The Cambodian labor law sets out two types of contracts: fixed duration and unspecified duration. The difference is relatively simple, but matters greatly on a number of issues – particularly the way in which the contract may be terminated (more on that in a future post, and in our recent guide).

A fixed duration contract requires three things:

–          A written contract

–          Precise commencement and termination dates

–          A duration, including any renewals, of less than two years

If any of these three points is missing, it’s automatically an unspecified duration contract. The real catch here is the two-year limit. Many employers mistakenly keep having their employees sign one-year renewals, believing they’re still on a fixed duration.

Well, after the employee hits the two-year mark, the law automatically considers it of unspecified duration. The contract might specify certain things about notice and termination, but if it ever came to a dispute over these provisions, a court would likely throw them out and replace them with the labor law rules.

Employers just need to be aware of when employees hit the two-year mark, and have them sign a contract of unspecified duration.