In a sign of the changing nature of doing business in Cambodia, the Labour Ministry has handed down new guidelines for employers, including mandating seniority payments that have the potential to cripple entrenched businesses.
Prakas 443 declares that staff of all firms begin to accrue seniority payments – equal to half a month’s salary every year – and applies the conditions retroactively, asking businesses to backpay their staff for each year they have been employed.
CAMFEBA – the Cambodian Federation of Employers and Business Associations – has released a statement calling for a revision of the Prakas, after a number of its members expressed concerns about the sustainability of the new rules.
CAMFEBA “expresses its serious concerns and reservations about the adverse impact of the Prakas on existing businesses as well as on the investment environment in Cambodia,” the group said in its statement.
“Retroactively making all employers, not just in the textile garment and footwear sector but across the entire economy, liable for accrued seniority indemnity for all current employees poses serious unexpected an unplanned financial burdens and may prove unaffordable for some.”
Indeed, Thalias is a family-run business and takes pride in having a core team of long-term employees that have been crucial to our success – but shares the concerns of CAMFEBA. “We support the idea of seniority payments, without a doubt,” said Mr Arnaud Darc, CEO and Chairman of Thalias Hospitality. “We also want to reward those who have been loyal and accrued unmeasurable talent and value for our business – but to apply the payments retroactively is simply not sustainable for us and I am sure many others”