You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

May 14, 2020

Changing Employment Conditions during the COVID-19 Situation

Subscribe to Updates
Bangkok Post: Human Resources Watch

The COVID-19 crisis continues to have a serious impact on global economic conditions, and many employers are feeling the severe economic effects here in Thailand. In light of this situation, employers are making efforts to ensure that their businesses survive the crisis, often looking to cost reduction measures such as reducing employees’ wages and benefits in accordance with labour laws. In general, Thai labour laws permit employers to reduce employee wages and benefits either by negotiating with employees and receiving their consent for the reductions, or by carrying out the labour relations processes described below.

Under Thailand’s Labour Relations Act (LRA), the definition of “employment conditions” includes general working conditions, working days and times, wages, welfare, conditions for termination of employment, and other benefits received by employers or employees relating to their employment or work. Any employer who would like to change these employment conditions, such as by reducing wages or benefits, must comply with the LRA.

In accordance with the LRA, employers are entitled to submit a written labour demand to employees (or a labour union, if applicable) in order to change an employment condition. Similarly, employees are entitled to submit a written demand to their employer to change an employment condition if the demand is submitted jointly by at least 15 percent of the total number of employees, or if the demand is submitted by a labour union that has a membership of at least one-fifth of the total number of employees.

After the demand has been submitted by either the employer or the employees, the parties must begin negotiations within three days.

It is important for employers to note that, once formal labour demands have been made to the other party, the employer is temporarily barred from terminating or transferring the employees, employee representatives, committee members, members of the labour union, or members of the labour federation committee. The only exceptions that allow termination of one or more of those parties are when they commit one of the following acts:

  • Acting dishonestly or intentionally committing a criminal offence against the employer;
  • Intentionally causing damage to the employer;
  • Violating the employer’s work rules, regulations or lawful orders, after the employer has already given a written warning to the employee (for matters not deemed serious); or
  • Neglecting their duties for a period of three consecutive workdays without reasonable cause.

This prohibition remains in force throughout the course of negotiations and settlement, or arbitration of the labour dispute should one arise.

If the parties are able to settle, they must enter into a written agreement signed by their representatives. Within three days from signing the agreement, the employer must display the agreement at the workplace for a period of at least 30 days. The employer must also register the agreement with the Ministry of Labour within 15 days from the date of signing.

If the parties do not settle after negotiations, or if they fail to negotiate at all, the labour demand is designated a “labour dispute.” In this situation, the party who submitted the labour demand must give written notice to a mediator within 24 hours after the lapse of the three-day period or the failure of the negotiations. The mediator is then obliged to resolve the dispute within five days. If a settlement is reached, the employer must proceed with the same notice requirements as stated above. If the parties are unable to reach a settlement, the labour dispute becomes an “unsettled labour dispute.”

The parties then have the legal right to either appoint one or more labour arbitrators to resolve the dispute by binding arbitration (if agreed upon by both parties), the employer can order an employee lockout, or the employees can go on formal strike. If the employees plan to proceed with a strike, they must give written notice to the labour dispute mediator, and to the employer, at least 24 hours prior to the strike commencing. In the present situation, parties should note that if the government issues any relevant regulations under the Emergency Decree on Public Administration in Emergency Situation to prevent the COVID-19 outbreak, both parties must also comply with those measures.

If the employees follow all legal procedures prior to executing a strike, they will be protected under Thai labour law. For example, if the employer then terminates the employees for submitting the labour demand, the employees can lodge a complaint to the Labour Relation Committee (LRC). The complaint will allege that the employer committed an unfair labour practice and will ask the LRC to order the employer to reinstate the employees at the same position, wages, and benefits that they had before termination. If the LRC agrees that the employer committed an unfair labour practice, the court may order the reinstatement. If the employer disagrees with the LRC’s order, they are entitled to challenge the order by submitting a petition to the Central Labour Court to revoke the LRC’s order. If the employer fails to comply with the LRC’s order by the deadline, and fails to submit a petition to the labour court in order to revoke the LRC’s order, the employer and its directors will face criminal penalties, such as imprisonment for up to six months, a fine of up to THB 10,000, or both.

Although this process gives the employer one method of changing employment conditions, this article shows that it is not always a simple process. If negotiations go well and consent is forthcoming, labour demands can be an effective way of mitigating the effects of the COVID-19 crisis on some businesses. However, if the demand becomes a dispute, employers can find themselves in difficulty, and must be aware of the risk of criminal penalties if they fail to comply with any legal requirements or take disciplinary action against the employees during the dispute period.

 

This article was originally published in the Bangkok Post and is reproduced here with permission and thanks. The original story can be viewed on the Bangkok Post website.

