Change of employer causes employment termination?

Employer and worker are parties to the employment contract. Will the change of employer cause the termination of employment contract in Cambodia?

The answer is NO. This article will further discuss this question based on the Labor Law of Cambodia.

The followings are cases of the changes of employers:

• The employer passes away, his or her successors (children and/or wife) continue the business and become new employers.

• The employer sells his or her business or company to another person.

• Two or more companies merge into a new company as surviving company to continue businesses of the original or constituent companies.

• Two or more companies merge into any one of them as surviving company to continue the businesses of the constituent companies.

• An employer forms a company to continue his or her business under the name of a registered company.

Pursuant to Article 87 of the Labor Law, the change of employer due to the any of the above events will not terminate the employment contracts or employment relations. All employment contracts in effect on the day of the change must remain effective and binding between the employees of the former enterprise with the new employer. This is to protect the employment security and stable income of the workers in the event of change of employer.

Termination of employment contract must be in compliance with rules governing each type of employment contracts. For example, fixed duration contract (FDC) is terminated at the expiry date or before the expiry date if there is mutual agreement, serious misconduct of any party or act of God. Premature termination without above any of the above reasons by a party entitles the other parties the right to damage compensation. Undetermined duration contract (UDC) is terminated by prior notice. However, termination at employer’s initiative requires a valid reason. Termination of contract by a party without valid reason entitles the other party the right to damage compensation.

The closure of the enterprise either at-will or through bankruptcy and judicial liquidation will not release employer from the obligation to follow the termination rules under the Labor Law.