Labor Rules and Regulations in Thailand

Employee and Employer's Agreement

The new hire process start after an offer has been accepted and a written employment agreement is highly recommended and must be carefully drafted.  All employers must define the terms of employment for their staff and employers with ten or more regular employees are required to specify working rules and regulations. These rules and regulations must be display on the work premises within 15 days from the date that the number of employees reaches ten employees or more and a copy must be submitted to the Department of Labor Protection and Welfare within seven days from the date that the employer announces or displays the working regulations.  An employer with ten or more employees is also required to maintain an employee register in the Thai language together with source documents pertaining to the working employee and employer’s agreements and this must be maintained for at least two years after the end of the employment.  According to the employment law in Thailand, an agreement that has been established between the employee and employer should not be less than the minimum requirements or standards devised by law.

An employer means a person who agrees to employ employees to work by paying wages and includes:

NOTE:  A business is also deemed to be an employer if a contractual employer has sub-contracted the provision of work and payment of wages to it.  Such an employer must also provide the employees (of the contractual employer) with the same employment protection measures as the employees’ contractual employer.

An employee means a person who agrees to do work for an employer in return for wages, regardless of the description of his status.
NOTE:  Employees in certain specified occupations, including those in agriculture, fisheries, the transporting or loading of goods for seagoing vessels, and other categories as prescribed by regulations, are subject to other forms of employment protection outside Labor Protection Act.  The act also does not apply to central or local government entities or state enterprises but they have similar employment rights as to this Act under separate legislation.

An employment agreement means a written or oral agreement which is clearly stated or implicitly understood, where a person referred to as the employee agrees to do work for another person referred to as the employer, and the employer agrees to pay wages throughout the period of work.

ACTS PERTAINING TO THAILAND’S LABOR RULES AND REGULATIONS

            In Thailand, all the rights and duties pertaining to employers and employees are generally governed by a series of laws and regulations.  The Ministry of Labor and Social Welfare is charged with implementing Labor Laws and performing Labor inspections throughout the country to provide a reasonable work environment and protects workers against labor exploitation and preserve their rights.  Among the different acts that govern labor issues in Thailand are the following:

This act is the most important act in Thailand labor law and  was promulgated with effect from August 19, 1998 and brought practices more in line with International Labor Organization (ILO) standards.  This mainly concern about the rights and duties of employers and employees.  It primarily establishes minimum standard practices in general labor force utilization, women and child labor utilization, remuneration, severance and employee welfare fund.  It also prescribes the interventions by government officials in providing protection to labors so as to ensure fairness and sound occupational health for the maximum benefit of both employers and employees, which will ultimately be beneficial for the national development.

This act requires employers with ten or more regular employees to contribute 0.2%-1% (depending on the assessed risk of the workplace) of the employee’s annual earnings to the Workmen’s Compensation Fund.  The fund provides benefits to employees who are injured, sick, disabled, or die as a result or in the performance of their work.  In general, the compensation amount must be paid monthly at the rate of 60% of the monthly wages but not lower than 2,000 and not exceeding 9,000 baht per month.  Actual and necessary medical expenses must be paid up to 35,000 baht for normal cases and 50,000 baht for serious injury.  Employment rehabilitation expenses must be paid as necessary up to 20,000 baht and in case of death, funeral expenses will be paid at a maximum amount equal to 100 times in minimum daily wage.

This Act has been in effect since 1990 amended by Social Security Act B.E. 2537 (1994) and by Social Security Act B.E. 2542 (1999).  This law covers enterprises with one or more employees.  Contributions to the Social Security Fund from the government, the employer, and the employee are mandated.  The Social Security Fund provides compensation to insured workers under six categories:  injury or sickness, disability, maternity, death, child welfare, and pensions.  In the first four categories, each party contributes 1.5% of the wages to the insured totaling to 4.5% of the basic salary not exceeding 15,000 baht.  For child welfare and old cases, 3% is contributed.  The contributions must be remitted to the Social Security Office within the 15th day of the following month.
Effective January 1, 2004, the Social Security Fund covers unemployment compensation.  If an employee is laid off, he is entitled to receive 50% of his wages for 180 days.  In practice, disbursal of unemployment benefits is dependent on the state of the economy and the government’s financial resources.

