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 13, 2020

COVID-19: Thailand Eases Provident Fund Requirements and Prohibits Strikes and Lockouts

Subscribe to Updates

In the latest of a suite of measures designed to help employers and employees weather the COVID-19 crisis, the Thai government has published legislation allowing the temporary cessation of provident fund contributions for employers and employees in crisis and preventing the use of strikes or lockouts in employment disputes while the government’s emergency decree is in force.

Provident Fund Measures

On May 5, 2020, the Announcement on Designation of Types of Business, Duration, and Conditions for Employees or Employers to Cease or Postpone the Submission of Savings or Contributions to the Provident Fund in Areas Affected by Economic Crisis, Disaster, or Other Severe Events Affecting Economic Conditions was published by the Ministry of Finance in the Government Gazette.

This announcement exempts both employers and employees from their duties to submit contributions to the provident fund between May 5 and December 31, 2020, subject to certain criteria and their agreement to make use of the exemption under the announcement. The provident fund membership status of employers and employees who avail themselves of these measures will not be affected.

In order to make use of the exemption under the announcement, employers will have to certify that they meet the following conditions:

  • The business is facing an operational crisis because of the COVID-19 pandemic; and,
  • The business is facing a financial crisis.

The exemption also requires a resolution of approval from either:

  • A resolution by a general meeting of the provident fund members, held in accordance with the fund’s regulations, resolved in accordance with the regulations for counting votes in general meetings or by at least half of the meeting attendees if the fund regulations are silent on vote counting; or,
  • A unanimous vote from all members of the fund committee if the meeting cannot be held for any reason.

In addition, if the provident fund is a pooled fund consisting of more than one employer, resolutions must be obtained from meetings of the members of each employer, or from the fund committee of each employer.

The employer or the fund committee must notify the registrar that they have resolved to make use of the exemption, attaching the following documents:

  • A certification, signed by the employer’s directors, certifying that the business is facing operational difficulties because of the COVID-19 pandemic, and is thus facing a financial crisis; and,
  • The meeting report for the resolution with details of the acknowledgement of the employer’s situation and details of the resolution to use the exemption (showing the decision on whether to cease or postpone contributions, and the decision on the duration of the cessation or postponement).

The employees and employer can resume their contributions to the provident fund before the end of the agreed period by jointly agreeing and notifying the registrar. In addition, during the temporary cessation or postponement of contributions by employers, employees can still submit their contributions to the provident funds. The employer has full discretion over whether to submit employer contributions in that circumstance. 

Strikes and Lockouts

In addition, on May 8, 2020, the Announcement on Determination of Unsettled Disputes to be Resolved by Labor Relations Committee and Forbidding Lock Outs or Strikes during the Announcement of Emergency Situation under the Law Regarding Public Administration in Emergency Situations, issued by the Labor Ministry, was published in the Government Gazette.

This announcement prohibits employees and employers from using strike or lockout measures under the Labor Relations Act B.E. 2518 (1975) during the emergency situation period announced under the Emergency Decree, currently set to expire on May 31, 2020 (subject to extension). The announcement also states that any strike or lockout that commenced before May 8, 2020, must end, and that all employees must return to work or employers must reinstate the employees. Any unsettled disputes under the Labor Relations Act that occurred during the emergency situation period must now be considered and resolved by the Labor Relations Committee.