Related Professionals

Practices

Employment

Location

RELATED INSIGHTS​ 

August 12, 2024
With the growing prominence of ESG (Environmental, Social, and Governance) factors, businesses in Vietnam are increasingly recognizing their importance in driving global demand, societal impact, and economic value. A comprehensive acknowledgment of ESG-related legal requirements is critical for investors and companies operating in Vietnam to meet stakeholder expectations and ensure compliance. Our guide provides a basic overview of the rapidly evolving ESG landscape in Vietnam, covering a range of key issues for companies doing business in the country: What is ESG, and what does the ESG legal framework look like in Vietnam? Who needs to follow ESG regulations in Vietnam? What are the benefits of ESG compliance? How can enterprises enhance ESG best practices in Vietnam? Please click on the link below to view the full article.
Read More
August 2, 2024
On July 17, 2024, Thailand issued the Ministerial Regulation under the Revenue Code regarding Revenue Tax No. 394 (B.E. 2567) to increase the personal income tax exemption amount on severance pay for terminated employees. Under this ministerial regulation, terminated employees are exempt from personal income tax on their severance pay up to a severance pay amount equivalent to their last 400 days’ wages, capped at THB 600,000. This tax exemption does not apply to severance pay relating to retirement or the expiration of a fixed-term employment agreement. Previously, this exemption, which has been in effect since 1998, only applied to an amount equivalent to their last 300 days’ wages, capped at THB 300,000. This aligned with the maximum severance pay rate specified in the Labour Protection Act B.E. 2541 (LPA). However, when the LPA was amended in 2019, the maximum severance pay rate was increased from a rate equal to employees’ last 300 days’ wages for those who have worked for 10 years or more, to a rate equal to employees’ last 400 days’ wages for those who have worked for 20 years or more. The recent ministerial regulation was enacted accordingly to align with the updated severance pay rate and account for Thailand’s rising inflation rate. The new exemption rate applies to assessable income received from January 1, 2023, onward. For any excess severance pay withheld in 2023 and filed in 2024, individuals may request a tax refund from the Revenue Department, according to Revenue Department clarification. This should be done according to the applicable procedure within three years of the income tax return filing deadline. For more information on severance pay exemptions, or any aspect of employment law in Thailand, please contact Pimvimol (June) Vipamaneerut at [email protected], Ketnut Pukahuta at [email protected], Dusita Khanijou at [email protected], or Chomanut
Read More
June 20, 2024
“Forced labor” has many incarnations. Some forms are shocking, such as a case in 2021 where Vietnamese guest workers were brought to a Chinese-owned factory in Serbia that manufactured tires sold to European car companies. The guest workers allegedly had their passports taken away and were subjected to horrible living conditions, including a lack of food, forcing them to resort to hunting small animals in the nearby forest to survive. However, forced labor more often takes subtler forms, so that most people do not even recognize it as such. For example, a factory may receive an order with an extremely short production deadline, and the workers are instructed to work overtime hours. If the employees refuse to do so and stop working when their regular shift ends, they receive warning letters the next day. While less shocking than the situation of the guest workers forced to hunt squirrels to survive, it is also forced labor. ILO Convention No. 29 on Forced Labor defines forced labor as “all work or service…extracted from any person under the menace of any penalty and for which the said person has not offered…[them]self voluntarily.” The ILO names 11 indicators of forced labor: abuse of vulnerability, deception; restriction of movement, isolation, physical/sexual violence, intimidation and threats, retention of identity documents, withholding of wages, debt bondage, abusive working or living conditions, and excessive overtime. Excessive overtime in particular is common in the manufacturing sector in Southeast Asia, and debt bondage is also prevalent. Some companies demand employees provide a “training deposit” when they commence their employment, which they will have repaid provided they continue working for a minimum period. However, these common practices may soon be eradicated due to new supply chain due diligence legislation. Two such examples demonstrating this greater focus on forced labor within
Read More
April 12, 2024
On April 10, 2024, new minimum wage rates for workers in certain hotels in Thailand were published in the Government Gazette, taking effect on April 13, 2024. Under the Notification of the National Wage Committee on Minimum Wage Rate for the Hotel Industry, the new minimum wage rate is THB 400 per day, applicable to employees working in four-star (and above) hotels that have at least 50 employees and are located in the following specific areas: Bangkok: Pathumwan and Wattana districts Krabi: Ao Nang Subdistrict Administrative Organization areas Chon Buri: Pattaya city Chiang Mai: Chiang Mai municipality Prachuap Khiri Khan: Hua Hin municipality Phang-nga: Khukkhak sub-district municipality Phuket: Whole province Rayong: Phe subdistrict Songkhla: Hat Yai municipality Surat Thani: Koh Samui municipality Rationale The increase in the minimum wage is to drive and stimulate the economy in Thailand’s tourism industry, which is critical to the overall economy of the country. The ten areas identified above are those that earn a significant portion of their revenue from tourism. The decision underwent a public hearing process involving stakeholders. Although there were objections from some hotels claiming they were not yet ready to bear the increased costs, the law was enacted, taking effect on April 13, 2024. For more information on Thailand’s minimum wage regulations, or on any aspect of employment law in Thailand, please contact Pimvimol (June) Vipamaneerut at [email protected], Ketnut Pukahuta at [email protected], Dusita Khanijou at [email protected], or Chomanut Arif at [email protected].
Read More