This Act was reaffirmed by the Thai parliament and became law in 2000.  This act mainly concern about the benefits and labor relations standards between State Enterprises’ Management and employees.  It establishes the right to collective bargaining in accordance with regulations and procedures set forth for submission of demand for changes or modifications of the conditions of employment, settlement of labor disputes, establishment of State Enterprise Labor Union for acquiring and protecting benefits for State Enterprise employment.  This law also requires each State Enterprise to establish the state Enterprise Labor Relations Committee, which is a tripartite committee to set the minimum standards of the conditions for employment in State Enterprises.  Additionally, the establishment of Labor Relations Affair Committee in each State Enterprises is also mandatory.  This is a bipartisan committee involving both parties in the discussion and reconciliation of labor issues and disputes with an aim to create positive mutual understanding and peaceful working atmosphere and co-existence between State Enterprises’ Management and the employees.

This act sets out a comprehensive framework of rules for employees and employers to negotiate labor disputes.  The aim is to create a good understanding and successful reconciliation between employers and employees which will result in a peaceful atmosphere and co-existence in the industry.  This will ultimately be beneficial to the national development.  The Act also provides for the registration of trade unions, trade union federations, employers’ associates and employers’ federations.  Employees who engage in trade union activities may not be disciplined or dismiss for such activities. Generally speaking, trade unions are not very active in Thailand.

This Act is concern about labor court procedures and gives jurisdiction to the Central Labor Court, The Regional Labor Court or Provincial Labor Court over the following matter:
-Disputes concerning the right or duties under and employment agreement or under the terms concerning the state of employment.
-Disputes concerning the rights or duties under the law relating to labor protection or the law relating to labor relations.
-Cases where the rights must be exercised through the court according to the law relating to labor protection or the law relating to labor relations.
-Cases of appeal against a decision of the competent official under the law relating to labor protection or of the Labor Relations Committee or the Minister under the law relating to labor relations.
-Cases arising from the ground of wrongful acts between the employers and the employees in connection with a labor dispute or in connection with the performance of work under an employment agreement.
-Labor disputes which the Minister of Interior requests the labor court to decide in accordance with the law relating to labor relations.

This law pertains to the hire of services.  A hire of services is a contract whereby a person, called the employee, agrees to render services to another person, called the employer, who agrees to pay remuneration for the duration of the services.  This regulates employer-employee relations and protects their rights from binding themselves in the contract they agreed upon.

This Act states that any business which employs at least ten employees and which does not yet have a registered provident fund or pension or retirement fund, must join the compulsory provident fund which will be set up by the Ministry of Labor.  This fund will provide benefits to employees on their retirement at the end of employment, upon death during employment, or in other cases to be set out in regulations.  Employers and employees will be obliged to make equal contributions to the Fund, in accordance with a scale of contributions to be fixed by the Ministry (not exceeding 5% of wages).  An employee (or his estate upon death) will be entitled to receive the total of the employer’s contributions, the employee’s contributions, and the benefits accrued from those contributions.

This Act had been originally the Employment Act B.E. 2511 (1968) used for enforcement until there were increasing numbers of overseas employment service businesses and frequent incidents of defraud.  As a result, this Act was amended to become the  Employment and Job Seeker Protection Act B.E. 2528 (1985) with follow up amendments in B.E. 2537 (1994) and B.E. 2538 (1995).  The essence of this Act is as follows:

Alien Employment Act was enacted to control alien employment and the issuance of work permits to aliens and to reserve certain occupations for the Thai labor force.  According to this Act, aliens of the following 3 categories are qualified to apply for work permits:

Generally, when considering whether to allow foreign nationals into the country to work, the Department of Employment will look at things such as whether the work could be done by a Thai, whether the foreigner is appropriately qualified and whether the job fits the needs of Thailand.  Companies that are entitled to investment promotion under the Investment Promotion Act will be able to obtain work permits for foreign nationals more easily, and there may be more flexibility on employment requirements.
There is currently a general statutory requirement that a ratio of 4:1 must be met when employing a foreigner; four employees must be local nationals in order to employ one foreigner (Order of Immigration Office No. 110/2546 (2003)).  All non-locals are subject to immigration controls and require employment visas before entering into employment in Thailand.  The general rule is that a visa must be obtained from the Thai Embassy on the country of residence of the applicant before departure for Thailand.  A local sponsor is required (normally the employing company) to support the application.  In considering an application, the Immigration Department must be satisfied that there is no suitable local candidate for the position.  Where the post involves a special skill or is of a senior nature, this is not normally a problem.

