If a Cambodian garment factory were to close its owner has to pay a maximum of six months’ worth of compensation, based on employee seniority.

Garment manufacturers acknowledge the distress caused by the closure of a garment factory but say the compensation could hurt employers. They accept workers need to be protected, depending on how long they have been working at the company, but say the need to make companies pay all at once will create a new degree of financial burden for the employer and possibly other human resource management challenges. One warning from them is that such a provision could spark an influx of resignations in order to collect the maximum severance amount.

So employers suggest that they should be allowed to pay compensation in phases.

A related problem the country faces is that of employers who abandon their factories without paying workers.

Regulations are being drafted that will require all enterprises to pre-deposit money with the National Social Security Fund so that if factories close unexpectedly, the fund will have the ability to pay workers.

Factory owners pay a seniority bonus once a year to workers. That may be changed to having factories pay every two or three months instead.