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Thailand’s New Work Permit Law (part 2): any work, anywhere, for anyone

In part one on our series on Thailand’s new foreign labor law we explained that the new law allows foreigners to work without a work permit in some limited but significant circumstances.

What most have failed to notice so far is that the new law is also very good news for foreigners who are still required to obtain a work permit.

Previously, foreigners who needed to obtain a work permit in order to work were prohibited from doing any work, for any employer, anywhere, and under any such conditions if such were not detailed and, therefore, permitted in the work permit itself.

That is no longer the case.

Until last year Thailand regulated foreign work permissions under the Alien Workers Act (2008) (the “Act”). In 2017 the Emergency Decree on Non-Thais’ Working Management Emergency Decree, (2017) (“Decree No. 1”) repealed the Alien Workers Act (2008). Decree No. 1, however, incorporated much of the repealed Act’s provisions and kept in force most of the regulations issued under it. Then, on 27 March 2018, the Emergency Decree on Non-Thais’ Working Management (No.2) (2018) (“Decree No. 2”) was issued. Decree No. 2 amended Decree No. 1.

Section 70 of Decree No. 1 (and the Act) provided that “person who is granted permission for working may not carry out the work of the type, with the employer, in a locality or on any working condition that is different from that specified in their work permit unless permission under section 71 is obtained.

Section 71 of Decree No. 1 (and the Act) provided that “a person who is granted permission for working, and who intends to change or add the following particulars, must obtain permission from the Registrar: (1) type of work (2) employer (3) location or (4) working conditions.

Section 72 of Decree No. 1 (and the Act) provided that “no person shall take into employment a foreigner who does not have a work permit with him (i.e. the employer).

And Section 73 of Decree No. 1 (and the Act) provided that “no person may allow a foreigner to work in a manner different from the requirements specified in the work permit.”

However, and very significantly, Section 37 of Decree No. 2 repealed Sections 70, 71, 72 and 73 of Decree No. 1. Furthermore, Section 28 of Decree No. 2 provides that a work permit holder may engage in any work that is not specifically prohibited to all foreigners on the “Official List” of work prohibited to foreigners. The Official List outlines, the limited number of activities for which a foreigner cannot obtain work permission for in any case. (The current Official List is the same as was last issued under the Act. However, the Official List is being revised and we detail such in part three of this series once the revision is complete.)

As a consequence, any foreigner who has a work permit in Thailand may now, work anywhere, for anyone, and do any type work, that is not excluded by the Official List.

This is a very significant and welcome change to the Thai foreign labor law regime. It is obviously good news for work permit holders in Thailand. And Thailand will also benefit from having made its labor market more attractive to the best foreign labor talent it needs to compete for in the ever increase globalized economy.

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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 over 50 other countries. Visit them at: duensingkippen.com

 

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Legally working WITHOUT a work permit?

The general rule is that someone who is not a Thai citizen must obtain a work permit if he or she wants to work in Thailand. Recently, however, Thailand has made a few significant exceptions to this general rule, as well as, some other notable changes to the foreign work permission regimen.

Until last year Thailand regulated foreign work permissions under the Alien Workers Act (2008) (the “Act”). In 2017 the Emergency Decree on Non-Thais’ Working Management Emergency Decree, (2017) (“Decree No. 1”) repealed the Alien Workers Act (2008). Decree No. 1, however, incorporated much of the repealed Alien Workers Act’s provisions and kept in force most of the regulations issued under it.

Normally, an Act, a law, can only be repealed in Thailand by another law passed by the legislature. However, Decree No. 1 was issued under Section 172 of Thailand’s Constitution, which provides for the King of Thailand to issue an emergency decree “for the purpose of maintaining national or public safety, national economic security, or averting public calamity.” And Section 172 also provides that such an emergency decree has the force of an Act or law as long as such decree is later approved by the legislature.

On 27 March 2018 the Emergency Decree on Non-Thais’ Working Management (No.2) (2018) (“Decree No. 2”) was issued. Decree No. 2 amended Decree No. 1.

