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

February 5, 2019

Thailand’s Robust Employee Protections under the LPA Get Another Upgrade

Subscribe to Updates

Thailand’s labour laws have long been known for the strength of protections afforded to employees. Continuing this trend, a slew of new amendments to the Labour Protection Act (LPA), passed on December 13, 2018, will further enhance worker protection, improve working conditions, and impose sanctions on employers who fail to uphold them.

The updates to Thailand’s labour law will come into effect 30 days after its publication in the Government Gazette, which is expected to be in early 2019. The key changes are summarized below:

New category of statutory severance pay

A new category of entitlement for statutory severance pay has been added for employees who have worked for an uninterrupted period of 20 years or more. Statutory severance pay is currently capped at the equivalent of 300 days’ wages for employees who have worked for an uninterrupted period of 10 years or more. However, those who have been employed for 20 years or more at the time of termination will now be entitled to the equivalent of 400 days at their most recent rate of pay—a massive increase of 33%.

Increased maternity Leave

Employers must grant pregnant employees 98 days of maternity leave—an increase of eight (8) days from the previous law. This is inclusive of days the employee’s scheduled weekly holidays, public holidays, and annual holidays. In addition, maternity leave is now defined to also include leave which is taken for pre-natal examinations before the delivery. The employer must pay up to 45 days’ wages during the maternity leave period.

Paid necessary business leave

Necessary business leave (that is, leave to carry out necessary business) is recognized under the current Labour Protection Act, and is at the discretion of employers to stipulate the criteria for such leave in its work rules. Nonetheless, the Act is silent on many key details including the number of necessary business leave days an employee is entitled to, and whether the leave will be with or without pay. The new law rectifies this, stating that employers must now grant employees a minimum of three (3) days of paid necessary business leave per year. However, “necessary business” itself remains undefined, leaving scope for further ambiguity. While some circumstances may qualify—notably when an employee’s physical attendance somewhere is required by the government—there are others that may be unclear and the interpretation in such cases will remain at the discretion of employers and its policies.

Workplace relocation notification

If an employer relocates an employee’s current workplace to a new establishment, or to another of its existing work locations, the employer has a duty to post a conspicuous announcement at the current workplace, for a continuous period of at least 30 days, in advance of the relocation. The announcement must clearly state which employees will be relocated, and the scheduled date of the relocation. If an employee thinks that the relocation will significantly affect his or her ordinary way of living, or that of his or her family, and therefore does not wish to relocate to the new place of business, such employee must inform the employer in writing within 30 days of the date of the announcement, or the date of relocation. In this case, the employee is entitled to severance pay calculated at the normal rate.

Consent required for change of employer

Where there is a change of employer, including where an employer changes as a result of a transfer of functions or staff from one juristic person to another, and where a registered merger between the employer and another juristic person results in a new entity, the employer must obtain consent from the employees who will be transferred. The new employer will assume all the rights and responsibilities owed to the transferred employees by the previous employer.

75% wages payable during suspension of business

Where it is necessary for an employer to temporarily suspend business, in part or in whole, for any reason other than force majeure, the employer must pay the employee at least 75 percent of his or her usually daily wages throughout the suspension period. Such payment shall be made at the place of work of the employee. If the payment is to be made elsewhere, or by other means, consent of the employee must be obtained.

Interest on statutory payments

If an employer defaults on payments owed to employees for wages in lieu of advance notice, wages during temporary cessation of the employer’s operations, or other payments due to an employee under the Labour Protection Act, they must pay interest on the default amount at 15% per annum.

Payment in lieu of notice required on date of termination

Under Thai labour law, an employer may terminate an indefinite term employment contract immediately, without notifying the employee at least one payment cycle in advance, by paying wages in lieu of advance notice. The amendment clarifies a previous ambiguity in this requirement, by stating the payment must be paid to the employee on the termination date.

Gender equality

Employers must pay wages, overtime payments, payments for working on holidays, and payments for working overtime on holidays, at the same rate for both male and female employees who undertake work of the same nature, quality, and quantity, or work of the same value, at an equal rate.

Sanctions

Several penalties for employers that fail to comply with the provisions in the Labour Protection Act have also been amended to extend them to cover the new amendments.

These new amendments range from the procedural, such as notification requirements for changing employment circumstances, to the financially substantial, such as the dramatic increase to severance pay for long-serving staff. However, both categories are designed with employee protection firmly in mind, and the burden to comply is firmly on employers. Failure to comply could result in severe penalties, and it is therefore vital for employers to thoroughly review their employment agreements and work rules to ensure that they comply with the new rules when they come into effect.

This story was originally published in the Bangkok Post, under a different title, and is reproduced here with permission and thanks. The original story can be viewed here on the Bangkok Post website, or downloaded using the link below.

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