Fixed duration contract for long-term employment relation?

Long-term employment relation refers to continuous relation without a break between employer and his or her worker. Can employer and worker use fixed duration contract for their long-term employment relation? This article will answer to this question.

Fixed duration contract (FDC) and undetermined duration contract (UDC) are the main types of employment contract under the Cambodia Labor Law. The contracting parties can choose either FDC or UDC for their employment relation. FDC is used for short-term employment relation while UDC is used for the long-term relation. This assumption is made based on the fact that there are legal rules of the Labor Law that convert FDC to UDC. One of which is the rule that converts FDC to UDC after the length of employment relation goes beyond a maximum period prescribed by the Labor Law.

Article 67, paragraph 2 of the Labor Law reads: 

The labor contract signed with one consent for a specific duration cannot be for a period longer than two years. It can be renewed one or more times, as long as the renewal does not surpass the maximum duration of two years.

Any violation of this rule leads the contract to become a labor contract of undetermined duration. 

Based on Instruction No. 050/19 dated 17 May 2019 of the Ministry of Labor and Vocational Training on Determination on Types of Employment Contracts, the duration of the initial FDC cannot be more than 2 years and the duration of the renewal of FDC cannot exceed the period of more than 2 years. For example, if the duration of initial contract is 6 months, the renewal of this FDC can be up to the period of 2 years. Consequently, the total duration of FDC which includes initial and renewal period can be up to the maximum period of 2 years and 6 months. If the employment continues under a contract for another specific period of 6 months which causes the total length of employment relation exceed this maximum period, the contract is converted to UDC pursuant to Article 67, paragraph 2 and Instruction No. 050/19.

Another relevant rule of contract conversion is that tacit or quiet continuation of employment after expiry of FDC can convert the contract to UDC. Article 67 paragraph 8 of the Labor Law reads:

When a contract is signed for a fixed period of or less than two years, but the work tacitly and quietly continues after the end of the fixed period, the contract becomes a labor contract of undetermined duration.

For example, the FDC is signed for a period of 6 months. After the expiry date, the parties do not sign any other new contract, the worker continues working and employer continues paying wage to that worker. Hence, the contract in this example is UDC.

Since rules on contract conversion are established to protect worker against the employer’s excessive use of FDC for long-term employment relation, these conversion rules have nature of public policy.

Article 13 of the Labor Law reads:

The provisions of the Labor Law are of the nature of public order, excepting derogation provided expressly. Consequently, all rules resulted from a unilateral decision, a contract or a convention that do not comply with the provisions of this law or any legal text for its enforcement, are null and void.

Except for the provisions of this law that cannot be derogated in any way, the nature of public order of this law is not obstructive to the granting of benefits or the rights superior to the benefits and the rights defined in this law, granted to the workers by a unilateral decision of an employer or a group of employers, by an employment contract, by a collective convention or agreement, or by an arbitral decision.

In conclusion, the parties to the employment contract cannot agree to continue to use FDC for their long-term employment relation. 

Please note that this article is not legal opinion or legal advice.

Categories Employment and Labor Laws

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