Interestingly, the definition of “working” under the Decree No. 1 remained as broad as in the Act and was defined as “the use of physical strength or knowledge for engaging in an occupation or a job with or without an intention to obtain wages or any other benefit”. Decree No. 2 now redefines “work” as “an engagement of any profession, with or without employer, but excluding business operation of a licensee under the law governing foreigners’ business operation.”

Decree No. 1 prohibits people who are not Thai citizens from engaging in specific occupations. Permission to do such work will not be granted. Other occupations are open to non-Thais; however, the work performed by anyone who is not a Thai citizen is strictly limited to the activities and conditions to conduct such provided in the permission granted. However,Decree No. 2 now provides for exceptions to the mandatory work permit application requirement as well as other revisions of note. The most significant changes under the Decree No. 2 are as follows:

A. The following non-Thais can carry out certain activities in Thailand without a work permit:

(1) a non-Thai who comes to Thailand on a short-term periodic basis to: hold or to attend a meeting, lecture, seminar, training, exhibition of art or culture, or sports competition; provide an opinion; inspect work of others; or, any other activities, as prescribed by the Council of Ministers.

(2) a non-Thai who enters into Thailand to: operate a business; make an investment; or who has knowledge, ability, or skills that are considered beneficial to the development of the country;

(3) a non-Thai legal representative (e.g. director) of an alien juristic person that is licensed to operate business under the Foreign Business Act (1999);

B. It remains the case, as provided for under Decree No. 1 that a non-Thai who wishes to work in Thailand on an urgent and necessary basis for a period of up to 15 days is no longer required to receive formal approval of such from the Department of Employment and need only to notify the Department of such (Note: failure to do so is subject to a fine of up to Thai Baht 50,000). However, Decree No. 2 has amended this provision such that if the work cannot be completed within 15 days an application for an extension of up to an additional 15 days may be made;

C. An employer of a non-Thai employee must notify the Department of Employment of:

(1) the name, nationality and nature of work of a non-Thai employee within 15 days of employment; and

(2) the cessation of employment and the reason for such cessation of employment of a non-Thai employee within 15 days after the employment ends.

Note: an employer who fails to notify the Department of Employment of the above is subject to a fine of up to Thai Baht 20,000;

D. Work permit applications are now permitted to be filed electronically; and

E. Penalties under Decree No. 1 have been significantly reduced. For example:

(1) thepenalties for working without a work permit under Decree No.1 was an imprisonment for a term not exceeded 5 years or a fine ranging from Thai Baht 2,000 to Thai Baht 100,000, or both. But under Decree No. 2 that has been reduced to a fine ranging from THB 5,000 to THB 50,000 and the imprisonment penalty has been repealed; and

(2) the penalties for employing a non-Thai employee without a work permit under Decree No. 1 was a fine ranging from Thai Baht 400,000 to Thai Baht 800,000 for each employee so employed. Under Decree No. 2 this has been changed to a fine ranging from Thai Baht 10,000 to Thai Baht 100,000.

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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 over 50 other countries. Visit them at: duensingkippen.com

 

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Opening a Representative Office in Thailand Just Got Easier

A Representative Office allows the foreign investor to evaluate potential market opportunities without the need to establish a subsidiary in Thailand. Thus, it provides an interesting “vehicle” for foreign investors who may be considering entering the Thai market.

Thailand has recently made the set-up process of such an office more investor friendly. Previously, prior to operating, the Representative Office was required to obtain a “Foreign Business License” because, under the Foreign Business Act (1999) (the “FBA”), its permitted activities were considered a“service” reserved to for Thais and prohibited to foreigners without such exemption.This requirement has been abolished. Under MinisterialRegulation No. 3 “Prescribing Service Businesses Which Do Not Require a Foreign Business License” (2017) of the FBA the operation of a Representative Office is no longer considered such a service.

Thus, aRepresentative Office is now permitted to provide its specified services without the need to apply for a Foreign Business License. This is good news for foreign investors who would like to open a Representative Office because the exclusion will now allow for an expedited and more efficient set-up procedure.

