Notice of Termination of Unspecified Duration Contract

Under the Labor Law of Cambodia, particularly Article 74, the labor contract of unspecified duration can be terminated at-will by one of the contracting parties. This termination must be subject to the prior notice made in writing by the party who intends to terminate the contract to the other party. It is highlighted that even though employer fulfills the obligation of prior notice, employer cannot terminate the contract unless he/she has a valid reason relating to the worker’s aptitude or behavior, based on the requirements of the operation of the enterprise, establishment or group. This article only discusses the rules of prior notice. The rule of valid reason is not discussed.

Is prior notice important?

Under the labor contract, employer expects worker to provide labor or service while worker expects remuneration from employer. Therefore, sudden or surprising termination of labor contract by a party more or less affects the other party. To avoid any damage or loss due to sudden termination, the Labor Law requires the party who intends to terminate the contract to provide notice of termination within a reasonable period prior to the date the termination becomes effective.  Upon receiving notice of termination from worker, employer may start to look for the replacement or other measures to maintain smooth operation of enterprise.  In the similar way, upon receiving notice from the employer, the worker may start to look for new job or other measure to ensure their incomes.

What is the reasonable period of prior notice?

Based on the principle that level of attachment of the worker to employer depends on length of his/her employment relation with employer, the maximum period of prior notice varies according to worker’s length of service. For example, Article 75 of the Labor Law provides that the minimum period of a prior notice is set as follows:

-7 days, if the worker’s length of continuous service is less than 6 months;

-15 days, if the worker’s length of continuous service is from 6 months to 2 years;

-1 month, if the worker’s length of continuous service is longer than 2 years and up to 5 years

-2 months, if the worker’s length of continuous service is longer than 5 years and up to 10 years

-3 months, if the worker’s length of continuous service is longer than 10 years.

Any article of a labor contract, of an internal regulation, or any other individual agreement that sets the prior notice period to be less than the minimum set forth in this provision is void. (Article 76, Labor Law) 

Can parties set the period of prior notice longer than the minimum period provided by Article 75 of the Labor Law? 

Article 75 only invalidates agreement providing notice period which are less than the legal requirement. Hence, the parties can agree for the period longer than this minimum period. However, in consideration to the principle of good faith in Article 5 of the Civil Code, if the worker is required to provide unreasonably long period of notice, this may lead to forced labor as prohibited by Article 15 of the Labor Law and affect the freedom to choose occupation of the worker as stipulated in Article 36 of the Constitution of Cambodia. In practice, most of the companies do not set period of prior notice longer than those in Article 75 of the Labor Law unless there is reason to do so.

What are rights and obligations of parties during the notice period?

During the notice period, the worker of the enterprise is entitled to two days leave per week with full payment to look for a new job. These leave days are paid to the worker at the normal rate of remuneration, regardless of how it is calculated.  This payment shall include other perquisites. (Article 79, Labor Law)  Throughout the notice period, the employer and the worker shall be bound to carry out the obligations incumbent on them. (Article 81) For example, if the condition to get seniority indemnity is fulfilled during the notice period, worker is entitled to the payment of this seniority indemnity.

What are the legal consequences in case of termination in breach of minimum period?

The termination of a labor contract at-will on the part of the employer alone, without prior notice or without compliance with the prior notice periods, entails the obligation of the employer to compensate the worker the amount equal to the wages and all kinds of benefits that the worker would have received during the official notice period. (Article 77, Labor Law) The prior notice is the obligation to be observed in enterprises or establishments set forth in Article 1 of the Labor Law, both by the worker and by the employer when one of them decides unilaterally to terminate the labor contract.  However, the worker laid off for reasons other than serious misconduct can leave the enterprise before the end of the notice period if he finds a new job in the meantime. In such case, the worker will not be required to compensate the employer. (Article 78, Labor Law)

The contracting parties are released from the obligation of giving prior notice under the cases (1) for probation or an internship specified in the contract; (2) for a serious offense on the part of one of the parties; and (3) for acts of God that one of the parties is unable to meet his obligations. (Article 82, Labor Law)

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