LABOR LAW IN THAILAND: PART 8 – The Labor Protection Act: employees committee

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:

Number of the Employees Employee Committee Members
50 – 100 5
100 – 200 7
200 – 400 9
400 – 800 11
800 – 1,500 13
1,500 – 2,500 15
more than 2,500 17 – 21

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

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LABOR LAW IN THAILAND: PART 7 – The Labor Protection Act: work rules

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

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LABOR LAW IN THAILAND: PART 6 – The Labor Protection Act: warnings prior to termination

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

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LABOR LAW IN THAILAND: PART 5 – The Labor Protection Act: termination

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:

Duration of employment Amount of severance pay[1]
120 days but less than 1 year = 30 days most recent wages
1 year but less than 3 years = 90 days most recent wages
3 years but less than 6 years = 180 days most recent wages
6 years but less than 10 years = 240 days most recent wages
10 years = 300 days most recent wages

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

 

 

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LABOR LAW IN THAILAND: PART 3 – The Labor Protection Act: pay

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

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LABOR LAW IN THAILAND: PART 4 – The Labor Protection Act: leave

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

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Leasing Property in Thailand? – Danish Chamber of Commerce of Thailand asks; Olaf Duensing answers

DK Interview_Scandmedia leasing in Thailand_090714(1)(16)To Lease or Not to Lease_090714(17)Practical Leasing_090714

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LABOR LAW IN THAILAND: PART 2 – The Labor Protection Act: work hours and break time

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.

Under the LPA an employee may not work more than eight hours a day unless otherwise agreed between the employer and the employee — but in any event the total work hours must not exceed forty-eight hours in a week. However, these requirements are reduced to seven hours a day or forty-two hours a week for work that “may be harmful to safety and health of an employee.” Furthermore, where the working hours of any working day are less than eight hours, an employer and employee may agree to add the balance of working hours to any other normal working day — but the total number of working hours must not exceed nine hours per day or forty-eight hours per week.           

Furthermore, employers must give a give at least one hour of break time to any employee who works for five hours or more continuously. This total of one hour maybe broken broken into shorter periodic breaks but the total break time must not be less than one hour. However, in the event that there is food and beverages facilities available to the employees within a reasonable proximity to the work location or such if such facilities do not provide service continuously on each of the employee’s working days, the employee is entitled to a total of two hours of break time on each such day. Employers must also allow a break of not less than twenty minutes to all employees who are required to perform two or more of overtime work.

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

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The Thailand “Hotel Tax”

The surprising increase of the so called “local tax” for hotels from 1% to 2% in Phang Nga Province created a fear among hotel business operators in other provinces of Thailand that they could also be affected by an increase or the establishment of such “local tax”. In the following we would like to explain briefly the legal basis of such local “tax” and whom it affects.

In 1997 Thailand enacted the Provincial Administrative Organization Act(“Act”). In accordance with such Act, the Provincial Administrative Organization, or the “Orborjor“, was created. The Orborjor is an administrative organization existing in every Thai province. The Orborjor is responsible for certain provincial administrative matters.

Sections 45(1) and 51 of the Act empower the Orborjor of every province in Thailand to issue regulations applicable to that specific province. Section 65 of the Act further empowers the Orborjor to collect a certain fee (“Fee”) from the hotel guests (as defined under the Hotel Act (A.D. 2004)(“Hotel Act”)) at a rate to be defined by a Ministerial Regulation(s) issued under the Act. Article 2 of Ministerial Regulation No. 4, (A.D. 1998) (“M.R.”) issued under the Act introduces a maximum Fee at a capped rate of 3% of the hotel room charge. Therefore, currently no province is entitled to implement a Fee in any amount exceeding 3% of the price the hotel charges a guest for the room. However, every provincial Orborjor in Thailand does have the authority to set the applicable rate, up to 3%, at their sole discretion.

To illustrate how the Fee is implemented under the Act, we will use Phuket Province as our example. The Phuket Provincial Administration Organisation Bye-Law Re: Collection of Contribution Fee of Provincial Administration Organisation from Hotel guests (A.D. 2002) (“Bye-Law”) further regulates the exact amount of Fee (currently 1% of the hotel room charge) payable within Phuket Province. The Fee is payable by the hotel guest. The “Hotel Manager” (defined by the Bye-Law as “the operator of a hotel business under the Hotel Act”) has the duty to collect the Fee from the hotel guest on behalf of the Orborjor. The Hotel Manager must then remit the collected Fee to the Orborjor within the 10th day of the following month.