This Act is an amendment of the Occupational Training Promotion Act B.E. 2537 (1994).  The objectives were to promote and support occupational skill training for economically active labor in response to the business and industrial job market, to upgrade skill standards for employed labor and to promote cooperation between private establishments and educational institutes in providing apprenticeship for high school and college students by the private establishments and occupational skill training for the apprentices by educational institutes or government’s occupational training authorities.  As an incentive and to promote private sector involvement in skill development efforts, any private establishment that delivers any occupational skill training services to labor force or its own employees utilizing training curricula or activities endorsed by the Registrar, will be eligible for certain privileges as stipulated in this Act.  Additionally, a Skill Development Fund had been established for use as a revolving fund for the promotion of skill development efforts.

ASPECTS ON WORKING CONDITIONS UNDER LABOR LAW IN THAILAND

1.  Minimum Wage. 

On October 17, 2011, the Cabinet has approved the notification of the new minimum wage rate (No.7), to be 300 Baht, which will take effect from January 1, 2013 onwards.

Minimum Wage/

The information came from Ministry of Labour which stated on February 2012
www.mol.go.th

The above rates are subject to change from time to time.  An employer is obligated to pay the minimum wage applicable and violation is an offense punishable by imprisonment or a fine.

2.  Salaries for full time office and Management Staff.  Salaries for full time office and management staff range from approximately 7,000 Baht per month for general office staff to 150,000 Baht per month for Director as follows:

3.  Overtime Compensation.  Overtime compensation must be paid at a rate between 1.5 times on regular days to 3 times on holidays of the normal hourly rate for the actual overtime worked.  Certain employees engaged in employment related work on behalf of the employer and other work as prescribed by law are not entitled to overtime compensation.

4.  Deductions from wages.  An employer is not entitled to make any deductions from wages, overtime pay, holiday pay or overtime holiday pay, except on the following grounds:

All deductions except income tax and other deductions required by law must not exceed 10% and in aggregate must not exceed 20% of wages due for that period without the employees consent.

5.  Place of Payment of Wages and Salaries.  The employer must pay the wages or salary of an employee at the place of work unless the employee agrees to another place or method of payment.  Thus, an employer using automatic deposit into an employee’s bank account must first obtain the permission of that employee.  The employee cannot be compelled to accept payment in this fashion.

Working hours in an organization is usually on the basis of nature and type of work.  In most cases, working hours should not go beyond above 8 hours per day or 48 hours per week.  In case of such work that is considered by law as hazardous or harmful to health of an employee, working hours is limited to 7 hours a day or 42 hours per week.
Employee and employer may agree to arrange the period of working hours as long as it will not exceed 48 hours a week.  All employees are entitled to daily rest period of at least one hour after 5 consecutive hours.  Both parties may arrange the daily rest period to be shorter than one hour at each time but it must not be less than one hour a day in total.
The maximum number of overtime working hours is limited to not more than 36 hours a week.  An employer may not compel an employee to work overtime and an employee’s consent to work overtime is required. However, if the nature of description of the work requires that is continuous and a stoppage would damage the work, or the work is of an emergency nature, the employer may instruct the employee to work overtime on regular days or holidays to the extent that it is necessary

An employee is entitled to the following holidays:
1.  Weekly holiday.  Employees are entitled to one day holiday per week and the interval between holidays must not exceed six days.
2.  Annual leave/holidays.  An employee who works continuously for one year is entitled to 6 days’ paid annual leave.  It can be postponed or accumulated depending upon the agreement made between the employer and employee.
3.  Traditional holidays.  An employee is entitled to 13 paid public holidays each year.  If a public holiday falls on a weekly day off, the next working day must be granted as a paid holiday.  The 13 paid holidays must be chosen from the 16 holidays published by the Thai government and that must includes the National Labor day.  An employer must notify its employees which of the following days will be considered public holidays:
Date                            Name of Holiday
January 1                     New Year’s Day        
January to March        Makha Bucha Day
April 7                         Substitution of Chakri Memorial day
April 13 to 15              Songkran Day ( 3 days)
April 16                       Substitution of Sonkran Day (bank don’t close)
May 1                          National Labor Day (Government don’t close)         
May 5                          Coronation Day
May 9                          Royal Ploughing Cermony day (bank don’t close)
May 19                        Visakha Bucha Day   
July 17                         Asarnha Bucha Day (Bank don’t close)
July 28                         Khao Phansa (Buddhist lent day)
August 12                   H.M. the Queen’s Birthday
October 23                  Chulalongkorn Day
December                    H.M. the King’s Birthday
December 10               Constitution Day
December 31               new Year’s Eve

An employee is entitled to a 30 days sick leave per annum with pay.  If sick leave is taken 3 or more consecutive days, a medical certificate is required.  A sickness from work related injury does not count as absent through illness.
A pregnant female employee is entitled to a maternity leave of not more than 90 days for each pregnancy with pay for 45 days.

