Labour: The Law On Amendment Of Article 87 Title Of Point “គ” Part 3 Of Chapter 4, Article 89, 90, 91, 94, 110, 120 And 122 Of Labour Law

Date of publication: 21-09-2018

Category: Legal updates

Audience: All

On 28th June 2018, the Ministry of Labour and Vocational Training (MLVT) issued the Law on Amendment of Article 87, Article 89, 90, 91, 94, 110, 120 and 122 of the Labour law. The key objective of the Law is to prevent the issue of employers leaving the factory and not being responsible for the employees' pension by ensuring that all employers pay full severance and benefits to employees every 6 months, as stated by Prime Minister Hun Sen[1].

In this matter, the new amendments deleted the references to a dismissal indemnity in order to replace them by a seniority allowance. With regard to Article 90, 91, 110 and 122, the content of those provisions remains the same besides the substitution of the words "indemnity for dismissal" for "seniority allowance".

1.    The introduction of the seniority allowance in the termination of an unspecified duration labour contract/Labour Law

The main change provided by this amendment law resides at Article 89. Prior to the amendment, and in case of termination of an unspecified duration labour contract by the employer alone (notwithstanding the case of a serious offense by the employee), the latter was required to pay the employee a dismissal indemnity either equaling 7 days of wages and fringe benefits if the employee's length of continuous service was between 6 and 12 months, or equaling 15 days of wages and fringe benefits for each year of services if the employee's length of service was longer than 1 year.

 Henceforth, the employer must pay a seniority allowance equaling 7 days of wage and fringe benefits in the case of the termination of the unspecified duration contract of an employee having worked between 1 month and 6 months, by the employer. Otherwise, the employee is entitled to a seniority allowance equaling 15 days per year of service and that seniority allowance must be paid in half every 6 months.

2.    Time delay for wage claim

Furthermore, Article 120 which previously limited the time for an employee to file a lawsuit for the payment of wages to 3 years from the date the wage was due, provides now that this time limit will be 3 months from the date the wage was due.

3.    Closing of the enterprise

At last, Article 94 which referred to Article 89 now refers to the newly amended Article 90 of the Law, and Article 87 now provides, additionally to its previous provisions, that indemnity and compensation in lieu of prior notice shall not be implemented in the case of closing an enterprise, pursuant to the conditions set forth later in a Prakas issued by the MLVT.

[1] Khouth Sophak Chakrya, "Labour Law amended," Phnom Penh Post, May 31, 2018, (accessed September 13, 2018).