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Employment contracts

Employment contracts

O ne contract that will affect virtually everyone's life at one time or another is

the employment contract. This form of contract governs the relationship between workers

and their employers. Employment contracts must be tailored to the particular needs

of the parties. There are, however, certain general subject areas that will be covered

in most agreements. These include the duration of the employment, provisions for

termination of the agreement, the compensation and benefits that will be provided

and the duties and responsibilities that will be assigned to the employee.

It is generally recognized that employment contracts provide considerably greater

protection for the employee than for the employer. In part, this attitude exists

because courts generally refuse to force a person to perform against that person's

will. Consequently, if the employee quits before the expiration of the employment

term, the employer could not successfully petition a court to order the employee

to continue working involuntarily although they may be awarded damages for actual

losses caused by the departure of the employee. On the other hand, if the employer

fires the employee before the expiration of the agreement the employee may often

recover the compensation he or she would have received had he or she been allowed

to perform the agreement, unless the employer can prove good cause for termination.

The draft Cambodian Labor Law contains a full chapter outlining the requirements

and limitations of employment contracts in the Kingdom. Written contracts are not

required in order to establish an employment relationship. One will be implied if

the circumstances surrounding the relationship between the parties justifies such

an implication. According to the draft law, the term of an employment contract may

either be for a fixed duration, a specific project or for an indefinite time. No

employment contract may be for a fixed duration of longer than two years, though

it may be renewed. Any contract that purports to be for a period of longer than two

years or in which the work continues past the initial fixed period of the contract

will be treated as one for an indefinite time. Probation periods are limited to a

maximum of three months.

For employment contracts of a specified duration, termination will normally occur

at the specified ending date. It can, however, be terminated before the ending date

if both parties are in agreement and that agreement is reduced to writing and signed

in the presence of a labor inspector. Without such agreement, fixed duration employment

contracts may only be terminated for serious misconduct or "Acts of God"

(flooding, earthquake, war).

Serious misconduct on the part of an employer include the following: refusal to pay

all or part of the salary, repeated late payment of salary, threat, abusive language,

violence or assault, fraud and neglecting to provide adequate health and safety measures

in the work place. For employees serious misconduct is defined as including: stealing,

embezzlement, breach of professional confidence, fraud, serious infractions of disciplinary,

safety or health regulations, threats, abusive language or assault, inciting other

workers to serious misconduct, and political activities within the work place.

The closing of a business for reasons other than Acts of God does not release employers

from their obligations to compensate their employees. The draft law specifically

excludes bankruptcy and liquidation from the definition of "Act of God".

If an employer fires an employee that has not committed serious misconduct and without

the existence of an Act of God prior to the expiration of the contract term, the

employee will have a right to claim compensation for their lost wages during the

remainder of the contract. Employers have the right to claim damages from an employee

who quits prior to the end of the fixed term contract.

When a contract approaches its expiration date, an employer must give notice to the

employee and inform them whether the contract is to be renewed. The amount of notice

that the employer is required to give varies from ten to fourteen days depending

on the original length of the contract. On contract termination, the employer must

compensate the employee in an amount proportional to the salary and length of the

original contract. The draft labor law sets a minimum compensation at five percent

of the wages paid during the length of the contract.

Employment contracts of unspecified duration may be terminated by either of the parties

by giving written notice in advance. The notice period requires varies from seven

days for employees who have worked for the business for less than six months to three

months for employees who have been employed for more than ten years. If the required

notice period is not given by an employer, they must compensate the employee for

the wage that would have been earned during the notice period. During the notice

period, the employee has a right to two days of paid leave per week in order to look

for new employment.

- Michael Popkin is an attorney with Dirksen, Flipse, Doran & Le, an international

law firm with regional offices in Vientiane, Phnom Penh and Ho Chi Minh City.

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