On 21 September 2018, Cambodia’s Ministry of Labour and Vocational Training (MLVT) issued Prakas No. 442 - which has consequences for when and how Cambodian businesses pay their employees. More specifically, the Prakas require employers to adjust their payroll in order to deliver pay twice a month to their employees.
Twice-Monthly Payroll
Prakas No. 442 on Payment of Wages was signed into law by Labour Minister, Ith Sam Heng, and will be implemented from January 2019. The law will require employers to pay employee salaries in twice-per-month installments. The details of the legislation are as follows:
- The first payroll should be run in the 2nd week of the month, and comprise 50% of base salary.
- The second payroll should be run in the 4th week of the month, and comprise the remaining amount of base salary, along with any peripheral monthly remuneration and benefits.
Employer Reaction
The introduction of twice-monthly payroll has not been without criticism. The Cambodian Alliance of Trade Unions pointed out that the new system has both positive and negative implications: on the one hand, it should help employees better manage monthly expenses, protect them from unscrupulous employers, and reduce the need to take out loans to get by. On the other hand, fortnightly pay will reduce saving rates, and possibly work against employee prosperity over the long term.
Some companies in Cambodia have previously expressed an intention not to abide by the Praka. Vice President of the Cambodian Federation of Employers and Business Associations, Nang Sothy, revealed that many private sector organisations would negotiate with the government for the option to pay their employees on a monthly basis.
To find out more about Cambodia’s tax and payroll landscape, browse activpayroll’s global payroll page.