Closing a Company in Cambodia: How to Shut Down and Retain Key Talent

1. Introduction: Why Companies Close Entities (But Want to Keep Talent)

Singaporean mid‑sized companies (500–2,000 employees) sometimes close a company in Cambodia to cut overhead, pivot strategy, or restructure ASEAN operations. But closing an entity doesn’t mean giving up on your team. Cambodian employees bring local know-how, client relationships, and regional capabilities that are hard to rebuild—and essential to future growth.

With an Employer of Record (EOR) Cambodia solution, you can retain employees without entity, hire in Cambodia without entity, and ensure a seamless employee transfer after entity closure, preserving critical talent and continuity.

2. What Happens When You Close a Company in Cambodia

A. Legal & Compliance Steps

Closing a legal entity in Cambodia involves several key stages:

1. Shareholder resolution & liquidator appointment (must be a licensed auditor since 2022)
2. Obtain a Tax Clearance Certificate from the General Department of Taxation (GDT) via audit and clearance
3. Submit dissolution application to the Ministry of Commerce (MOC); receive Certificate of Closing in 1–2 months
4. Public notice as required—twice in newspaper over four weeks
5. Deal with creditors, settle liabilities, distribute assets per priority:
   1. employee wages
   2. secured claims
   3. state taxes
   4. unsecured claims
6. Notify NSSF, Customs, CDC, GDT, and obtain deregistration from MOC.

This process typically takes 6–12 months, depending on audits and creditor engagement.

B. Employee Obligations: Notice, Severance & Benefits

Under the Cambodian Labour Law:

• Notice periods vary by contract:
  • Fixed‑Duration Contracts (FDC):
    • <6 months: none;
    • 6 mo–1 yr: 10 days;
    • 1 yr: 15 days
  • Undetermined‑Duration Contracts (UDC):
    • <6 mo: 15 days
    • 6 mo–2 yr: 1 month
    • 2–5 yr: 2 months
    • 5+ yr: 3 
• Severance or seniority pay:
  • FDC: minimum 5 % of total wages
  • UDC: 15 days’ wages per year of service, capped at 6 months, plus seniority payments
• Final payments (wages, leave, severance) must be made within 48 hours of termination
• For protected statuses or mass layoffs, specific MLVT notifications, procedure, and consultation rules apply

Missing any of these steps can lead to legal claims up to 3 years later

3. Risks of Talent Loss During Entity Closure

• Operational disruption: Projects, service delivery, and customer relations suffer. 
• IP or knowledge leakage: Departing staff may take crucial know-how. 
• Client disengagement: Relationship breakdowns can impact recurring business. 
• Costly re-entry: Rebuilding a presence—sourcing, training, compliance—can take months and cost significantly more than retention. 

4. Retaining Employees Without a Legal Entity: Your Options

Option 1: Freelancers/Contractors

• Pros: Quick, flexible 
• Cons: High misclassification risk, no benefits, poor employee engagement 

Option 2: Set Up a New Entity

• Pros: Full legal control and brand ownership 
• Cons: 3+ months to set up, significant cost, regulatory burden 

Option 3: Employer of Record (EOR) – Best Practice

An EOR in Cambodia becomes the legal employer—issuing contracts, managing payroll, benefits, and compliance. You retain operational control, while your team stays intact. This model enables you to retain employees without entity, hire in Cambodia without entity, and transfer employees after entity closure efficiently.

Explore our Employer of Record Cambodia service for full details.

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5. How EOR Helps You Retain Employees in Cambodia

What an EOR Does (in simple terms)

AYP acts as the legal employer of record, handling:

• Labour contracts and Cambodia Labour Law compliance
• Payroll, withholding and contributions
• Notice, severance, seniority, and elected termination procedures
• HR admin: on-boarding, payroll support, employee queries
• MLVT filings and labour compliance guidance

You maintain management of daily operations and performance.

Transition Phase: Step by Step

1. Planning – decide which roles to retain 
2. Termination – issue legal notices or payout in-lieu 
3. EOR Onboarding – team rehired immediately under AYP 
4. Continuity – payroll, benefits, and role remain unchanged 
5. Operations – you control, AYP administers 

This ensures no gap in productivity and compliance, making employee transfer after entity closure seamless.

AYP’s Competitive Advantage

• Onboarding speed: usually within 3–5 business days 
• Compliance expertise in Cambodian labour and payroll regulations 
• ISO-certified, regional presence across Asia 
• Proven delivery without legal pitfalls

6. Case Study: Retaining Talent During Closure

Business: Singapore-based fintech provider

Cambodian Team: 12 staff across tech and customer support

Reason: Restructure country operations, yet retain regional service

Solution: Partnered with AYP EOR before termination notices

Outcome:

• 100% retention of staff and continuing service quality 
• Full compliance: notice, seniority pay, MLVT filings
• No service disruption or client dissatisfaction
• Entity formally closed within 8 months

“AYP enabled us to close our Cambodia entity while keeping the team and client support fully intact.” – Head of APAC Operations

7. Key Considerations Before You Close an Entity

1. Timing is critical

Start EOR onboarding before termination notices—to avoid communications gaps or non-compliance.

2. Legal compliance risks

• Correct notice and severance for FDC/UDC
• File MLVT notifications for mass layoffs or protected categories
• Maintain records to protect against potential claims

3. Employee communication

• Be transparent about changes, continuity, and benefits
• Emphasize ongoing engagement and employer-of-record structure
• Coordinate onboarding into EOR payroll smoothly

4. HR & payroll handover

• Finalise payroll, leave, and contributions before transfer
• Transition payroll system and access to AYP
• Ensure all records and entitlements transfer seamlessly

8. Conclusion: Close with Confidence and Keep Your Team

Shutting down your Cambodian entity doesn’t have to mean letting go of talent. With an EOR Cambodia, you can:

• Streamline compliance and reduce costs
• Retain institutional knowledge, client relationships
• Keep operations running smoothly
• Avoid the time and cost of rebuilding later

AYP’s Employer of Record lets you close a company in Cambodia, retain employees without entity, and prepare for future growth—without disruption.

9. Call to Action: Speak to AYP’s Local Experts

Thinking of exiting Cambodia but keeping your regionally critical team?

✅ Book a Free EOR + entity closure consultation

✅  Get a complimentary cost simulation

✅ See how AYP can onboard your Cambodian staff in just days

Retain Your Team Without a Local Entity →