What should be included in employment contract?

Employment is a contractual relation between employer and worker. The parties have the right to decide the content of their contract. What should the parties to the contract agree to and should be written in the employment contract? This article will answer to this question based on the Labor Law of Cambodia.

1. Title of the contract

The title of contract shows the nature of relations of the parties to the contract. It quickly tells us what the agreement is all above. In general, parties use the general terms “employment contract” as the title of their contract. There are also cases where the parties name their contracts based on the period or length of their employment relation. For example, if employment relation is for the fixed period, the title of the contract can be “fixed-term employment contract”. If employment relation is established for an undetermined duration, the title of contract should be “undetermined or open-ended employment contract”. If the contract is for the purpose of probation, the title of the contract should be “probationary contract”.

2. Parties

The identity and information of the employer and worker should be specified in the employment contract. Under the Labor Law of Cambodia, employer can be either natural person or legal person while worker is natural person. If party is a natural person, the contract should state the name, sex, age or date of birth, ID or passport and their issuance dates and address of the parties. If party is a legal person, contract should state the name, form of the legal entity (partnership, limited liability company, association, non-governmental organization, etc), registration number and date of registration with relevant competent authority, registered address or business address, together with identity and information of the representative of the legal person who is signatory on behalf of the legal person. The identity and information of the said representative should be name, sex, age or date of birth, ID or passport and their issuance dates and address, his or her relations or role with the legal person. The said representative can be director, chief executive officer or any officer duly appointed by the legal person.

Article 667 of the Civil Code of Cambodia sets out the rules on personal exclusivity of employment. That is, without the consent of the worker, the employer cannot assign his or her rights under the employment contract to a third party. Similarly, without the consent of the employer, the worker cannot allow a third party to work on his or behalf.

3. Position and job description

The employment contract should provide detail of the position and duties of the workers. This is to provide worker with the scope of responsibilities and employer’s expectation.

4. Place of work

The contract needs to state the place of work. There are also cases where the workplace can be changed pursuant to the need or management of the employer. Hence, in the contract, the employer should include the clause under which the employer reserves the right to change the work at any time during the life of the employment contract.

5. Wage

Wage is one of the main working conditions. The contract should state the amount of wage to be paid to the worker. The wage is subject to salary tax. The employer has the obligation to withhold the tax from the wage and pay the remain amount of wage to the worker.

The company can pay the workers in cash or by transfer to the worker’s bank account. There are 2 payroll payments in 1 month. The first payment is equal to 50% of the net wage per month and is made to the worker within the second week of each month. The second payment is equal to the amount of wages remaining after tax deduction in each month and is made to the worker within the second week of each month. If the day to be paid is a holiday or a weekly time off, the employer should pay the worker before the holiday or weekly time off.

6. Working hours

The contract should state the working hours of the worker at the enterprise. The working hours should not be longer than 8 hours per day or 48 hours per week. Further, the parties can also set the schedule of work, break or rest time, weekly time off in their contract. For example, a clause of employment contract can state that the working hours of the workers are 8 hours per day, starting from 8:00 am to 12:00 noon and starting from13:00 pm to 17:00 pm. Workers have one hour to take rest. The working days are 6 days in week, which is from Monday to Saturday. However, the parties can agree that the daily and weekly working hours of the workers may be changed at the sole discretion of the employer to meet the specific activities and activities.

7. Probation

In cases of undetermined duration contract, most of the parties agree to have the probationary period which is not longer than the period of 3 months. During the probationary period, employer or worker has the right to unilaterally terminate the contract by just providing prior notice (7 days).

The probationary period is to provide the worker with an opportunity to have a clear understanding of his or her working conditions and to provide the employer an opportunity to be aware of the worker’s profession. Article 68 of the Labor Law of Cambodia stipulates the maximum duration of a probationary contract or probationary period according to the type of worker. That is, the probationary period as agreed upon shall be:

  • 3 months for employees (for example accountant, office employees)
  • 2 months for specialized workers and
  • 1 month for non-skilled workers

8. Leaves

The contract needs to state the leaves which can be either paid or unpaid leave. Paid leaves include weekly time off, special leave, public holiday, annual leave, maternity leave, sick leave, special leave. Unpaid leave is the one other than paid leave.

9. Period of the contract

The duration of the contract may also determine the type of employment contract and the rules that apply to such contract. A contract with a definite expiration date is an employment contract with a fixed term. The term of the contract with a fixed term cannot exceed 2 years. (Article 67 of the Labor Law) If the term is longer than 2 years, this employment contract is treated as an employment contract with indefinite duration. If the parties do not set a contract termination date, this type of contract is an employment contract with an indefinite duration. Undetermined duration contract is the one other than fixed-duration contract.

10. Intellectual property

The contract should provide rules on intellectual property. For example, all works, design, technical discovery, working methods, system solutions, software, documentation, products, sketches created, discovered or written by workers under the employment contract must be the intellectual property of the employer.

11. Confidentiality

The employment contract stipulates the definition of confidential information. The contract also includes obligations of the worker to keep confidentiality and must not use the confidential information for purpose other than performing duties for the employer during the life of employment contract. Furthermore, there are also cases where the employer imposes the confidentiality obligation on the worker after the employment contract.

12. Non-competition obligation

The employer can also prohibit the worker from performing any work which is nature competing with the business of the employer during the life of employment contract.

13. Insurance

The employer will pay contributions to the National Social Security Fund in accordance with the laws, regulations and policies related to the social insurance required by law.

14. Disciplinary actions and internal regulations of the enterprise

The employment contract may provide details of misconduct and disciplinary actions against such misconducts. There are also cases where the contract refers to the internal regulations of the enterprises regarding the misconduct and disciplinary measures.

The contract can list down the light, medium and serious misconducts together with disciplinary actions proportional to the level of seriousness of misconduct which include verbal warning, written warning, suspension of employment contract without payment, and dismissal.

15. Termination

There are two main types of employment contracts, such as fixed duration contract and undetermined duration contract. Fixed duration contract normally ends that the expiry date of the contract. It can only be terminated before the expiry date if there is mutual agreement, serious misconduct of either party or act of God. Fixed duration contract which is equal to or more than 6 moths, the employer is required to notify the worker about renewal or non-renewal 10 days in advance. If the length of employment is more than 1 year, the employer is required to giver prior notice 15 days about the renewal or non-renewal of the contract after the expiry date. If the employer fails to provide notice on time, the employment contract is deemed to continue for the period the same as the initial period of the initial contract.

The undetermined duration contract is terminated at the will of the party provided that there is prior written notice. However, termination of employment contract at the initiative of the employer without valid reason may entitle the worker to compensation.

Upon expiration or termination of the employment contract, the worker is not allowed to enter into the premise of the enterprises or must not perform work for the employer.

In conclusion, the parties can decide the content of employment contract, provided that such content is not contrary to the compulsory provision of the labor law or provided that the contract provides worker with benefits or working conditions better than those provided by the labor laws.

This article is not legal advice or opinion.

Categories Employment and Labor Laws

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