The purpose of a Representative Office is to provide services solely to its foreign head office, affiliates, or companies in the same group. The services it can provide are limited For example: a Representative Office is not allowed to accept purchase orders; make sales offers; or engage in business negotiations with any person. Andit is not allowed to generate any profit. The limited business activities the Representative Office is allowed to operate are as follows:

  1. Procurement of supply sources for goods and services in Thailand for the head office or affiliated company;
  2. Inspection and control of the quality and volume of goods by the head office or affiliated company or that was hired by the head office or affiliated company for production in Thailand;
  3. Consultation on various aspects pertaining to goods distributed by the head office or affiliated company to a distributing agent;
  4. Dissemination of information pertaining to new goods or services offered by the head office or affiliated company; and
  5. Reporting on business movements in Thailand to the head office or affiliated company.

Furthermore, a Representative Office cannot engage in the:

  1. Purchase goods on behalf of the head office or its affiliated company or any activity concerning such a purchase;
  2. Shipment of goods of the head office or its affiliated company that were purchased prior to the Representative Office beginning operations;
  3. Checking and control of the quality and quantity of goods for any company that is not the head office or its affiliate company;
  4. Giving of after sale service concerning the installation and maintenance of goods;
  5. Giving of advice concerning goods that are not produced or sold by the head office or its affiliated company;
  6. Receiving of any purchase order or service on behalf of the head office or its affiliated company;
  7. Coordination of any purchase or sale on behalf of the head office or its affiliated company;
  8. Propagation of information concerning goods or services that were sold in Thailand prior to the Representative Office beginning operations;
  9. Carrying out of activities as a “middleman” or “agent” between customers in Thailand and the head office or its affiliated company;
  10. Planning or coordination with any organization of business on behalf of the head office or its affiliated company;
  11. Acting on behalf of the head office or its affiliated company; or
  12. Reporting of information to any company that is not the head office or its affiliated company.

It should also be noted that since a Representative Office is not allowed to generate any income, the operation of the Representative office must be completely financed by the foreign head office. However, financing of the operation received by the head office is not considered to be taxable income. Nevertheless, a Representative Office is still required to apply for a tax ID and submit annul tax returns.

 

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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 over 50 other countries. Visit them at: duensingkippen.com

 

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“Seasonal” Employment in Thailand?

Thailand’s tourism and hospitality industry is among the most important contributors to its economy. Anyone familiar with that industry knows that it’s dictated by high and low “seasons”. Business peaks during the winter holidays and dips during the spring and fall. Thus, if you are running a business in the Thai tourism or hospitality sector, you need more help during the peaks and less during the dips. As a result, we are often asked about “seasonal employees”. Are there any legal issues with hiring people for just the peak season and then letting them go if the following dip does not justify (from a business perspective) keeping them on? Are there any legal issues with, for example:

  1. hiring someone 1 November 2016 to 30 April 2016 and then letting them go; or, if business warrants
  2. hiring them again by entering under a new employment contract running from 1 May 2017 to 31 October 2017, and then letting them go; or
  3. hiring them a third time for the next high season from 1 November 2017 to 30 April 2018?

The short answer is: “yes, there are” and perhaps the most significant is severance pay liability.

Employment matters are generally governed by the Labour Protection Act (1998) (“LPA”). The LPA was largely enacted to protect employees on the assumption that employees are in the weaker of the two positions in their relationship with their employer and, therefore, in need of such protection. This also means that, in any dispute with an employer, Thai labour courts are supposed to interpret the LPA in the light most favourable to the employee.

One of the most significant rights that the LPA provides to employees is the severance pay that is due to the employee should he or she be terminated for any reason other than the rather limited “termination for cause” reasons defined by the LPA. The amount of severance that is payable to an employee terminated without such cause increases the longer the employee is employed.

The only way for a worker’s employment to come to an end without terminating them for cause and without paying severance is to hire that employee under a “fixed-term” contract. But Section 118 of the LPA significantly curtails who can qualify as a “fixed-term” employee as follows:

a.  employment in a specific project, which is not the normal business or trade of the employer  and requires a definite date to commence and end the work; or

b.  work which is occasional with a definite ending or completion; or

c.  work which is seasonal and the employment is made during the season.

AND whether it is under (a), (b) or (c) above, such work must be completed within a period not exceeding two years and the employer must make a written contract with the employee at the beginning of the employment.

