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Work Permit Crackdown: Westerners Next

Emmanuel Scheffer / Khmer Times Share:
Foreign passports and the form for Cambodia’s work permit are seen in this composite file image. Photo: Anna Penigina

PHNOM PENH (Khmer Times) – Starting in August, the Labor Ministry plans to focus its work permit crackdown on “Western companies.”

“Asian companies” were the targets for the first half of this year. Now, the Ministry has worked through its backlog. 

“It is not a surprise,” says Sithy Puth, executive director of Top Job Cambodia, a human resources firm. “The Ministry of Labor had warned that, starting in January 2015, they would carry out the checks. They were overwhelmed and they have fallen behind.”

In the first half of this year, work permit applications jumped six fold over the same period in 2014, he said. So far this year, authorities have issued 25,000 work permits to foreigners.

The need for foreigners working in Cambodia to have work permits went into effect back in 1997. One year ago, the Ministries of Labor and Interior jointly announced that they would start to enforce the law. So far, enforcement has largely fallen on Vietnamese and Chinese people working here without work permits.

“It was announced that the law on work permits was to be enforced – nobody believed it,” Mr. Puth said of the crackdown now spreading to Phnom Penh’s “Daun Penh” and “BKK1” firms.

Who is affected?

The work permit law covers all foreigners working in Cambodia, with the exception of diplomats, foreign government employees and domestic servants. Anyone who receives a salary should have a work permit. A small business owner living in Cambodia also needs a work permit.

As far as retirees receiving pensions, Cambodian law is unclear.

“If the expatriate has an E Visa before applying for a work permit, he will get it,” notes Mr. Puth, whose firm is part of Saint Blanquat & Associates. “As far as volunteers, they must ensure before coming to Cambodia, that their NGO has a memorandum of understanding with the Ministry to obtain a Visa B, which does not require a work permit.”

From now on at the departure area of Cambodia’s three airports, passport control is checking to verify that departing E Visa holders also have a work permit. Those who do not must pay a fine if they want to catch their flight. The outcome can depend on the relationship between passport control and the expat. 

Who should do the paperwork?

The process is rather simple, but it has a cost, especially if the foreigner has worked in Cambodia for a long time. The law is retroactive. It is not up to the employee, but to company management to request a work permit. Any company, regardless of sector of activity, must register at the Labor Ministry.

The company then asks for a “quota approval” indicating the number of needed work permits. This must not exceed 10% of the total number of employees. Indeed, labor law stipulates that a company can have only one foreign employee for every 10 employees.

This foreign 10% of all employees must break down as follows: 6% skilled employees, 3% ordinary employees, and 1% non-qualified employees.

If a company wishes to exceed this quota, it must prove that no Cambodian meets the criteria and qualifications for the position.

When is the paperwork due?

For 2015, the request for “quota approval” from the Ministry of Labor should have been done last year, between October 1 and December 31, 2014. This was to be followed by applications for work permits, from January to March 2015. A work permit must be renewed every year – or with every new contract. Employees, or future employees, then take a medical exam. After this, they are to be issued a work book.

A big problem is that the law is retroactive. For example, a French citizen working in Cambodia for eight years must pay for a work permit for each of these eight years. At $100 per license, the math gets salty. Without counting the fines. 

This raises the question, who pays? The law does not say. However, if an employee does not have a work permit, it is because the company management did not ask for it. So the responsibility falls on the employer.

The experience of companies who filled out forms on time this year has generally been positive.  Expatriates working here generally were able to negotiate retroactivity.

The question is difficult for independent workers, such as musicians or photographers. Having multiple employers, they could create their own business as a solution. This is sensitive, given the cost – between $1,100, and $1,300 – to incorporate.

Fines, ranging from $120 to $180, are low enough for some to take the risk. But the prison sentence, ranging from 6 to 30 days, is daunting. For now, priority will be on small and medium businesses, said a Labor Ministry official.

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