Note, the hotel guest and the Hotel Manager are both separately liable under the Bye-Law for payment of the Fee to the Orborjor. A hotel guest who refuses to pay the Fee may be punished by imprisonment for a term of one month or a fine not exceeding Thai Baht 2,000 or both. Whereas a Hotel Manager who fails to collect the Fee may be punished by up to three months or a fine not exceeding Thai Baht 5,000 or both. Additionally, a Hotel Manager who fails to remit the collected Fee to the Orborjor as required may be punished by up to three months or a fine not exceeding Thai Baht 5,000 or both. If anyone fraudulently avoids payment, collection or remission of the Fee may be punished by up to six months or a fine not exceeding Thai Baht 10,000 or both.

The Fee is payable by hotels as registered in accordance with the Hotel Act. Section 65 of the Act only entitles the Orborjor to collect the Fee in relation to a “Hotel” as defined by the Hotel Act. Small guest houses and other establishments that are offering temporary stays to guests and travellers that are excluded from the definition “Hotel” under the Hotel Act are apparently outside of the scope of the Act. It should be noted, however, that if such small guest house or establishment is operating without having registered with the local authorities as required, then they are operating not only in violation of the Hotel Act but also quite likely in violation of the Act if no Fee is being collected and remitted.

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Can you name your Thailand company “[your name here] Limited”?

Prior to the legal formation of a company under Thailand Civil and Commercial Code, the company’s name must be approved, then reserved at the Thai authorities. The applicant must be a partner, a promoter or a director of that company. The form for reserving the company’s name is available at the: (i) Office of the Central Company and Partnership Registration, Nonthaburi Province; (ii) Office of Business Registration Service (seven locations in Bangkok); and (iii) the various Provincial Office of the Company Limited and Partnership Registration and can be submitted in person, either by the partner, the promoter or the director or by an individual under a power of attorney in person or post. The company’s name reservation can also be conducted via the Department of Business Development website, www.dbd.go.th[1].

The maximum amount of names for each reservation is three and should be submitted in order of preference. If approval granted, it will be for only one of the names[2], with a thirty-day validity period[3], which means the application to form the company expecting to use such name must be filed at (i) or (ii) if its location is in Bangkok and at (iii) if its location is in other provinces, within thirty days after the approval.

It should be noted that a company’s name must not contain certain words or phrases, for example, names that are the same or similar to those of other registered companies or entities or those that have already been formally reserved for other purposes. Of course names of the royal family, ministries, bureaus, departments, government offices or organizations are also prohibited, unless special prior permission has been granted. Also names of countries, unless in brackets will not be approved. Finally, names which are contrary to morality, public policy or public order[4] may not be registered.

The company’s name must also include wording that indicates that it is: (i) a company; and (ii) its liability is limited. But also, the company’s foreign language name, if any, must have the same pronunciation or meaning as its Thai language name.It is the Registrar’s discretion as to whether or not the foreign language name has the same pronunciation or meaning as in the Thai language. Thus, it may be that the spelling submitted, even if correct in the submitted language, and even if it is a personal name, may be rejected, at least initially. For example, in one case from our own experience, a company name reservation was rejected because part of the company’s name was one of the German promoter’s name as that promoter spelled it in English. However, according to the Registrar, it was spelled “incorrectly” in English.

What happened then? Did said German promoter have to give up how he actually spells his last name and use whatever spelling that the Registrar deemed appropriate? Fortunately, the answer was “no”. In that and any such case, the following documents were and can be submitted to the Registrar at the head Company’s Name Reservation Division, Office of the Central Company and Partnership Registration, Nonthaburi Province:

1) A letter from one of the promoters explaining why that specific word in the company’s foreign language name should be spelt that way and disavowing any claim against the Registrar by the applicant for registering the name with a spelling that the Registrar does not think is correct;

2) A copy of the German promoter’s passport, to show the Registrar how his last name is spelt;

3) Two original copies of the completed application form for reserving company’s name signed by the same promoter who signs the letter mentioned in (1) together with a signed copy of his passport; and

4)  A signed copy of an attorney-in-fact’s identification card and house registration (if the promoter does not submit the documents by himself).

After reviewing the documents in the example case, the Registrar allowed the promoters to use the company’s name with the applicant’s previously disputed spelling.

[1] See: The Office of the Central Company and Partnership Registration’s Regulations Regarding Company and Partnership Registration (B.E. 2549) Clause 23.

[2] See: Ibid., Clause 24.

[3] See: Ibid., Clause 25.

[4] See: Ibid., Clause 37.

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