Furthermore, although it is recommended, Thai employment contracts generally do not need to be written. However, in order to be qualified as a fixed-term employment exemptible from severance payment, the said contract must be a “written contract”.

So what about (c)? Are high and low tourism season employees, “seasonal” employees?

There is no definition of “seasonal employment” under the LPA. Thai courts’ interpretation of seasonal employment is still based on Thailand being an agriculture-based country. Therefore, as far as we are aware, the meaning of “seasonal employment” as interpreted by Thai courts has been limited to agricultural seasons, not high or low seasons in the sense of tourism, hotel, or any other businesses. Accordingly, Thai courts do not interpret tourism and hospitality “seasonal” employment contracts as “seasonal employment” under the LPA. Thus, such employees would be entitled to severance pay upon termination pursuant to the LPA.

What about at least limiting the amount of severance payable by entering successive employment contracts so that severance liability would only apply to the period covered by the most recent contract? The LPA does not allow for that either.

Section 20 of the LPA provides that if the employee has not worked continuously because the employer intended to deprive an employee of any right under the LPA, all such employment periods will be considered cumulative in determining what rights the employee is entitled to. Thus, when there are successive fixed-term employment contracts they are most likely to be interpreted under the LPA as the employer’s attempt to deprive the employee’s right to severance pay for the cumulative term of employment. In other words, our employee in our example above would have the rights of a standard 18-month employee (not a 6 month employee). Therefore, that employee would be entitled to severance pay equivalent of 3 months salary (rather than one month) if terminated “without cause” as defined by the LPA.

This is true even if the employment agreement provides for reducing or extending the duration of the employment, or details the “motive” for the employment as “due to seasonal business fluctuations”. The employer under Section 118 of the LPA and its “pro-employee” perspective would still owe severance payment for the cumulative employment period.

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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 over 50 other countries. Visit them at: duensingkippen.com

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New annual statutory e-filing requirements for all Thai companies-FIRST DEADLINE is 30 SEPTEMBER 2015

Thailand’s Ministry of Commerce, by way of its Department of Business Development (DBD), recently issued an announcement regarding the submission of annual statutory audit financial statements by Thai limited companies. Starting in 2016, Thai companies will be required to file their 2015 reports electronically. This new system will replace the previous method of submitting documents by hardcopy.

In order to e-file all Thai companies are now required to obtain an official e-filing username and password from the DBD. Any Thai company that does not obtain their user name and password before 30 September 2015 will be required to file BOTH a hardcopy of their 2015 statutory audit by 31 May 2016 AND to file the same electronically no later 30 June 2016.

Thus, in order to comply with this new regimen most efficiently, all Thai limited companies should obtain their e-filing username and password by 30 September 2015. Such companies will then be allowed to e-file only their 2015 statutory audit by 31 May 2016.

 

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THE LICENSING FACILITATION ACT
 – A More Business Friendly Licensing Procedure in Thailand?

Historically, obtaining a desired business license, registration, or other requisite government permission has often been time consuming and incurred arguably unnecessary costs in Thailand. Such inefficiencies stem in large part from the broad discretion government offices are generally given to determine what an applicant must do or provide, to obtain a license, registration, or permission. What is required to obtain a given license at one office at one time may not be the same at another office or even the same office on a different day. Recently, however, the Thai government enacted a law that aims to significantly reduce, or even eliminate, such inconsistencies and resulting waste.

The Licensing Facilitation Act (2015) was formally published on 22 January 2015 and it will take effect on 21 July 2015. With a few notable exceptions, including court procedures, environmental regulation, and licensing related to strategic military operations, the Act applies to all licenses, registrations, and permissions that Thai law requires or allows individuals to obtain. It also applies to the government offices charged with issuing the same. The Act requires all other government offices to produce, and make available to the public, a Manual that details the procedure, timing, and specific requirements (including listing all necessary documents that must be provided) to obtain the licenses, registrations, and permissions that they administer.

Significantly, once a Manual is in place, Thai government offices covered by the Act will no longer have discretion to deviate from the requirements therein. If, but only if, an application does not meet the requirements in the Manual, an office may refuse an application. However, in such case that office must do so in writing to the applicant within the time required by the Manual. Any such written notice must also explain why the office is refusing the application and detail how the applicant should revise their application to make it acceptable. Thereafter the applicant may resubmit the application. If the office rejects it again, the office must provide reasons for the rejection again in writing. The applicant may then choose to either resubmit its application or file an appeal under the Administrative Procedures Act.

