PEO & EOR Cambodia - Hire in 48h Without an Entity | INS Global

PEO in Cambodia

Hire Globally, Pay Locally, Expand Effortlessly

Cambodia represents a serious goal for many companies looking to expand their international presence among the various countries highlighted as holding the most growth potential. Cambodia is the next destination for many U.S. and international companies, a thriving country that’s seen consistent, rapid growth.   

However, while it shows many signs of rapid development, Cambodia suffers from many problems related to this development. While Cambodia generally ranks highly for business opportunities, it has overly complex and underdeveloped bureaucratic processes, high levels of corruption, and poorly developed infrastructure. 

PEO in Cambodia - Summary

Advantages to using a PEO in Cambodia

All-In-One Streamlining

Have all necessary HR services taken care of through one platform.

Rapid Market Entry

Begin operations in days instead of months.

Legal Compliance

Enjoy the highest levels of local legal compliance from professional compliance experts 

Reduced Time and Cost

Save time and money by avoiding fees, fines, and frustration.

Less Distraction

We take care of the complexities of regulatory compliance, leaving you to work on what matters to your success.

Why Choose A PEO Over Company Incorporation?

While there are few restrictions on foreign-owned companies in Cambodia, navigating the complexities surrounding every aspect of local regulations is a significant problem. Setting up a separate legal entity requires a lot of time and hassle that could otherwise be put to better use. A PEO skips much of the hassle that comes with company incorporation and allows you to operate in a new market quickly and easily.  

A PEO:
  • Allows the fastest possible market entry
  • Avoids costly setup fees and processes 
  • Provides expertise in ensuring compliance with local regulations
  • Makes the most of local support and resources 
testimonial from Manuel Ramos

Testimonial

Manuel Ramos

TERAO ASIA

Managing Director

We think INS Global is a good solution about starting in a market like China. Understanding the market doesn’t mean you need to set up a company immediately. 

5/5

What are the Steps to Forming a PEO partnership in Cambodia?

INS Global has 15+ years in global PEO services. We base our system for organizing and managing employee assignment needs on the following simple steps: 

  1. We meet you to discuss your requirements and together come up with an individualized services plan.
  2. Our local PEO provides you with the means to hire and pay staff in Cambodia 
  3. INS Global manages as many aspects of HR services for your employees in Cambodia as you require.
  4. Your team in Cambodia begin operations and get to work on making the most of your new opportunity.

How do PEO and EOR Services Differ?

Before deciding on the range of services you require to begin operations in Cambodia, it’s helpful to understand the difference between a PEO and an EOR. In most countries, the two operate almost identically. Still, the two terms may be used to distinguish between the range of services offered. Typically: 

  • A PEO provides HR services to employees of other companies. 
  • These may extend to but aren’t limited to payroll, tax, legal compliance, and benefits management services. 
  • The PEO makes a contract with the original company.
  • An EOR legally and officially hires employees on behalf of another company. 
  • In addition to the services offered by a PEO, an EOR takes on all liabilities encompassed by recruiting and employing staff members. 
  • The EOR may make a contract with the employee on behalf of the original company.

 

As in most countries, the distinction between the two services is limited in Cambodia. PEOs may act as EORs, offering the full range of services open to both.  

Labor Law in Cambodia 

Employment Contracts in Cambodia

There are two types of employment contracts in Cambodia. These are classified as Fixed (Sometimes called Specific) Duration or Unfixed (Sometimes called Undetermined) Duration.  

A fixed Duration contract can be anything up to 2 years, after which time it automatically becomes Unfixed. A fixed contract may be made either orally or through a written agreement. However, an Unfixed contract must be defined legally in a written contract.  

 An employer can set a probationary period at the beginning of the contract lasting up to a maximum of 3 months. 

 In the case of unilateral termination, the employer must give a notice period of  between 7 days to 3 months, depending on the length of the employee’s service. 

Reimbursement for termination without a valid reason can be severe.  

At the end of a contract, the employer must offer a severance payment of 7 days’ wages for 6-12 months of service and 15 days for each year of service up to a maximum of 6 months. 

Working Hours in Cambodia

Working hours in Cambodia may be higher than those in some of its neighbors. According to the WHO, 11.5% of workers in Cambodia work “excessive” hours to the point of it being a health concern.  

That being said, typically, the working hours in Cambodia are 8 hours per day or 48 hours per week. Overtime can be up to 2 hours per day. There are no standardized legal specifications for lunch breaks or any kind of break.   

Overtime is paid at 150% of standard pay, which rises to 200% if the overtime is at night, on a Sunday, or during a public holiday.  

Holidays and Annual Leave in Cambodia

Cambodia has many national holidays which change yearly. Employers should be aware of official government announcements of annual public holidays as they are announced.  

 In 2022, there will be 21 days of paid national holidays. This has been reduced since 2020 when the government announced it would be reducing the number of public holidays due to the complications caused by such a large amount of paid days off.  

 Annual leave is also generous. After 1 year of service, an employee should receive 1.5 days of annual leave per month of service (This is based on a 48-hour work week. Employees working less than 48 hours receive a leave allowance of a pro-rata basis).  

Sick Leave in Cambodia

Upon getting proper validation by a medical professional, an employee in Cambodia may be eligible for up to 6 months of medical leave. An employer cannot terminate an employee’s contract during this period.  

Paid sick leave is not required, though it is generally suggested that employers pay:

  • 100% salary for the first month 
  • 60% salary during the 2nd and 3rd months 
  • 0% salary during the 4th to 6th months 

 

In the case of a work-related incident, the employer must pay all necessary bills and treatment costs.  

Maternity and Paternity Leave in Cambodia

Since 2020, Cambodian Labor Law has allowed for 90 days of maternity leave after a year of service, at least 6 weeks of which must be taken after birth. A worker who uses maternity leave is protected from termination during this period. They should receive 50% of their regular salary.  

Currently, there is no paid paternity or parental leave. However, this is a topic of discussion and may change soon.  

Tax Law and Benefits in Cambodia

Tax in Cambodia is paid monthly according to all earned income. Residents (anyone residing in Cambodia over 182 days in a year) are taxed on a progressive scale from 5% on anything above KHR 1.3million to 20% on anything above KHR 12.5 million. 

Non-residents pay a standard flat rate of 20%.  

All “fringe benefits” related to an employee’s contract are taxed at 20%.  

Employers are expected to pay 2.6% of an employee’s monthly earnings above KHR 200,000 towards the employee’s Health Care Scheme and 0.8% towards the Occupational Risk Scheme.  

As of 2021, the employer and employee are each expected to contribute 2% of an employee’s monthly salary to the National Pension Scheme. 

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FAQs

No, it is necessary to use a local entity abroad to comply with each country labor law.

Foreign companies can either set up a local entity in each country or use the services a local PEO (Professional Employment Organization) to hire the staff on-site directly.

The employer of record is the legal entity liable for the staff employed in a specific country. In practice, a foreign company can either open a subsidiary to become the employer of record of its abroad employees or use a PEO to act as the employer of record.

Liabilities may vary from country to country and include all the staff management responsibilities: labor contract issues, payroll management, and tax compliance, social security management, expenses claim declaration, hiring and termination
procedures, etc.

In general, 1-month is necessary to have an employee based out abroad using an existing PEO as the employe of record. When incorporating a new subsidiary to be the employer of record, the delay varies from 4-12 months.