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Thailand

Employment Act and Labor Laws in Thailand

Every country incorporates regulated working standards for employers and employees’ ease, comfort, safety, and convenience. The employment law Thailand guide works on the standard of being fair and justified, besides being pro-employee. Thailand has incorporated some of the smartest economic policies and is evolving into a middle-income economy, moving steadily towards achieving its Sustainable Development Goals.

It has some of the most critical development success stories. The economy of Thailand economy has been reasonably free for 20 years, and GDP growth is strong. Professional business reforms in 2018 have made it more convenient to get electricity, pay taxes, start a business, and trade across borders. The rights and duties of the employers and the employees are stated in the following laws of Thailand regulating and governing the country’s employment scenario.

These important laws are:

  • Labour Protection Act B.E. 2541 (1998)
  • Labour Relations Act (No. 2) B.E. 2518 (1975)
  • Labour Protection Act B.E. 2551 (2008)
  • Social Security Act of 1990, as amended in 1999
  • State Enterprise Labour Relations Act B.E. 2543 (2000)
  • Workmen’s Compensation Act of 1994
  • The Labour Court and Labour Court Procedure B.E. 2522 (1979)
  • Provident Fund Act B.E. 2530 (1987)
  • Thai Civil and Commercial Code
  • Employment and Jobseeker Protection Act B.E. 2528 (1985)
  • Alien Employee Act B.E. 2521 (1978)

Who is Covered by the Employment Act?

The Employment and labor act rules in Thailand usually apply to businesses, industries, factories, commercial establishments, registered companies, contract labor code Thailand, etc., and are even applicable for ex-pats. An important point to consider is that employees in certain specified occupations, including those in agriculture, fisheries, transporting or loading goods for seagoing vessels, and other categories prescribed by labour regulations in Thailand, are subject to other forms of employment protection outside Labour Protection Act.

The act does not apply to central or local government entities or state enterprises. Still, they have similar employment rights to this labor act rules in Thailand under separate legislation.

Thailand’s labor laws are curated to establish norms for the employment and salary of employees in Thailand. As a new business, you can hire the expertise of professional goal solutions like Multiplier to know about various employment statutes governing the employment sector of Thailand. As an entity, you must meet local legal requirements, covering issues such as retirement, probationary periods, vacation eligibility, and statutory benefits.

Multiplier can advise companies on how to cover local employment regulations while providing a consistent global employment solution policy. The labor code in Thailand is subject to strict rules and labor regulations in Thailand. It is essential to get the right advice based on the business structure built into Thailand.

Employment Contract

According to the Industrial Safety and Health Act, employment contracts can be concluded in writing or verbally. Thailand’s Civil Commercial Code and Labour Protection Act provide that the following statutory qualifications are included in the employment contract:

  • Rest, illness, annual leave, holiday rights
  • Compensation claim (wage, overtime, vacation allowance, severance pay)
  • Notice period and salary qualification at the end of employment
  • Restrictions on suspension from employment

Key Provisions of the Act

Wages and salaries

The Minimum Wages in Thailand range between THB 313 – THB 336 per day. Wages vary from state to state, and the Payroll Cycle is usually monthly. The employer and employee contract determines the Payment date. In addition, overtime pay, holiday allowance, and holiday allowance are agreed upon in advance.

Working hours

Thailand’s working hours law states that the regular working hours are 48 hours a week or 8 hours a day. For dangerous/hazardous work, these working hours change to 7 hours a day, 42 hours a week. All workers are entitled to a daily rest period of at least 1 hour after working 5 hours in a row according to the working hours in Thailand labor law.

Overtime

On regular working days, 150% of the employee’s hourly wage is paid every hour after 8. If you work up to 8 hours on a holiday or holiday, you will be paid 200% of the basic fee, and if you work more than 8 hours on a holiday or holiday, you will be paid 300% of the basic hourly wage. For these and many other reasons, the following are the broadest guidelines, and we recommend professional legal advice if you are employed in Thailand.

