When an employer’s work force totals one hundred or more employees, the Skill Development Promotion Act (the “Act”) must be considered. The objectives of the Act are to promote and support occupational skill training and upgrade skill standards for employed labor in Thailand. The Act also estalished a Labor Skill Development Fund (the “Fund”) for use as a revolving fund for the promotion of skill development efforts.

Thus, the Act incentivizes private businesses and educational institutions to provide apprenticeships and occupational skill training. With regard to the the private sector, for example, any private business which provides occupational skill training to the labor force in general or to its own employees – utilizing training curricula or activities endorsed by the Act – will be eligible for certain privileges as stipulated the Act.

Any employer who has one hundred employees or more is required to arrange yearly labor skill training for at least 50% of its employees (it should be noted, however, that teachers do not count in this calculation for private school and college businesses). But, if such an employer does not provide such training, then that employer is required to make a contribution to the Fund before March of the following year, except for an employer:

1) who is a ministry, department, or government agency; or

2) who is a foundation or a charitable, or non-profit organization; or

3) whose activity is related to cultivation and planting, fishing, forest, animal husbandry, or salt farming; who does not employ an employee for a whole year; and who does not have any other business activities.

Currently, the requisite Fund contributiom is an amount equal to 1% of the current legal minimum wage per hours of the past calendar year ( currently Thai Baht 300/hour) x 30 x 12 months x the number of employees who have not been so trained.

If the employer fails to make such a contribution to the Fund in full as required by law, the employer is required to pay an additional payment in an amount equal to 1.5% of the outstanding contribution per month, until the contribution is made in full.

In the event that such an such employer – at any later time – has:

a) less than one hundred employees in every month of a calendar year; or

b) an average of less than one hundred employees per month in that calendar year,

then that employer must continue to report its number of employees but will not be required to make any Thai Baht payment to the Fund.

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DUENSING KIPPEN is an international law firm specializing in business transaction and dispute resolution matters, with offices in Bangkok and Phuket, Thailand and affiliated offices in 45 other countries. Visit them at: duensingkippen.com

The Employees Compensation Act (the “Act”) requires an employer with one employee or more to register employees (with the exception of certain categories of employees such as government officials and teachers at private schools) with the Employees Compensation Fund (the “Fund”) at the Social Security Office. The purpose of the Fund is to compensate employees — or their estate — for lost wages in the event of the employee’s employment-related injury, illness, or death, as well as for such an employee’s, medical treatment and rehabilitation, or funeral costs.

Employers must contribute to the Fund by the end of January of every year at rates, which depend on the type of employer’s business and nature of the employee’s work. The contribution rates range from 0.2% to 1% of the employee’s total annual pay. However, where an employee’s salary exceeds Thai Baht 240,000 yearly, the base salary of that employee — for purposes of the requisite Fund contribution calculation — will be capped at Thai Baht 240,000. If an employer fails to make any required contribution to the Fund, that employer will be required to pay the outstanding contribution amount — as well as an additional penalty amount equal 3% of the unpaid contribution per month of the deficiency.

An employee’s eligibility for payment of compensation benefits is determined by the criteria detailed under the Act and if eligible, paid to such an employee at rates prescribed by the Act, which depend largely on the seriousness of the case. Most commonly, the compensation will be paid monthly at the rate of 60% of the employee’s monthly wages for a specific duration to an employee who is: unable to work continuously for more than three days; has lost an organ; becomes disabled such that they cannot preform their work; or who dies.

Where medical treatment is required as a result of a covered employee’s work, then such an employee’s “actual and necessary” curative expenses will be paid for by Fund up to Thai Baht 45,000 for a “normal case” and up to Thai Baht 65,000 for a “serious injury”. Furthermore, and if applicable, an employee may also be eligible to receive compensation for curative rehabilitation expenses, but not exceeding Thai Baht 20,000.

It should be noted, however, that certain exceptions to an employer’s obligations and an employee’s eligibility to compensation under the Act apply where an employee is injured due to the employee’s fault.

