The Cost of Hiring a Full-Time Employee in Cambodia

Cambodia offers competitive wage structures and a growing pool of skilled labor, especially in garment manufacturing, tourism, hospitality, and business process outsourcing. For organizations expanding into Cambodia, understanding complete employment costs—mandatory social security contributions, generous leave entitlements, seniority payment obligations, and compliance requirements—becomes critical for accurate financial planning.

Cambodia's employment framework provides substantial employee protections through National Social Security Fund (NSSF) contributions, extensive public holiday entitlements (among the highest globally at 21-28 days), mandatory seniority payments, and comprehensive leave provisions. Total employment costs typically range from 115-125% of base salary when accounting for all statutory obligations.

Average Gross Monthly Salaries in Cambodia

Salary levels vary based on role, experience, industry, and location (Phnom Penh commands premiums over provincial areas):

Monthly Salary Benchmarks:

• Entry-level/general labor: KHR 800,000 - 1,200,000 (USD 200-300)
• Office/administrative roles: KHR 1,500,000 - 2,500,000 (USD 375-625)
• Professional/technical: KHR 2,500,000 - 5,000,000 (USD 625-1,250)
• Management/senior roles: KHR 5,000,000+ (USD 1,250+)

Important considerations:

Minimum wage (garment/footwear sector): KHR 930,000/month (approximately USD 232) as of 2025 for textile, garment, and footwear industries. This is sector-specific minimum—other industries follow general minimum wage principles or market rates.

Currency usage: While Cambodian Riel (KHR) is official currency, US Dollar (USD) widely used in employment contracts and salary payments. Exchange rate approximately KHR 4,000 = USD 1 (verify current rates).

Salary payment timing: Monthly salaries typically paid once per month. Must be paid by agreed date in employment contract.

Statutory Contributions and Employer Taxes

National Social Security Fund (NSSF)

Cambodia's National Social Security Fund (NSSF) provides social protection through multiple schemes:

Occupational Risk Scheme (Work Injury Insurance):

• Employer contribution: 0.8% of monthly salary
• Coverage: Work-related injuries, occupational diseases, death benefits
• Effective since: 2008

Health Care Scheme:

• Employer contribution: 2.6% of monthly salary
• Employee contribution: 1.3% of monthly salary
• Total: 3.9% of monthly salary
• Coverage: Medical treatment, hospitalization, maternity benefits
• Effective since: 2016

Pension Scheme:

• Employer contribution: 2.0% of monthly salary
• Employee contribution: 2.0% of monthly salary
• Total: 4.0% of monthly salary
• Coverage: Old-age pension, disability pension, survivor benefits
• Effective since: February 2023

Total NSSF Employer Contributions: 5.4% (Occupational Risk 0.8% + Health Care 2.6% + Pension 2.0%)

Contribution ceiling: NSSF contributions calculated on monthly salary up to approximately KHR 1,200,000 ceiling (USD 300). Salaries exceeding ceiling still only calculate contributions on ceiling amount.

Example (employee earning KHR 2,000,000/month):

• Contributions calculated on KHR 1,200,000 ceiling
• Employer NSSF: KHR 1,200,000 × 5.4% = KHR 64,800 (USD 16.20)
• Employee NSSF: KHR 1,200,000 × 3.3% = KHR 39,600 (USD 9.90)

Registration requirements: Employers must register new employees with NSSF within 3 days of employment commencement. Monthly contributions due by 15th of following month.

Penalties: Late registration or contributions incur penalties and interest charges.

Seniority Payment (Indemnité d'ancienneté)

Unique to Cambodia: Mandatory payment compensating employee loyalty and tenure.

Calculation: 15 days' wages per year of service (or pro-rated for partial years).

Payment schedule: Split into two semi-annual payments:

• 50% paid in June covering January-June service
• 50% paid in December covering July-December service

Accrual: Begins from first day of employment, accrues continuously.

Payment on termination: If employee terminates mid-year, employer must pay accrued seniority payment through termination date.