The social security system in Thailand

  • Social protection: Companies must enroll their employees in the Workers’ Accident Compensation and Social Security Fund (SSF). The employer and the employee must contribute 5% of the employee’s income, up to 750 baht per month. It usually protects the employees financially against issues related to health, unemployment, education, pension, and other benefits.
  • Pension: A minimum of 180 months of contribution is required. If a pensioner starts a new job, the pension will be suspended until the end of the employment relationship. The pension represents 20% of the average monthly income of the insured for the last 60 months before retirement

Holidays/Paid and unpaid leave under the Thailand Labour Law

Employees are entitled to at least 13 holidays from their employer. There are various kinds of leaves that the employees can avail of within their employment contract in Thailand, which is as follows:

  • Sick leave: Employees are entitled to up to 30 annual paid sick leave.
  • Thailand paid maternity leave: An expectant mother is entitled to maternity leave after filling the maternity leave form Thailand for up to a maximum of 98 days (inclusive of holidays). This leave includes Leave for antenatal care. The employer must pay the same wage to the mother for up to 45 days during the holidays, even for maternity leave in Thailand for foreigners.
  • Paternity leave: Civil servants, public sector employees, or state officials can take up to 15 days of fully paid leave within 30 days of childbirth. Employees who take extra shared paternity leave in Thailand to care for their new-born are not eligible for salary payments. Employers are free to provide paid / unpaid leave, but there is no statutory paid parental leave in the private sector.
  • Marital Leave: Up to 3 days’ vacation.
  • Adoption leaves: There is no legal adoption leave for parents.
  • Childcare leaves: There is no individual parental leave.
  • Death: The employer can take up to 4 weeks of bereavement leave with a salary of 100% (base)
  • Work-Related Injury Leave: If an employee needs medical treatment due to an occupational accident or occupational illness, their occupational accident leave should not exceed 12 months. Injured employees receive 100% of their daily salary.

Worker rights, protection from discrimination, and health and safety at the workplace

The Human Rights Act (HRA) in Thailand protects human rights and includes protections for workers’ rights and freedoms. Only if you work in the public sector are you protected by the HRA. If your employer is not a public authority, you cannot sue your employer for violating your human rights.

Looking at the current legislation, it is clear that Thai policymakers have taken a pragmatic approach to introduce labor standards. Although there appears to be a general policy of raising employment standards and improving worker protection, particular attention is paid to the population’s social development level.

Thailand, along with the rest of the world, recognizes the importance of discrimination. The Thai constitution prohibits all forms of discrimination. Thailand is adopting the Labour Protection Act to address key discrimination issues and protect workers from unfair treatment due to distinctive traits.

Such characteristics include gender, age, physical or mental disabilities, race or national origin, and religion. In July 2011, the Working Conditions Act was adopted based on the Labour Protection Act and other labour act rules in Thailand. This law creates a separate agency within the Ministry of Labor, the Office for Safety and Health at Work.

Termination of an Employment Contract in Thailand

Employment law Thailand termination – Each party to an employment contract may terminate the employment relationship with at least one day’s notice if the employment contract does not provide for such conditions. These reasons must be recorded if an employee leaves the company legally.

As per the Thailand employment law termination rules, employees cannot be terminated due to pregnancy, Union membership, or participation in Trade union activities. The conditions under which an employee can be terminated in Thailand are:

  • Fraud or intentional criminal offenses against employers
  • Deliberately harm your employer
  • Negligence that causes serious damage to the employer
  • Violation of labor rules after warning from the employer
  • Absent for 3 consecutive days without good reason
  • Imprisonment

If the employer relocates the place of business, the worker must be notified at least 30 days in advance or pay the amount equivalent to 30 days’ wages. Employees are free to terminate their employment contract and are entitled to at least 50% of their statutory severance pay.