Download Full Article
Related Professionals

Practices

Employment

Location

RELATED INSIGHTS​ 

April 3, 2023
Most employers know that terminating employees for poor job performance is not easy. But it is actually legally possible—if employers have the right approach and take specific precautionary measures. However, failing to take these precautions can mean that an employer is either stuck with an incompetent employee or on the losing end of a lawsuit for unfair termination. This article will lay out some essential considerations for employers in Thailand regarding termination of employment for poor performance. First, understand that “poor work performance” is a lack of performance or ability, or an inability to work with other employees. It does not constitute a violation of work rules or regulations. In some cases, however, an employee’s failure to act in accordance with lawful instructions or commands of the employer, resulting in poor work performance, could also be considered a violation of work rules or regulations. This may be the case if the work rules or regulations clearly state that an employee must strictly comply with the employer’s instructions or commands. Second, an employer can, in fact, terminate an employee due to poor work performance. For example, this may be possible in the following scenarios: Records show that an employee’s work performance has fallen below the employer’s required standards, and the employee has not tried to improve his or her work performance for three consecutive years. In addition, it does not appear that the employer was biased when giving ratings or scores for the employee’s work performance. The job description of the employee includes coordination with employees in other departments, but the employee has not been able to do so. Therefore, the employee was reassigned to a new job function, but the employee still did not improve. This suggests that the employee has a lack of interpersonal skills and is not
Read More
March 23, 2023
On March 19, 2023, Thailand’s new work-from-home (WFH) legislation amending the Labour Protection Act (No. 8) B.E. 2566 (2023) was published in the Government Gazette. It will come into effect on April 18, 2023. The amendment aims to enhance employee protections to accord with current global standards, provide alternative working arrangements for employers and employees, increase workforce efficiency, and strengthen employees’ job security and a better quality of life. As we detailed previously, the new WFH legislation allows employers and employees to reach agreements that permit employees to work remotely. Since there are no accompanying criminal punishments relating to this new provision, and the legislation incorporates the term “may agree,” it appears that this WFH provision is not mandatory but is primarily intended to facilitate and encourage remote working agreements between employers and employees. For more details on the WFH legislation, or on any aspect of employment law in Thailand, please contact Tilleke & Gibbins at [email protected].
Read More
February 24, 2023
Many companies have moved to Southeast Asia to benefit from the advantages of this vibrant and diverse market. The region is already a manufacturing hub for a multitude of industries—computer and automotive products in Thailand, textiles in Cambodia, and footwear and electrical goods in Vietnam, to name a few—and an increasing number of companies worldwide are reconfiguring their supply chains to include regional suppliers. A key challenge is keeping up to date with employment law trends in these jurisdictions to ensure compliance with local regulations—and avoid costly, time-consuming business interruption. Here we outline trends and recent regulatory developments in Cambodia, Thailand, and Vietnam, and consider what they mean for employers. Cambodia The Ministry of Labour and Vocational Training (MLVT) is likely to pursue a more proactive enforcement strategy in 2023. Last May, the MLVT announced companies would be required to submit a twice yearly self-declaration on labour compliance through a new online system. The self-declaration form requires companies to confirm and upload evidence of compliance, and the MLVT online system—through which the ministry can easily determine if a company is compliant –generates a report that lists all fines. Companies should comply with the self-declaration requirement and carefully review the form to understand what fines will apply for non-compliance. On 1 October 2022, regulations relating to the National Social Security Fund (NSSF) pension system came into effect, and employers and employees began making NSSF pension contributions. Over the next five years, total compulsory pension contributions will amount to 4% of an employee’s wage, half of which is paid by the employer and half deducted from the employee’s salary. The contribution wage is capped at KHR 1.2m (USD 300). Employers are currently required to pay a relatively small amount (KHR 24,000, or around USD 6). This will increase to 10.75% over
Read More
January 19, 2023
The Thai parliament has passed the so-called Work from Home Bill—formally known as Labour Protection Act (No. 8) B.E. 2566 (2023)—which amends the country’s Labour Protection Act (LPA) to reflect current circumstances. The accompanying legislative remark states that the proposed amendments to the LPA will provide additional options for work arrangements between employers and employees, upgrade the level of labor protection, increase work stability, and improve quality of life for employees in Thailand. The legislation adds a single section to the LPA providing that an employer and an employee “may agree in the employment contract” that the employee is allowed “to bring work . . . to perform at home or at the residence of the employee or anywhere that the employee can work remotely through information technology, if the nature of the work permits.” The provision further provides that employers are responsible for ensuring that remote work agreements are in writing, either physically or electronically, and may include the following details: Period of the agreement; Normal working hours, rest periods, and overtime work; Criteria for overtime work, holiday work, and various types of leave; Scope of work and control or supervision by the employer; and Responsibility for arranging supplies and equipment, including necessary costs relating to the work. The amended LPA gives employees who work from home the right to refuse contact from the employer or the supervisor beyond working hours. In addition, employers must treat remote employees equally to on-premise employees. The most notable question surrounding this legislation is whether employers must allow employees to work remotely. The phrase “may agree” suggests that employers do not have to agree to allow an employee to work remotely. Another important aspect of the amendment is that there is no criminal punishment attached to it, which suggests that the legislation
Read More