Cambodia’s adoption of the Law on Social Security Schemes dated November 2, 2019, will extend social security provisions to cover unemployment and roll out pension coverage to the private sector. The pension reform is expected to be launched in 2020. A date for the start of the unemployment scheme is yet to be set.
The new law continues to recognize current active schemes relating to occupational risk and health care under the prior law until new regulations are implemented.
Social Security Schemes Under the New Law (Private Sectors)
1. Pension schemes
As a general principle, private pension schemes are funded by compulsory contributions by both employers and employees. Contribution rates will be determined by implementing regulations.
The benefits under this scheme include old age pensions, invalidity pensions, survivor pensions, and funeral allowances.
All members registered with the National Social Security Fund (NSSF) who reach 60 years of age are entitled to an old age pension provided that they fulfill certain conditions.
2. Health care scheme
Conditions of entitlement to benefits under the health care scheme are the same as those for the pension scheme. The benefits afforded by the health care scheme include:
- medical care and treatment;
- daily allowances for absence due to work-related sickness;
- maternity allowances; and
- funeral allowances.
Presently, the monthly contribution fees are paid by employers (ranging from US$1.30 to US$7.80 per month per employee) until there is new implementing regulation.
3. Occupational risk scheme
The benefits under this scheme include medical care and treatment, temporary disability cash allowances, permanent disability pensions, permanent disability allowances, survivor pensions, rehabilitation services, and funeral allowances.
Individuals who sustain accidents that are caused by their own negligence will not receive benefits under this scheme.
Presently, the monthly contribution fees are paid by employers (ranging from USD$0.40 to US$2.40 per month per employee) until there is new implementing regulation.
4. Unemployment Scheme
The unemployment scheme is predicated on both employers and employees making compulsory contributions. Conditions, formalities, and procedures for implementing the unemployment scheme will be determined by implementing regulations.
Any disputes or complaints concerning the implementation of the provisions and regulations on the social security schemes among NSSF members, employers, and the NSSF must be resolved by the NSSF’s (yet to be constituted) Committee for Dispute Resolution. In the event that the dispute or complaint cannot be settled, the dispute or complaint may be filed with the relevant social security scheme regulator before it goes to the municipal or provincial court of first instance. The minister in charge of social security schemes must issue a regulation to determine the organization and functioning of the Committee for Dispute Resolution.
Employers, companies, or enterprises that fail to comply with their contributory obligations are liable to a fine from 10 to 30 times the daily base wage of all affected employees.
The new law will significantly increase the financial responsibility of employers, employees, and self-employed persons, and increase labor costs for employers in the private sector, notably due to the introduction of pension and unemployment schemes. As the conditions and procedures to define contribution rates for the social security schemes will be issued in subsequent implementing regulations, private sector employers may want to closely monitor the ongoing development of such regulations and actively participate in the process to ensure that their concerns and feedback are taken into account.
Written by Chris Robinson and Chesda Teng of DFDL and Roger James of Ogletree Deakins
© 2020 DFDL and Ogletree, Deakins, Nash, Smoak & Stewart, P.C.