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DUENSING KIPPEN is a multi-service law firm specializing in all Thailand inbound investment transactional matters, as well as, dispute resolution by litigation proceedings and international arbitration. DUENISING KIPPEN is the only firm in Thailand whose attorneys include three MCIArb internationally certified arbitrators. And, as a member of the International Alliance of Law Firms, with 63 member firms and 100 offices in 45 countries, DUENSING KIPPEN is able to provide its clients with high-quality cost effective legal services worldwide. DUENSING KIPPEN can be reached at: contact@duensingkippen.com or for more information visit them at: duensingkippen.com

The Social Security Act (the “Act”) requires employers, employees and the government to contribute the Social Security Fund (the “Fund”). The purpose of the Fund is to insure employees against costs incurred by: non-work related injury; illness; invalidity; death; maternity; child support; retirement pension; or unemployment.

Employees between the ages of fifteen and sixty are required to be insured under the Act. However, some employees — such as: government officials; employees of foreign governments or international organizations; employees working in foreign countries for Thai companies; teachers at private schools; and students or nurse students who work for schools, universities or hospitals, are specifically excluded from coverage under the Act.

The Act requires all relvant employers to submit a statement specifying the name of each insured employee, their wage, and any other details to the Social Security Office within thirty days from the date when the employee becomes insured. If the employment is terminated, the employer must notify the Social Security Office within the fifteenth day of the month following the month of which the termination occurrs. Any employer who does not submit the said statement or notification, or who submits false statements, is subject to imprisonment for a term not exceeding six months or a fine not exceeding Thai Baht 20,000 or both.

All relevant employers must also deduct Fund contributions from the wages of covered employees (currently, at the rate of 5% of such wages — but not less than Thai Baht 83 and not exceeding Thai Baht 750 per month). The employer must then also match this amount from the employer’s own funds for each such covered employee and then pay the total combined amount to the Social Security Office within the fifteenth day of the month following the month of each such deduction and submit a statement (in a required format) detailing the payments of all such contributions. If an employer fails to comply with the Act and pay the Fund within the specified time, that employer will be liable to pay the outstanding Fund contributions and a penalty equal to 2% of such outstanding contributions per month of such deficiency.

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DUENSING KIPPEN is a multi-service law firm specializing in all Thailand inbound investment transactional matters, as well as, dispute resolution by litigation proceedings and international arbitration. DUENISING KIPPEN is the only firm in Thailand whose attorneys include three MCIArb internationally certified arbitrators. And, as a member of the International Alliance of Law Firms, with 63 member firms and 100 offices in 45 countries, DUENSING KIPPEN is able to provide its clients with high quality cost effective legal services worldwide. DUENSING KIPPEN can be reached at: contact@duensingkippen.com or for more information visit them at: duensingkippen.com

The major legislation governing labor protection law in Thailand is the Labor Protection Act (the “LPA”). The LPA prescribes labor protection standards applicable to both employers and employees working in Thailand. However, the LPA does not apply to Government and State Enterprise employees.

In our last article, we described the “Work Rules” which an employer is required to provide and pointed out that this requirement is triggered when the employer’s total number of employees reaches ten or more. But that is not the only legal obligation triggered by the size of an employer’s work force. Once an employer employs fifty or more employees, an “Employees Committee” must be established.

Employees Committee members are entitled to hold their position for a term of three years. The minimum required number of members of the Employees Committee depends on the total number of the employees as follows:

Employers must arrange for a meeting with the Employees Committee at least once every three months, or when more than half of the total of all Employees Committee so request, or whenever otherwise “appropriately requested,” in order to:

(a) provide welfare for an employee(s);

(b) hold discussions regarding any Work Rule(s);

(c) consider a complaint(s) of an employee(s); or

(d) compromise a dispute(s).

Significantly, if any action of the employer is perceived to be to be unfair to an employee(s), the Employees Committee has the right to file a claim the Labor Court on behalf of the employee(s).

Note: any employer who violates or fails to comply with the LPA may be punished according to the level of his or her offence with a fine of Thai Baht 5,000 to Thai Baht 200,000, or imprisonment of up to one year, or both.