If an office is unable to make an initial determination on an application within the time required by the Manual, that office must provide reasons for the delay in writing to the applicant and send a copy of such to an administrative oversight committee. Such written notice must be repeated every seven days until the office provides its written decision on the application. In the event any such office fails to comply with this requirement “it shall be deemed that it commits or omits the commission of an act which causes damage to other persons; provided that such commission or omission was not caused by force majeure.”

The Act also favors business interests over regulatory formality. Under the Act if an application was submitted in accordance with the law, and any relevant regulation, and that law or regulation changes prior to approval of the application, the application remains valid and will be determined under the previous law and regulation. Renewing licenses may also become significantly more efficient. Operators of certain ongoing business activities may be eligible under the Act to renew their licenses by simply paying the renewal fee, without having to file a renewal application.

Finally, the Act requires all offices to establish “Service Link Centers” to accept applications, as well as, to provide information regarding what is required by law to apply for and receive any license, registration, and approval, which that office administers. The Act also provides for “One Stop Service Centers” to be established in each province in Thailand. Presently applications for and to renew a license, registration, or approval must be done at the specific government office that issues it. But once established, applicants will be able to accomplish all such applications and renewals at one location dedicated to this purpose. Furthermore, the Act provides for One Stop Service Centers to accept certain applications online.

This “mere administrative law” may not appear significant to some. And only time will tell how it will be implemented in practice. However, it is a welcome addition to Thailand’s legal landscape. We believe that, if properly implemented, the Act has the potential to greatly improve administrative efficiency and services, and therefore, make doing business in Thailand easier.

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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

 

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A Step Towards an End to Frustration and “Tea-Money” in Thailand?

Historically, obtaining a desired license, registration, or other requisite government permission has often been frustrating and costly in Thailand. Inefficiencies, and the all too common “tea money”/unofficial “fees” charged by government offices to perform their administrative duties, stem from the broad discretion government offices are generally given to determine what an applicant must do or provide, to obtain a license, registration, or permission. Recently, however, the Thai government enacted a law that may significantly reduce, or even eliminate, such waste and untoward practices.

The Licensing Facilitation Act (2015) was formally published on 22 January 2015 and it will take effect on 21 July 2015. With a few notable exceptions, including court procedures and licensing related to strategic military operations, the Act applies to all licenses, registrations, and permissions that Thai law requires or allows individuals to obtain. It also applies to the government offices charged with issuing the same. Furthermore, the Act requires all such government offices to produce, and make available to the public, a Manual that details the procedure, timing, and specific requirements (including listing all necessary documents that must be provided) to obtain the licenses, registrations, and permissions that they administer.

Significantly, once a Manual is in place, Thai government offices covered by the Act will no longer have discretion to deviate from the requirements therein. If, but only if, an application does not meet the requirements in the Manual, an office may refuse an application. However, in such case that office must do so in writing to the applicant within the time required by the Manual. Any such written notice must also explain why the office is refusing the application and detail how the applicant should revise their application to make it acceptable.

If an office is unable to make an initial determination on an application within the seven days of the time required by the Manual, that office must explain why in writing to the applicant and send a copy of such to an administrative oversight committee. Such written notice must be repeated every seven days until the office provides its written decision on the application. In the event any such office fails to comply with this requirements “it shall be deemed that it commits or omits the commission of an act which causes damage to other persons; provided that such commission or omission was not caused by force majeure.”

This “mere administrative law” may not appear significant to some. And only time will tell how it will be implemented in practice. However, it is a welcome addition to Thailand’s legal landscape. We believe that, if properly implemented, the Act has the potential to greatly improve administrative conduct and services in Thailand.

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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

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Labor Law in Thailand: PART 11 – The Skill Development Promotion Act

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

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LABOR LAW IN THAILAND: PART 10 – The Employees Compensation Act

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

 

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LABOR LAW IN THAILAND: PART 9 – The Social Security Act

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

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