1.  Reasons for Dismissal.  If an employee contract does not specify any duration, either party can terminate the contract by giving noticed.  The notice period for termination of employment is at least one pay period, unless a longer period was agreed upon.
Where an employer dismisses an employee for a permitted statutory reason, a reason that exempts the employer from paying a severance payment, then the reasons for such dismissal must be stated in the dismissal notice.  If the
Reasons are not so stated, then the employer will be stopped from raising them as defense in any proceedings subsequently brought by the employee.
Note also that an employer may not dismiss an employee for the reason of pregnancy, and may not dismiss an employee for trade union membership or trade union activities.

2.  Severance Pay.  An employee can be terminated without cause with payment of severance pay, unused annual leaves, overtime pay and other payments due under the employment agreement and the employee’s works rules and regulations within 3 days from the date of termination of the employment.
The severance payment varies according to the length of service of an employee:
Severance Pay Rate                  Work Period
30 days pay                             120 days – less than 1 year                         
90 days pay                            1 year – less than 3 years
180 days pay                           3 years – less than 6 years                  
240 days pay                           6 years – less than 10 years
300 days                                  10 years and over
Note that no severance pay is due on the following conditions:

3.  Non-entitlement of Severance Pay.  An employee maybe dismissed without notice and severance pay if an employee has been terminated in any of the following reasons:

4.  Special Severance Pay.  In the event that the employer relocates its place of business that essentially affects the normal living of an employee or his/her family, the employer must notify the employee of the relocation at least 30 days in advance or pay an amount in lieu of the advance notice equal to 30 days’ wages.  In this connection, if the employee refuses to move and work in the new location, the employee has the right to terminate the employment contract and is entitled to receive a special severance pay of not less that 50% of the prescribed rates of severance pay.
In the event that the employer terminates the employment of an employee as a consequence of streaming the work units, production process and distribution service, due to the introduction or change of machinery or technology which thereby results in the reduction of the number of employees, the employer must notify the Labor Inspector and the employee concerned at least 60 days before the date of termination of the employment or pay in lieu of the advance notice to the employee the amount equal to 60 days’ wages.  The terminated employee will be entitled to the prescribed severance pay.  Moreover, if the terminated employee, has worked consecutively for over 6 years, the employee would be entitled to an additional special severance pay at the rate of 15 days’ wages per one full year of service, calculating from the start of year seven onwards.  However, the total amount of this additional special severance pay is limited to the equivalent of 360 days’ wage.
If the employer fails to make payment, the employee may complain to the Labor Welfare Committee.

An employer, nor a superior, controller, or inspector are prohibited in sexually menace or harass employees especially female employee.  Male and female should be equally treated in their employment, except where the nature or conditions of the work does or do not allow the employer to do so.  Female employees are not allowed to do the following works:

An employer may not employ pregnant woman to work during the hours of 10:00 PM to 6: AM, work overtime and holidays and perform any of the following:

Where a pregnant employee has an executive, academic, administrative, financial or accounting position, the employer may allow the employee to work overtime in a normal working day, provided there is no effect on the employee’s health and with the employee’s consent for each occasion of work.

The minimum age in order to employ a child is 15 years old in Thailand.  Furthermore, no child under the age of 18 can be engaged to work without informing the labor inspector within 15 days from the date the child starts working.
An employer is required to give a child a rest period of one hour every four hours of working.  Similarly, an employer should not ask a child employee below 18 years to work overtime on holidays or work at 10:00 PM to 6:00 AM.

The employer should not put the child employee under the age of 18 to perform dangerous works such as:

An employer should not employ a child under the age of 18 to perform job in the following workplace:

An employer is prohibited from:

Employees in Thailand may form a labor union and may start operation after the issuance of license from the Register of the Department of Labor Protection and Welfare.  Persons having the following qualifications can form a labor union:

Probationary Period:  Under the Thailand Employment Law the maximum probationary period is 120 days.
Home Workers:  Under a regulation passed in 2004, where work is performed by an employee at home, this is subject to more detailed regulation, including an obligation for the contract of employment to be in writing and to be registered at the Ministry of Labor.
Transfer of Employment:  Where employees are transferred, whether on the sale or transfer of a business or otherwise, the new employer is obliged to accept all the rights and obligations of the former employer, in relation to the transferred employees.  The employees’ existing rights against the former employer will survive.
Health and Safety:  The labor Protection Act contains a provision whereby the Ministry of Labor is granted delegated powers to formulate and issue regulations for the health and safety of employees.  Many such regulations have been issued, usually applicable to only one particular industry or type of employment.