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DUENSING KIPPEN is a multi-service law firm specializing in all Thailand inbound investment transactional matters, as well as, dispute resolution by litigation proceedings and international arbitration. DUENISING KIPPEN is the only firm in Thailand whose attorneys include three MCIArb internationally certified arbitrators. And, as a member of the International Alliance of Law Firms, with 63 member firms and 100 offices in 45 countries, DUENSING KIPPEN is able to provide its clients with high quality cost effective legal services worldwide. DUENSING KIPPEN can be reached at: contact@duensingkippen.com or for more information visit them at: duensingkippen.com

The major legislation governing labor protection law in Thailand is the Labor Protection Act (the “LPA”). The LPA prescribes labor protection standards applicable to both employers and employees working in Thailand. However, the LPA does not apply to Government and State Enterprise employees.

Once an employer employs ten or more employees, that employer must provide “Work Rules”. These Work Rules must be provided in the Thai language and they and must be announced and in force within fifteen days of the employer’s labor force reaching ten or more employees. And the employer must submit the Work Rules — as well as any later amendment to the Works Rules — to the Department of Labor Protection and Welfare within seven days of the Work Rules coming into force.

The employer’s Work Rules may contain any legally permissible conditions of employment. However, at a minimum, the Work Rules must include details of the following particulars:

• regular working hours and breaks;
• work holidays and the rules for taking holidays;
• rules concerning overtime work and work on holidays;
• the date and place of payment of wages, overtime pay, holiday pay and holiday overtime pay;
• leave and rules for taking leave;
• terms and procedure for employee discipline and punishment for employment misconduct by the employee;
• the procedure for the submission and consideration and settlement of complaints regarding employment conditions or issues by an employee to the employer;
• protections afforded to any such complaining employee; and
• the procedure and terms for termination of employment, severance pay, and special severance pay, if any.

The employer must distribute the Work Rules to all employees and post them in a conspicuous position at the work place. In the event that the employer less than ten employees at some later time, the Work Rules must remain in effect.

Note: any employer who violates or fails to comply with the LPA may be punished according to the level of his or her offence with a fine of Thai Baht 5,000 to Thai Baht 200,000, or imprisonment of up to one year, or both.

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DUENSING KIPPEN is a multi-service law firm specializing in all Thailand inbound investment transactional matters, as well as, dispute resolution by litigation proceedings and international arbitration. DUENISING KIPPEN is the only firm in Thailand whose attorneys include three MCIArb internationally certified arbitrators. And, as a member of the International Alliance of Law Firms, with 63 member firms and 100 offices in 45 countries, DUENSING KIPPEN is able to provide its clients with high quality cost effective legal services worldwide. DUENSING KIPPEN can be reached at: contact@duensingkippen.com or for more information visit them at: duensingkippen.com

The major legislation governing labor protection law in Thailand is the Labor Protection Act (the “LPA”). The LPA prescribes labor protection standards applicable to both employers and employees working in Thailand. However, the LPA does not apply to Government and State Enterprise employees.

In our last article we discussed employee termination and noted that the LPA distinguishes between termination “for cause” and termination “without cause” of an employee contracted to work for an indefinite period of time. Where such an employee has work for at least two months and one and is then terminated without cause, the employer will be liable to pay that employ severance compensation to the employee in an amount equal between thirty and three hundred days of that employee’s most recent wages.

We also quoted the what the LPA considers to be the six qualifying “for cause” reasons for which an employer may terminate an employee, among them being where an employee: “violates the lawful and just work rules or regulations or orders of the employer, after receiving written warning of the employer . . . such written warning is valid for only one year.”

But what qualifies as such “written notice”? For instance, does the employee need to acknowledge it, or even sign it? The LPA does not detail the requirement beyond its need to be in writing. However, the Thai Supreme Court has helped to clarify this question by interpreting the following to satisfy this written notice requirement:

a. the employee signing the written warning;

b. the employer reading the written warning to the employee and a third party witness signs the written warning;

c. posting the warning in a conspicuous place where everyone can see it at the place of employment; and

d. sending the written warning to the employee by registered to post to the employee’s address.

But it should be emphasized again that it is not possible for to “go back in time” with a written warning. In other words, it is not possible for the employer to become aware of an employee’s misconduct and only later issue a written warning to the employee. When an employer has done that, the Thai Supreme Court has interpreted the employer’s failure to issue the warning earlier as the employer having consented to the conduct. Therefore, it is an employer must issue any such warning as soon as the offending conduct occurs, ideally immediately after such conduct occurs; otherwise repetition of such conduct, even within the next one year, will not be grounds for termination “for cause”.