Example (employee earning KHR 2,000,000/month with 3 years service):

• Annual seniority payment: (KHR 2,000,000 ÷ 30 days) × 15 days × 3 years = KHR 3,000,000 total (KHR 1,500,000 June, KHR 1,500,000 December)
• Monthly accrual cost: KHR 3,000,000 ÷ 12 months = KHR 250,000/month (~12.5% of monthly salary)

Critical note: Seniority payment is separate from severance pay (which applies upon certain terminations). Both may be owed depending on circumstances.

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Mandatory Leave Entitlements

Annual Leave

Statutory entitlement: 18 days paid annual leave per year for employees with one year continuous service (among the more generous in APAC).

Increases with tenure: 19 days after 3 years, 20 days after 6 years, 21 days after 9 years, 22 days after 12 years.

Accrual: Annual leave accrues progressively during year.

Leave payout on termination: Unused accrued annual leave must be paid out upon separation.

Cost (18 days annual leave, KHR 2,000,000/month): ~KHR 120,000/month accrual

Public Holidays

Statutory paid public holidays: 21-28 days depending on government proclamations (among highest globally).

2025 public holidays include: Khmer New Year (3 days), International Labor Day, King's Birthday, Constitution Day, Water Festival (3 days), Independence Day, plus additional proclaimed holidays.

Substitution rules: When public holidays fall on weekends, may be substituted to weekdays (creating longer holiday periods). Employers must follow government announcements on substitution dates.

Payment obligation: Employees receive paid day off. If working public holiday, receive compensation (typically 200% of daily wage).

Maternity Leave

Statutory entitlement: 90 days paid maternity leave.

Payment during leave:

• First child: 50% of salary
• Second child: 75% of salary
• Third+ child: 100% of salary

NSSF coverage: NSSF Health Care Scheme provides maternity benefits; employers pay difference between NSSF benefit and required percentage.

Protection: Pregnant employees cannot be dismissed from pregnancy notification through end of maternity leave (except serious misconduct with Ministry of Labour approval).

Paternity Leave

Statutory entitlement: 7 days paid paternity leave (recommended by law, increasingly standard practice).

Sick Leave

Unpaid sick leave: Employees entitled to up to 6 months unpaid sick leave annually for serious illness with medical certification.

Partial pay (optional): Employers may voluntarily provide partial salary during sick leave; NSSF provides sickness benefits under Health Care Scheme.

Optional and Market-Driven Benefits

Competitive Cambodian employers commonly offer:

Private health insurance: Supplementing NSSF Health Care coverage for enhanced medical services, international hospitals.

13th-month pay: Increasing popularity following regional practices (Thailand, Vietnam); typically equivalent to one month salary paid at year-end.

Holiday allowances: Gifts or bonuses during Khmer New Year, Pchum Ben (Ancestors' Day), Water Festival.

Attendance bonuses: Common in garment sector—monthly bonuses for perfect attendance (no absences).

Meal and transportation allowances: Daily or monthly stipends for meals and commuting costs.

Housing allowances: For expatriate employees or senior local managers.

Performance bonuses: Variable compensation tied to individual or company performance.

These benefits typically add 5-10% to total employment costs but enhance attraction and retention.

Total Cost of Employment: Comprehensive Example

Employee Profile: Mid-level administrative professional, Phnom PenhBase monthly salary: KHR 2,000,000 (USD 500)

Statutory Costs:

• NSSF contributions (5.4% on KHR 1,200,000 ceiling): KHR 64,800/month (KHR 777,600 annually)
• Seniority payment (12.5% for 3-year employee): KHR 250,000/month (KHR 3,000,000 annually, paid semi-annually)

Mandatory Leave Accruals:

• Annual leave (18 days): KHR 120,000/month (KHR 1,440,000 annually)
• Public holidays (24 days embedded): No additional cost beyond normal salary

Optional Benefits (example):

• 13th-month pay (8.33%): KHR 166,667/month (KHR 2,000,000 annually)
• Attendance bonus: KHR 50,000/month (KHR 600,000 annually)

Total Monthly Cost: KHR 2,651,467 (~33% above base)

Total Annual Cost: KHR 31,817,600 (~33% above base)

Breakdown:

• Base salary: 75% (KHR 24,000,000)
• NSSF contributions: 2.4% (KHR 777,600)
• Seniority payment: 9.4% (KHR 3,000,000)
• Annual leave: 4.5% (KHR 1,440,000)
• Optional benefits: 8.2% (KHR 2,600,000)

Minimum statutory costs alone (NSSF, seniority payment, annual leave) add approximately 17% above base salary.

