Employers don't need to stress over labour law compliance if they follow these easy steps

Photo by: TRACEY SHELTON

Employers should view labour law compliance as more than just a bureaucratic hassle. Compliance can be a powerful human resource, management and marketing tool.

LABOUR law compliance is often overlooked by many organisations, whether business or not-for-profit organisations. Employers tend to focus on areas of law that have a direct impact on their investment or program activities, such as contractual obligations, holidays, leave, termination clauses, etc. These "traditional compliances" impact processes, productivity, management and, importantly, budget decisions.

Complying with the law and implementing processes and procedures articulated in Chapter II of the Labour Law is challenging due to the lack of prescriptive information available with clear articulation of where to go, what to do and how to do it. Also, an understanding of the importance and value of labour law compliance is not clearly articulated, publicised or understood. 

Compliance is important for any employer, in every sector. It has a variety of benefits that are not always tangible. Often, it is viewed as a tedious and time-consuming process that is expensive but with no direct benefit. From a human resources and general management perspective, compliance impacts not only the bottom line but the culture, management style and standards set in an organisation as it starts and grows its operations in Cambodia.

Importantly, being compliant has an impact on how others view the organisation, whether jobseekers, customers or clients.  Compliance is often viewed as a government requirement only. On the contrary, it is a powerful human resource, management and marketing tool that organisations do not always utilise effectively.

What are the labour law requirements that you should be aware of?

Step-by-step

First is the Declaration of The Opening and Closing of The Enterprise, a required declaration made to the Ministry of Labour. It should be made before you establish your enterprise if you have more than eight employees, or 30 days after opening your enterprise if you employ fewer than eight workers on a permanent basis. In practice, many organisations make such declarations after they have received their formal "operational" registration. After making your declaration, you will receive a register, a book numbered and initialled by the labour inspector that should be kept safely and shown to the inspector upon request.

At the same time you receive your register, you should also request a Payroll Ledger, which tracks the monthly earnings and holidays of staff. In practise, if you have electronic systems, you can request the ministry to use your HRIS instead of the Payroll Ledger.

Being compliant has an

impact on how others view the

organisation, whether jobseekers, customers or clients.

Second, you will be required to get a staff movement form. A staff movement form tracks the movement of staff, mostly full-time staff. This form is updated within 15 days of every  employee being newly hired or separated. In practise, many employers try to coordinate the updating of these forms with relevant authorities to minimize administrative costs, a useful approach in large organisations with high turnover. 

Third, you should establish Internal Work Rules and Regulations of the Enterprise (IWRR).  The ministry provides organisations with a standard format from which you can further develop your organisation's specific regulations.

The IWRR are then approved, signed and stamped by the ministry and should be displayed publicly for all employees to access. In practise, it is important that you distinguish clearly between human resources policies and the IWRR of the enterprise.  It is important that your IWRR be thought of as a "timeless document" that complies with the requirements and does not need to be re-registered if a policy change, eg, a change in benefits, salary reviews or bonus payments, is made.

Employment card requirements

Fourth, all employees are required to have an Employment Card. The Cambodian employment card comes in the form of a small green book and documents employee details, work and salary history, signed and stamped by the employer and ministry. To get such an Employment Card, employees are required to go the Health Department to get a health check. The health check costs approximately US$3 - $5.50 (depending on turnaround time) for a Cambodian employee and $25 dollars for an expatriate - typically an employer cost.

In practice, you will keep the health check and the employment card of the employee in his employee file. This is the first step for an expatriate to gain a work visa. It is best to request employees to get a health check before starting work. 

Finally, for expatriates, with the completion and submission of your health check, together with your entry visa into Cambodia, your "work permit" will be processed. This will include a $100 annual tax. Your work permit will be renewed for the length of time your entry visa is renewed.  The annual tax is applied according to the first entry date into Cambodia unless you have proof of your annual tax payment. To apply for work permits, organisations must also apply for a "quota" from the ministry which allows them to hire a certain number of expatriates for the year. 

These are the basic first steps in Labour Law compliance. This is not intended to be legal advice but provide practical steps for managers and human resources managers. If you have not been through a labour compliance process before and feel that it is tough to tackle, I suggest that you work with a service provider to set up the initial compliance.

You will be required to pay for each step and process and service providers can help you understand the overall cost implications.  Some providers will also include training to ensure you maintain compliance in the future. Service providers include law firms, the Cambodian Federation of Employers and Business Associations (CAMFEBA) and human resources services firm.

Labour law complaince checklist

Practical steps

Documentation filed

Documentation received

Opening and closing of enterprise

Declaration of Opening and Closing of Enterprise

Register numbered, signed and stamped by labour inspector

Payroll

Employee information

Payroll Ledger with employee details, payroll data, and holidays to be filled out monthly and signed by employee

Staff movement form

Details of all employees joining and leaving

(1) An A3 sheet with all employees in the company

(2) An A3 sheet showing all the employees who left during the period you update your staff movement forms

Internal Work Rules and Regulations (IWRR)

Ask the ministry for a standard format to guide your company in its development and that can be updated and standardised

according to company policy

IWRR signed and sealed by MoSALVY. This should be photocopied and displayed in the office for employees to access. Keep the original in the human resources department

Cambodian Compliance:

(1) Health Check

and Employment Card

(1) ID Card/Family Registration Book

(2) Photos

(3) Employment contract

(1) Health check signed and sealed by the authorising ministry

(2) Employment Card (Green Book) from MoSALVY

Expatriate Compliance:

(1) Health Check

and Employment Card

(2) Quota

(3) Work Visa

(1) Passport

(2) Photos

(3) Employment contract

(4) CV

(5) Entry visa (multiple)

(6) Letter requesting quota

(1) Health check signed and sealed by relevent ministry

(2) Employment Card (Green Book) from MoSALVY

(3) Work visa from MoSALVY

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Sandra D'Amico is managing director of HRInc (Cambodia) Co Ltd.