Note: any employer who violates or fails to comply with the LPA may be punished according to the level of his or her offence with a fine of Thai Baht 5,000 to Thai Baht 200,000, or imprisonment of up to one year, or both.

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DUENSING KIPPEN is a multi-service law firm specializing in all Thailand inbound investment transactional matters, as well as, dispute resolution by litigation proceedings and international arbitration. DUENISING KIPPEN is the only firm in Thailand whose attorneys include three MCIArb internationally certified arbitrators. And, as a member of the International Alliance of Law Firms, with 63 member firms and 100 offices in 45 countries, DUENSING KIPPEN is able to provide its clients with high quality cost effective legal services worldwide. DUENSING KIPPEN can be reached at: contact@duensingkippen.com or for more information visit them at: duensingkippen.com

The major legislation governing labor protection law in Thailand is the Labor Protection Act (the “LPA”). The LPA prescribes labor protection standards applicable to both employers and employees working in Thailand. However, the LPA does not apply to Government and State Enterprise employees.

Where employment is for a defined period of time with a fixed termination, the contract of employment expires upon the completion of the period specified in the contract without the need to give advance notice.However, where employment is not for a defined period of time, the employer must give advance notice of the termination, in writing, to the employee before the employee’s next regular wages pay-date.

Where notice is required and the termination is “without cause”, then the employer must pay the employee additional “severance pay” as follows:

Under the LPA, “cause” for termination exists and allows the employer to terminate the employment of the employee without severance payment for only if the employee does at least one of the following:

(1)     performs his/her duty dishonestly or intentionally commits a criminal offence against the employer;

(2)     intentionally causes damage to the employer;

(3)     causes serious damage to the employer as a result of the employee’s negligence;

(4)     violates the lawful and just work rules or regulations or orders of the employer, after receiving written warning of the employer. In this regard, such written warning is valid for only one year. Except in the case of a serious violation, in which case the employer need give no prior written warning;

(5)     leaves his/her duty without justifiable reason for three consecutive working days regardless of there is holiday in between or not; or

(6)     is sentenced to prison by a final judgment, except for a penalty for an offence arising out of negligence or for a petty offence, unless the negligence or petty offence caused serious damage to the employer.

However, if an employee is terminated for such “cause”, the employer must notify the employee of such cause for the termination at the time of termination, not later; if not the termination will be deemed to be “without cause”.

Furthermore, where employment is terminated by either the employer or the employee for any reason — including the six LPA “for cause” reasons mentioned above — the employer must pay the employee for all accumulated annual leave days to which the employee would have been entitled at the time of termination.

It should also now be clear that an employer cannot include a three-month “probation period” in a new employee’s contract and then terminate that new employee at the end of the three months without incurring liability to pay that employee for both: an additional fourth month (i.e., the mandatory notice period) wages; as well as, severance pay equal to thirty days of wages.

Note: any employer who violates or fails to comply with the LPA may be punished according to the level of his or her offence with a fine of Thai Baht 5,000 to Thai Baht 200,000, or imprisonment of up to one year, or both.

[1] Calculated based on the employee’s most recent base wages payment.

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DUENSING KIPPEN is a multi-service law firm specializing in all Thailand inbound investment transactional matters, as well as, dispute resolution by litigation proceedings and international arbitration. DUENISING KIPPEN is the only firm in Thailand whose attorneys include three MCIArb internationally certified arbitrators. And, as a member of the International Alliance of Law Firms, with 63 member firms and 100 offices in 45 countries, DUENSING KIPPEN is able to provide its clients with high quality cost effective legal services worldwide. DUENSING KIPPEN can be reached at: contact@duensingkippen.com or for more information visit them at: duensingkippen.com

The major legislation governing labor protection law in Thailand is the Labor Protection Act (the “LPA”). The LPA prescribes labor protection standards applicable to both employers and employees working in Thailand. However, the LPA does not apply to Government and State Enterprise employees.

