With payroll outsourcing Cambodia, businesses can enter the market without worrying about local payroll regulations. Our payroll Cambodia solutions ensure proper tax handling and labor law compliance, making local hiring smooth and sustainable.
Managing payroll in Cambodia requires navigating the country's labor laws, social security contributions, and tax obligations. Employers need to ensure that payroll is processed efficiently, employees receive their salaries on time, and that all statutory contributions and taxes are accurately calculated and submitted.
Failure to comply with Cambodia’s payroll regulations can result in fines, penalties, and legal disputes. This comprehensive guide will help you understand payroll requirements in Cambodia and how to stay compliant.
Payroll in Cambodia is governed by labor laws and regulations that outline how employees should be compensated. Employers are required to follow these guidelines to ensure that their workforce is paid accurately and on time, while also meeting tax and social security obligations.
Under Cambodian labor law, employers are required to pay wages to their employees at least once a month. The payment schedule, however, can vary depending on the employment contract, with some businesses opting for bi-weekly or weekly payroll cycles. Regardless of the payment frequency, it is crucial that employers meet the deadlines set out in the employment contract.
Late salary payments can lead to fines and employee grievances, which could escalate into labor disputes. Employers should implement robust payroll systems to ensure that salaries are processed and paid on time, in full, and with the correct deductions applied.
Overtime in Cambodia must be paid when employees work beyond their standard working hours, which is typically 8 hours per day or 48 hours per week. The labor law mandates that overtime be compensated at a rate of 1.5 times the regular hourly rate on regular workdays and at 2 times the hourly rate on public holidays or rest days.
While bonuses are not legally required, they are a common practice in Cambodia, especially in the form of the 13th-month salary or annual bonuses. If bonuses are outlined in an employee’s contract, employers must ensure they are paid as agreed.
Cambodia’s social security system, managed by the National Social Security Fund (NSSF), is designed to provide employees with benefits such as healthcare, employment injury insurance, and pensions. Both employers and employees are required to contribute to the NSSF based on the employee’s earnings.
As of 2024, the NSSF requires employers to contribute 3.4% of an employee's gross salary towards employment injury insurance and healthcare coverage. Employees are not required to contribute directly to the NSSF; however, the employer is responsible for making the full contribution on behalf of their employees.
Employers must calculate these contributions based on the employee’s gross salary, ensuring that all required payments are made to the NSSF. Non-compliance with social security regulations can lead to penalties and loss of benefits for employees.
Social security contributions in Cambodia must be submitted to the NSSF by the 15th of each month. Employers who fail to meet this deadline may be subject to penalties, including fines and interest charges on overdue contributions. To avoid non-compliance, it is essential that employers implement automated payroll systems that accurately calculate contributions and ensure timely submission.
Employers in Cambodia are also responsible for withholding personal income tax from employees' salaries and remitting these amounts to the General Department of Taxation (GDT). Proper management of income tax is critical for ensuring that employees’ taxes are paid accurately and on time.
Employers must calculate and withhold income tax from employees' salaries based on Cambodia’s progressive tax system. Tax must be deducted at source, meaning it is taken directly from the employee’s salary before payment. Employers must then remit these taxes to the GDT on a monthly basis.
Employers are also required to provide employees with a detailed payslip that shows gross salary, tax deductions, social security contributions, and net salary. This ensures transparency and compliance with Cambodian tax laws.
Cambodia follows a progressive income tax system, where the amount of tax an employee owes depends on their salary. As of 2024, the personal income tax rates are as follows:
Employers must calculate the correct amount of tax based on each employee's salary and ensure that the appropriate amount is withheld each month. Incorrect tax withholding or failure to report taxes can lead to penalties from the Cambodian tax authorities.
In addition to salaries and taxes, employers in Cambodia are required to provide certain statutory benefits to employees, such as leave entitlements and social security deductions. Understanding these benefits is essential for ensuring payroll compliance.
Cambodian labor law provides employees with several types of leave entitlements, including:
Employers must ensure that employees receive the correct amount of leave as per Cambodian labor law and that this leave is documented properly in payroll records.
Employers in Cambodia must also make mandatory social security contributions on behalf of their employees, as discussed in the Social Security Contributions section. Additionally, employers may be required to make other deductions, such as for union fees or voluntary pension contributions, if applicable. These deductions must be clearly outlined on the employee’s payslip and comply with labor regulations.
Non-compliance with Cambodia’s payroll regulations can result in serious consequences for employers, including fines, legal disputes, and reputational damage. Below are some common areas where non-compliance may occur and how to avoid them:
Employers are required to pay employees on time, according to the agreed payroll cycle. Delays in salary payments can lead to employee disputes, fines, and damage to your company’s reputation. To avoid these issues, businesses should implement reliable payroll systems that ensure salaries are processed and paid on time.
Missing deadlines for social security contributions can result in penalties, including interest charges on overdue amounts. Employers must ensure that NSSF contributions are calculated accurately and submitted by the 15th of each month to avoid non-compliance.
Failing to withhold the correct amount of income tax or misreporting tax liabilities can lead to fines from the General Department of Taxation. Employers should regularly review their payroll processes to ensure that taxes are calculated correctly and that all reports are submitted to the GDT on time.
Employers who fail to provide statutory benefits, such as paid leave or social security, may face legal action from employees. It is important to understand Cambodia’s labor laws and ensure that all required benefits are provided and properly documented in the payroll system.
Managing payroll in Cambodia can be challenging, especially for businesses unfamiliar with local regulations. AYP provides a range of services to help companies manage payroll efficiently and ensure compliance with Cambodian labor laws.
AYP’s PEO services allow businesses to outsource their payroll management, ensuring that all salary payments, tax withholdings, and social security contributions are handled accurately and on time. We help businesses stay compliant with Cambodia’s payroll regulations, reducing the risk of penalties and legal disputes.
As an Employer of Record, AYP assumes full responsibility for your workforce in Cambodia, handling all payroll, HR, and compliance functions on your behalf. This allows businesses to focus on growth while ensuring that their payroll processes are fully compliant with local laws.
AYP’s Payroll Outsourcing Management (POM) services provide end-to-end payroll solutions, including calculating salaries, tax deductions, and social security contributions. We ensure that your payroll is processed accurately and efficiently, helping you avoid non-compliance risks and penalties.
With AYP’s services, you can rest assured that your payroll is in good hands, allowing you to focus on growing your business while we take care of the administrative details.
