The minimum wage was traditionally governed by the Labor Law from Article 104 to Article 109. The Minimum Wage Law which was promulgated on July 6, 2018 has come to replace the provisions of the Labor Law which are contrary to its provisions. This article briefly discusses the rules regarding this minimum wage in Cambodia.
1. What is the minimum wage?
Article 4 of the Minimum Wage Law stipulates that the minimum wage is equal to the minimum wage which is determined by a Prakas (ministerial order) of the Minister in charge of labor (which is now the Ministry of Labor and Vocational Training). Every year, the Ministry of Labor and Vocational Training issues a Prakas determining the minimum wage for workers in the textile, garment and footwear sectors. For example, Prakas No. 303/20 dated September 10, 2020 sets the minimum wage for workers at 192 USD per month and for worker on probation at 187 USD per month, which have been implemented since January 1, 2021.
2. Why is it necessary to set minimum wage?
Wage is one of the main working conditions in an employment relation. According to the principle of private autonomy (as well as the principle of freedom of contract) in the Civil Code of Cambodia, known as basic law, amount of wage is determined and decided based on the agreement of the employer and the worker who are parties to the employment contract. However, based on the generally accepted assumption that workers have less power than employers to negotiate working conditions, especially in determination of wages, Article 4 of the Minimum Wage Law requires that amount of wage agreed by the parties must not be lower than the minimum wage set by the Prakas of the Minister in charge of labor.
As a mechanism for implementing the minimum wage, Article 6 of the Minimum Wage Law stipulates that any written or oral agreement that provides the wage to worker lower than the minimum wage set in the Prakas is void. However, the written or oral agreement that provides wage to the worker in the amount higher than the minimum wage set in the Prakas is legally valid. In order for information on the minimum wage to be available to workers, Article 14 of the same law requires employers to permanently display the Prakas on the minimum wage at workplace, office where wage payment is made, and at the place where workers are recruited.
3. How is minimum wage determined?
According to Article 5 of the Minimum Wage Law, the elements used for consideration in determining the minimum wage should be the focuses on the economic conditions, living costs and realities of the country. These elements are (1) social criteria that include household status, inflation rate and cost of living, and (2) economic criteria that include productivity, national competitiveness, labor market status, and sector profitability. If necessary, the National Minimum Wage Council may adjust the criteria for setting the minimum wage according to economic, professional, occupational or regional activities, depending on the country’s economic and social situation.
Article 10 of the Minimum Wage Law stipulates that discussions on setting the minimum wage must adhere to the following principles: (1) the discussion on setting the minimum wage shall be held on a regular basis by the Minister in charge of Labor; (2) the minimum wage must be a predictable figure or rate of change, that is, it must increase in succession; (3) adhere to the win-win principle; (4) use official social data as stated in Article 5 of the Minimum Wage Law as a basis for discussion.
The Minister in charge of labor is required to issue a Prakas on the schedule of the discussion on minimum wage after the recommendation of the National Minimum Wage Council. In the event of the force majeure or any necessary case, the Minister in charge of Labor may issue a proclamation suspending or adjusting the minimum wage schedule. In this case, the last set minimum wage will remain in effect until a new minimum wage is set.
After achieving the figure or rate of change of the minimum wage in accordance with the procedure of minimum wage discussion as set out in the Minimum Wage Law, the National Minimum Wage Council takes this result as a recommendation to the Minister in charge of labor. If necessary, the Minister in charge of labor may seek the principle (advice) from the government before issuing a Prakas on minimum wage for implementation in next year. (Article 13, Minimum Wage Law)
4. Composition of National Minimum Wage Council
The Minimum Wage Law requires the establishment of a National Minimum Wage Council under the Ministry in charge of labor ￼(Article 15). This Council must comprise at least 48 full members, consisting of an equal number of tripartite, of which one-third are representatives of the government, one-third are representatives of the employers and one-third are representatives of the workers. The Minister in charge of labor or one representative of the Ministry in charge of labor or is the chairman of the National Minimum Wage Council. The Council has two vice-chairmen, one elected from the representatives of the workers’ side and the other elected from the representatives of the employers through the internal election of each party. (Article 17, Law on Minimum Wage)
In conclusion, minimum wage is mechanism aims at protecting workers from being paid less than the amount set by the Prakas on minimum wage. Even though minimum wage now only applies to workers in textile, garment and footwear sectors, in negotiation for wage, there might be cases where the employers and workers in other sectors tend to use or refer to the said minimum wage as the basis for the wage determination. In this sense, we can say that legally speaking the Prakas on minimum wage for workers in textile, garment and footwear sectors does not apply to wage determination for workers in other sectors, but more or less it has influence on wage determination of the workers of those sectors.