Hidden and Overlooked Costs

NSSF registration failures:

• Late registration (beyond 3-day deadline) incurs penalties
• Unregistered employees create compliance violations during labor inspections
• Employee complaints to Ministry of Labour for NSSF non-enrollment

Incorrect seniority payment calculations:

• Forgetting semi-annual payment schedule (June/December)
• Miscalculating days when employees separate mid-year
• Not paying accrued seniority on termination

Public holiday adjustments:

• Failing to follow government substitution announcements when holidays fall on weekends
• Incorrectly calculating compensation for employees working public holidays (200% typically required)

Foreign worker costs:

• Work permit fees: USD 100-300 annually depending on position
• Business visa fees: USD 35/month or USD 300/year for Type E visa
• Quota compliance: Certain industries have foreign worker percentage limits
• Housing and benefits often higher for expatriate employees

Leave payout liability:

• Accrued annual leave payouts on termination
• Pro-rated seniority payment through termination date

Severance pay (separate from seniority):

• 7 days wages per year of service for certain terminations without fault (redundancy, business closure)
• 10 days wages per year if termination due to serious illness/disability preventing work
• Not required for serious misconduct dismissals

Advisory Notes for Employers

1. Comply with Labor Law Requirements

Employment contracts must comply with Cambodia Labour Law:

• Written contracts required specifying job duties, salary, working hours, leave entitlements
• Contracts in Khmer language required (English translations acceptable alongside)
• Indefinite-term contracts (most common) vs. fixed-term contracts (maximum 2 years duration)

2. Register with NSSF Within 3 Days

Critical compliance requirement: Register new employees with NSSF within 3 days of employment start. Late registration creates penalties and compliance violations. Monthly contributions due by 15th of following month.

3. Track and Pay Seniority Payments Semi-Annually

Unique Cambodia requirement: Ensure systems track accruing seniority payments and remit semi-annual payments (June/December). Budget for this ~12.5% additional annual cost.

4. Document Leave Policies Clearly

With 18+ days annual leave and 21-28 public holidays, employees have substantial leave entitlements. Clearly document:

• Annual leave accrual and usage policies
• Public holiday schedules following government proclamations
• Leave carryover rules
• Leave payout procedures on termination

5. Follow Public Holiday Substitution Announcements

Monitor Ministry of Labour, Invalids and Social Affairs (MLVT) announcements regarding public holiday substitutions when holidays fall on weekends.

6. Understand Termination and Severance Requirements

Notice periods: Typically 1 month for indefinite-term contracts (or as specified in contract).

Severance pay: Required for certain terminations without employee fault (redundancy, business closure)—7-10 days wages per year of service depending on circumstances.

Seniority payment on termination: Must pay accrued seniority through termination date (separate from severance).

7. Maintain Accurate Payroll Records

Ministry of Labour inspections verify:

• NSSF enrollment and contribution compliance
• Seniority payment calculations and remittances
• Working hour records (8 hours/day, 48 hours/week maximum)
• Overtime compensation (150% standard rate)
• Leave entitlement compliance

Retain employment records minimum 3 years for inspection purposes.

Navigate Cambodian Employment Costs with AYP EOR Solutions

For organizations expanding into Cambodia without dedicated in-country HR and payroll infrastructure, accurately calculating and managing employment costs across NSSF contributions, seniority payments, extensive public holiday entitlements, and compliance requirements creates operational challenges.

AYP Group's Employer of Record (EOR) services in Cambodia provide transparent, comprehensive employment cost management.