The Ministry of Labour and Vocational Training (“MLVT”) introduced “Prakas 442 – On the Payment of Wages” (Prakas 442) in September 2018. Prakas 442 provides that from January 2019 all enterprises and establishments covered by the provisions of the Labour Law shall prepare their payroll to employees/workers (“employees”) two times per month.

The first payroll will be paid to employees in the second week of each month and shall contain fifty percent (50%) of the employees net wages (“First Payroll”) and the second payroll shall be paid at the end of the month and shall contain the balance of the net monthly wages plus other benefits owed to the employee for that month (“Second Payroll”).

How do I determine when the First Payroll is paid to my employees?

Prakas 442 refers to the First Payroll being made to the employee in the second week of each month. If we take January 2019 as an example 1 January 2019 fell on a Tuesday and the second calendar week of January 2019 ended on 13 January 2019. Consequently, one interpretation could be that the First Payroll is due in the second calendar week ending 13 January 2019.

We believe the better interpretation is that the First Payroll must be paid to employees by the 14th of each month. If the 14th of the month falls on a weekend or public holiday, we would suggest that the First Payroll be paid to employees in the working day before the weekend or public holiday.

For January 2019 that would mean that the first payment to employees would be due on Monday 14 January 2019.

How to I calculate Tax on Salary on the first payroll?

Prakas 442 refers to 50% of net wages being paid to employees in the First Payroll of the month. By net this means not including any addition benefit, such as overtime. We note that, for tax purposes, the Tax on Salary of an employee is calculated on their monthly salary received so the monthly Tax on Salary calculation of employees will not be affected by Prakas 442.

What may be affected by Prakas 442 is whether the First Payroll under Prakas 442 should be 50% of the gross salary of the employees or 50% of the employee salaries after Tax on Salary has been deducted. We note that the General Department of Taxation issues the monthly exchange rate on the 15th of each month, so practically speaking if an employer wanted to deduct Tax on Salary on the First Payroll of the month it would need to use the previous month’s exchange rate and then make any required adjustments in the second payroll payment at the end of the month.

Based on our reading of Prakas 442, we believe the First Payroll should be calculated on 50% on the gross salary of employee’s before Tax on Salary is taken into account.

 What happens if I don’t comply with Prakas 442?

Pursuant to Article 365 of the Labour Law and Joint Prakas 659, non-compliance with Prakas 442 may subject the relevant employer to a fine of 1,680,000 KHR (approximately USD 420) imposed by the MLVT or a fine from 1,240,000 KHR (approximately USD 310) to 2,400,000 KHR (approximately USD 600) imposed by the court.

The DFDL tax and corporate team has a vast and varied depth of experience with regard to labor and tax issues, as always, we would be pleased to answer any questions that you may have on this and other legal and tax issues of concern.

Tax services required to be undertaken by a licensed tax agent in Cambodia are provided by Mekong Tax Services Co., Ltd, a member of DFDL and licensed as a Cambodian tax agent under license number – TA201701018.

The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.

DFDL Contacts


Chris Robinson
Partner, Head of Cambodia Corporate & Commercial Practice Group


Clint O’Connell
Head of Cambodia Tax Practice

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DFDL is a leading international law firm specializing in frontier markets. In 1994, DFDL was built on the foundation of a unique vision: to build an integrated international standard law firm, with in-depth knowledge of the Mekong Region, while providing specialized and personalized advisory services to the international business community. As the Mekong Region and other emerging markets continue to thrive, DFDL is uniquely positioned to secure your access to promising international growth opportunities. We have offices in Bangladesh, Cambodia, the Lao PDR, Myanmar, Singapore, Thailand and Vietnam, and collaborating firms in Cambodia, Indonesia and the Philippines. We have the regional reach to work with you, wherever you are. With a team of over 250 foreign and local lawyers, advisers and support staff working closely together, we provide personalized and cost-effective legal, tax and consulting services and solutions across a number of practice groups.

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