Wages must be paid only in money and must not be at less than the minimum wage rate. With regard to pay, employees can be divided into two types as follows:

(1) “salaried employees” who already receive wages on holidays (weekly holiday, official holiday and annual leave) when they do not actually work on such holidays, e.g. employees who receive a monthly salary. These employees must be and are already (by being on salary) paid “holiday wages” at a rate of not less than one time of their average hourly wage rate on a normal work day; and

(2) “non-salaried employees” who are not entitled to receive wages on holidays if they do not work on such a holiday, e.g. employees whose wages are calculated on a daily or hourly basis. These employees, must be paid “holiday wages” if they work on a holiday at a rate of not less than two times their normal non-holiday wage.

When any employee works more than eight hours in a day, such an employee must be paid for overtime work beyond this at a rate of not less than one and half times their normal hourly wage rate average. On holidays employees must be paid overtime wages must at a rate of not less than three times their normal hourly wage rate average.

Note: any employer who violates or fails to comply with the LPA may be punished according to the level of his or her offence with a fine of Thai Baht 5,000 to Thai Baht 200,000, or imprisonment of up to one year, or both.

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DUENSING KIPPEN is a multi-service law firm specializing in all Thailand inbound investment transactional matters, as well as, dispute resolution by litigation proceedings and international arbitration. DUENISING KIPPEN is the only firm in Thailand whose attorneys include three MCIArb internationally certified arbitrators. And, as a member of the International Alliance of Law Firms, with 63 member firms and 100 offices in 45 countries, DUENSING KIPPEN is able to provide its clients with high quality cost effective legal services worldwide. DUENSING KIPPEN can be reached at: contact@duensingkippen.com or for more information visit them at: duensingkippen.com

The major legislation governing labor protection law in Thailand is the Labor Protection Act (the “LPA”). The LPA prescribes labor protection standards applicable to both employers and employees working in Thailand. However, the LPA does not apply to Government and State Enterprise employees.

WEEKLY LEAVE

Under the LPA an employee must be given at least one day of leave per week. However, in the event that the business that the employee is working for is a hotel, the employer and the employee may agree that the employee may accumulate and postpone his weekly leave days within a period of four consecutive weeks to be taken at any time later.

ANNUAL LEAVE

An employee who has worked for an uninterrupted period of one year must be given at least six working days of personal annual leave per year thereafter.

In addition to such personal annual leave, an employee must be given leave on not be less than thirteen national holidays per year. However, in the event that the business that the employee is working for is a hotel, entertainment establishment, beverage or food shop, or similar, the employer and the employee may agree that the employee will take leave on an alternative day(s) to substitute for the official holiday(s)but the higher requisite “holiday wages” applicable on official holidays must be paid to the employee for his work on any such substitution work day(s).

But, in any event, an employer must obtain an employee’s consent for an employee to work overtime or to work on a holiday. An exception applies in the event that the employee is working for a hotel, entertainment venue food store, club, or other similar business, in which case an employer may require an employee to work on a holiday without the employee’s prior consent.

SICK LEAVE

An employee is entitled to a sick leave as long as he is actually ill. However, if an employee takes sick leave for three days or more, his employer may require the employee to present a certification of such illness from a licensed physician or an official medical establishment.

MATERNITY LEAVE

A pregnant employee is entitled to a maternity leave of up to ninety days for each pregnancy.

OTHER LEAVE

Finally, the LPA also provides many other categories of leave for the employee: for example, leave for: “necessary business”; sterilization; military training and service, and others.

Note: any employer who violates or fails to comply with the LPA may be punished according to the level of his or her offence with a fine of Thai Baht 5,000 to Thai Baht 200,000, or imprisonment of up to one year, or both.

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DUENSING KIPPEN is a multi-service law firm specializing in all Thailand inbound investment transactional matters, as well as, dispute resolution by litigation proceedings and international arbitration. DUENISING KIPPEN is the only firm in Thailand whose attorneys include three MCIArb internationally certified arbitrators. And, as a member of the International Alliance of Law Firms, with 63 member firms and 100 offices in 45 countries, DUENSING KIPPEN is able to provide its clients with high quality cost effective legal services worldwide. DUENSING KIPPEN can be reached at: contact@duensingkippen.com or for more information visit them at: duensingkippen.com