As a medium-sized country in Southeast Asia, Cambodia has delivered much more than medium growth in recent years. The size of its economy has doubled in the past ten years, and its GDP is now up to $49.8 billion, with another 4.0% growth expected in 2025. With a per capita GDP of $2,870, Cambodia has increased its status to that of a low-middle-income country.

Of Cambodia’s population of 17.354 million people, more than 9.903 million workers make up its labor force. Around 36% are involved in agricultural production, while industry employs 27% of workers, especially in the textile and garment industries that produce 70% of the country’s exports. The remaining 37% of workers provide services like tourism, trade, hospitality, and construction.

Workers here earn an average monthly wage of 1,344,500 KHR (Khmer riels), roughly equal to 336 USD. With a large force of young and affordable workers, Cambodia is growing as a center for outsourced manufacturing and services. However, employers can find it challenging to work in this country if they’re unfamiliar with the local language, culture, and laws.

This is the main reason why many companies choose to outsource payroll, a notoriously difficult function, to service providers, instead of doing it internally. This review will explain how Cambodia payroll outsourcing services work and how they can help businesses succeed in this growing market.

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What is Payroll Outsourcing in Cambodia?

Payroll outsourcing is the process of engaging a third party to manage your payroll function for you, rather than managing it in-house. Many service providers work in Cambodia and can take care of the earnings calculations, tax management, and social security contributions for you.

Their expert staff have experience with local regulations and administrative bodies, and their complex and comprehensive platforms help automate as much of the payroll management process as possible to a high degree of accuracy. Because they work with many customers, payroll providers can normally manage payroll more affordably than most small and medium businesses (SMBs) can on their own.

They can manage payroll just for employees in Cambodia, or as part of a global payroll service that takes care of your employees all over the world. Working with a payroll provider in Cambodia can also reduce your risk in this country. If you were to manage payroll yourself, you’d find experienced staff and leverage their experience with local laws.

However, payroll providers go a step further by setting up calculations based on the current regulations while also constantly monitoring for any legal changes that would require adaptations. They also report to the tax and social security offices on your behalf, further limiting your risk and helping the success of your business in Cambodia.

How Payroll Outsourcing in Cambodia Works?

The number of payroll providers working in Cambodia is rising every year. While they differ in their prices and approaches, most providers offer the same core services to their clients, including.

Needs Assessment 

Most payroll outsourcing service providers will start out by meeting with clients to evaluate their payroll needs. They’ll be particularly interested in how many employees of different types are already or will be employed. They’ll also need to know how much they’ll receive in compensation and benefits so they can provide service plans and related quotes.

You can meet with several providers and choose the one whose proposal is best for your needs. By signing a service agreement, you’ll engage the provider so it can start to manage your payroll in Cambodia.

Data Collection

The provider of your choice will need to collect data from you to add employees to your payroll, set up their automatic salary calculations, and register new employees with the authorities. It will also need to collect your employees’ banking information so that it can set up direct deposits for their salary payments. It’s important that you know how the provider will transfer and store this data to keep it safe and protect you from liability.

Payroll Processing

The provider will set up your payroll calculations, but it will need data from you to run them. You’ll still need to monitor your employees’ hours and days of work so you can share this information with the payroll provider. These days, this can normally be done conveniently using time-tracking tools built into providers’ online platforms. With this data prepared each pay period, your provider will process your payroll, calculating the earnings and deductions of each of your employees.

Managing Taxes and Social Security

While earnings are calculated from your workers’ salaries and working days, their deductions are mandated by law. The payroll provider will need to calculate their tax withholdings and remit these to the tax authority. For social security contributions, it will calculate and deduct amounts from your employees’ pay, and also calculate your employer contributions.

Making Payments and Reporting

The provider will normally ask you to approve the payroll before it runs it and pays your employees. With your authorization, it will pay the employees their net salaries by direct deposit or other methods, like paper checks or prepaid employee cards. It will issue pay stubs to all employees and keep your payroll records for internal and external reporting.

Cambodia Labor Law and Payroll Compliance

Cambodia’s legal system reflects a mixture of Khmer traditions, French civil law, and common law. The main legal instruments that regulate payroll include the Constitution of the Kingdom of Cambodia 1993 and the Labor Law 1997. The main regulations you should know about include:

Minimum Wage and Overtime

Recently updated in January 2025, the minimum wage for the garment industry in Cambodia is 839,809 KHR (around 210 USD). Workers in other industries aren’t yet protected by a minimum wage. Employees work 48 regular hours each week, normally on a six-day schedule.

They can perform up to two hours of overtime a day, and if they do, they have to be paid at least 150% of their normal wages for those additional hours.