Suppose an employer terminates an employment relationship due to streamlining work units, production processes, or sales processes due to the introduction or modification of machinery or technology. In that case, employees must be notified at least 60 days in advance or 60 days of wages.

In the meantime, the labor inspector should also be notified. If a dismissed employee has been working for more than 6 years, they are entitled to additional severance pay of 15 business days each year from the 7th year. However, such additional special severance pay should be limited to 360 wage days.

Retirement age: 60 years old. Employee Provident Fund: The employer and the employee must make an equal monthly contribution ranging from 5% to 15% of the employee’s monthly salary.

Penalties

Under the Labour Court Law, the labor code in Thailand can reinstate an employee for the same wage as before the dismissal. However, the Labour Court may order the employer to pay compensation if it finds that the employer and the employee cannot cooperate due to exceptional circumstances. The Penalties as specified under Section 144-159 of the Labour Protection Act.

In the investigation, if the investigator determines that an employer has committed a crime under this act and the person agrees to the settlement, the investigator may, in some cases, present the case to the General Affairs Department Manager or the Governor. A few days after, the person agreed to the claim. If the offender pays a fixed fine within 30 days, the proceedings will be terminated by the Code of Criminal Procedure. If the offender refuses or agrees to the settlement but does not pay the fine within the period specified in Section 3, the case will be further tracked.

Compliance Strategies for Employers

Employers must pay wages, overtime, and vacation allowances at the same rate to male and female workers of the same type, quality, and quantity. Employers should carefully review their employment contracts and rules to ensure they comply when the new rules come into force.

This amended LPA has new requirements that affect most companies’ operations and employee management (for example, new severance pay rates, new employer transfer requirements, merger or acquisition employee approval). Failure to comply with these requirements will result in civil and criminal liability for the company and its responsible persons.

It is essential for employers to carefully study the revised LPA to ensure that their employment policies are in line with the employment law Thailand guide, especially in areas where the revision may differ from existing case law. For example, in the case of mergers and acquisitions requiring employee consent, the new employer must assume all existing rights and obligations of the previous employer.

As a business or an organization, you can:

Hire a Compliance Manager to effectively help your organization adhere to important Thailand labor laws and labor regulations in Thailand and to manage employees and human resources. You can outsource to a firm Outsourcing to a global employment solution firm like Multiplier that specializes in ensuring compliance.

How Can Multiplier Help?

Multiplier can be contracted directly with the company for maintaining and sustaining compliance and adhering to statutory Thailand labor laws. As a business owner, you already have a lot to focus on – Hiring, Production, management, decision-making, strategizing, and ultimately driving the organization to meet the ultimate goal of earning profits and enhancing ROI.

Getting entangled with Thailand’s laws and labor regulations while conducting business may distract and dissuade you from the primary focus. At Multiplier, we will help you with local employment contracts that meet local legal requirements, covering issues such as retirement, probationary periods, vacation eligibility, and statutory benefits. We can advise companies on how to cover local employment regulations while providing a consistent global employment policy. 

As Employer of Record, we ensure that the employer and employee comply with labor code Thailand and handle the following-

  • Salaries, taxes, and immigrants.
  • Placing local and foreign workers in Thailand.
  • Supporting tax, mandatory employee benefits, employment, contract drafting, immigration, management, and payroll compliance in Thailand

Adhering to local employment legal requirements is just one of the challenges foreign companies face when hiring talent in Thailand. Professional legal advice is recommended for companies that intend to hire staff directly through an incorporated Thai entity. Multiplier provides companies with an alternative way to outsource employee employment in Thailand.

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Frequently Asked Questions

The leading company types governed by the compliance laws in Thailand are partnerships, limited liability companies, joint ventures, representative offices, branches, international headquarters, and regional offices.

Employment Visa holders have a 1-year validity. Smart visa holders are granted residence permits, work permit exemptions, and other privileges for up to four years in the country.

If an employer encounters a business suspension, affected workers may be paid at a discount rate of 25% of their average wage rate.

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