Prime Minister-designate Hun Sen announced on Wednesday that public and private institutions in the Kingdom will begin paying workers fortnightly starting next year. This would be a major change to payroll systems which currently pay out monthly.
Several firms’ representatives commented on Wednesday that the move could impact cash flows and hamstring administrative work.
Speaking to 14,799 workers in Por Sen Chey district, Phnom Penh on Wednesday, Hun Sen informed enterprise owners to be prepared in advance for the new payroll methods, saying that Cambodian officials and employees from the public and private sectors will be given wages twice a month.
“Please, all factory and company owners in Cambodia, be prepared in advance. From 2019, we will no longer offer payroll monthly, but once every two weeks,” he said.
The change would force compliance with Cambodia’s Labour Law, signed in 1997, which stipulates that wages must be paid at least two times per month, at a maximum interval of sixteen days.
Difficult for SMEs
Garment Manufacturers Association of Cambodia’s (GMAC) deputy secretary-general, Kaing Monika said on Wednesday that the change will create more administrative work for employers compared to a monthly system.
He said the issue can be mitigated if factories offered payroll through banks. He said 90 per cent of GMAC’s members still paid wages and salaries in cash and the balance through financial institutions.
“I don’t think it is a big burden to change from paying out monthly compared to twice a month,” he said, adding that paying through a bank meant factory owners needed fewer payroll staff.
While cash flow issues could spring up in the first few months, he said firms should have no trouble adapting.
However, Keo Mom, the director of Ly Ly Food Industry said small- and medium-sized enterprises like hers needed more time to sort out the payroll as they have to verify if workers turned up for duty and if they had accrued overtime or additional benefits.
Her company employs 250 workers and currently handles its payroll via a bank.
“If we need to make payroll twice a month, we will have more to handle and we are concerned we could make errors. I might need to employ more staff to work on the payroll which will enlarge the company’s expenditures,” she said.
Mom also anticipated that, since her business is fairly small, it might have cash flow problems if it is forced to adopt a fortnightly payroll system.
Larger companies such as Acleda Bank shouldn’t have any problem with the change, said In Channy, its president.
“In the banking sector, I don’t think there will be difficulty in activating the change. Making reports is not difficult because it is computerised while withdrawing salaries will not be difficult as employees use the ATM card,” he said.
Others have expressed concerns that a fortnightly payroll system would encourage overspending.
Weighing in on this issue, Hun Sen on Wednesday said people should know how to properly manage personal finances.
“If we worry we could spend it all, why should we not put it in a piggy bank in order to avoid [overspending]? It is not a problem ... the important thing is to get the money in hand,” he said.