Taxes

Employers in Cambodia have to calculate and withhold pay-as-you-earn (PAYE) taxes from their employees’ paychecks. Personal income tax rates are progressive and range from 0% to 20% of workers’ earnings. These PAYE taxes must be remitted to the General Department of Taxation (GDT).

Social Security

Employees in Cambodia pay mandatory contributions for social security. They are deducted between 2% and 8.125% of their salaries for their old-age pensions (OP). Employers must make matching OP contributions, and pay 0.8% of their employees’ salaries as an Occupational Risks Contribution (ORC) and contribute 2.6% of salaries for healthcare.

These contributions must be made to the National Social Security Fund (NSSF).

What are the Benefits of Payroll Outsourcing in Cambodia?

Payroll can be a challenge to manage in your own country, so it’s no surprise that it can be much more difficult elsewhere. Employers in Cambodia can realize several advantages by outsourcing payroll to a provider, including:

  • Increasing Operational Efficiency: Rather than learning the complexities of managing payroll on your own, outsourcing payroll can let you leverage professional expertise while focusing your own efforts on your core business activities.
  • Reducing Costs: By working at scale, payroll providers can normally manage payroll more accurately, efficiently, and affordably payroll services than most SMS can in-house.
  • Ensuring Legal Compliance: Payroll providers employ staff who are experts in Cambodian tax and employment law. They help set up systems and services that keep you compliant at all times.

What are the Downsides of Payroll Outsourcing in Cambodia?

While the advantages of payroll outsourcing are obvious, you will also have to consider the possible downsides before making the right decision for your business, including:

  • Reduced Control: If you outsource this function, you limit the amount of control you have over how and when your payroll is managed. You can also be reliant on providers because you won’t build up your internal capacity to manage payroll instead. 
  • Service Quality: Providers vary in service quality and professionalism. If the provider you choose to partner with pays your employees or the authorities late or incorrectly, you can face several risks, from employee dissatisfaction and resignations to fines and even shutdowns.
  • Data Security Risks: Sharing data with your provider introduces the risk that it could be hacked and misused. This makes it very important to choose a provider with excellent security protocols in place.

How to Choose a Payroll Outsourcing Provider in Cambodia

There are dozens, if not hundreds, of payroll providers now operating in Cambodia. Choosing between them can be a time-consuming challenge, as so many of their services are similar. To save time and effort when selecting your partner, try to focus on the following criteria:

Experience

New companies can entice you with good deals and exciting technology. However, if they don’t have a lot of experience working in Cambodia, they’ll be more prone to making mistakes when dealing with the authorities and your employees than more established providers.

Reputation

Past and present customers can provide you with valuable insights into the professionalism and performance of different providers. Look for reviews and ratings that pertain specifically to Cambodia, as many providers also work in other countries, and their service quality can vary.

Price

Price is always an important factor, so start by assessing your needs and making a budget for your payroll management. This will help you limit your search to providers whose fees fit what you can afford to pay.

Security

It’s crucial that the data you share with any provider is protected in transit and at rest. Check out providers’ security policies to be sure they have the infrastructure in place to keep it safe, and also find out if they are compliant with high-quality data security standards like ISO27001 and the EU’s GDPR.

How Much Does Payroll Outsourcing Cost in Cambodia?

Payroll services in Cambodia can be highly affordable. They normally range from $4 to $25 per employee per month.

However, some providers don’t include tax management in their base price, so be sure to check that all the services you require are included before making a selection. Some providers will also provide tailored prices for your specific needs and may discount their fees for larger staff teams.

Payroll Outsourcing Alternative: Employer of Record

When you own an entity in Cambodia or plan to set one up, it makes sense to work with a payroll outsourcing service provider. If you only plan to hire a few staff there, however, or only need them to work remotely, you may want to hire them without registering a local business entity. This is possible with the help of an Employer of Record in Cambodia.

An EOR is a service provider that uses its local entity or that of a partner to hire workers in Cambodia on your behalf. It becomes their legal employer and, therefore, the party responsible for maintaining compliance with local laws. It will also handle all of your employees’ HR needs, like payroll, benefits, and leave management.

Partnering with an EOR helps you avoid the time and expense of setting up in Cambodia while letting you start working with local workers quickly.

Payroll Outsourcing for Success in Cambodia

Instead of handling payroll in-house, more and more employers in Cambodia are choosing to outsource this function to professional service providers who can do it better and cheaper. Payroll providers can help to keep you compliant with local regulations while keeping your employees correctly and promptly. If you want to know more about how working with a payroll provider in Cambodia can encourage the success of your business, contact Remote People today.