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Thailand

January 25, 2021

By Eric Minh Huu Huynh, Derik Schmidt, Zac Robinson and Pimvimol (June) Vipamaneerut

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Thailand

KEY DEVELOPMENTS FOR 2020


 

Updates to the Labour Protection Act

Amendments to the Labour Protection Act ("LPA") recently came into effect, to introduce and expand a number of employee benefits and protections. The key amendments include: (i) employees with at least 20 years' service are now entitled to severance pay equal to 400 days of their most recent pay rate; (ii) the period of maternity leave has been increased from 90 days to 98 days (inclusive of holidays), with employers now required to pay a minimum of 45 days' worth of the employee's most recent pay rate; (iii) employers must grant employees a minimum of three days of paid 'necessary business leave' per year; (iv) if an employer relocates an employee's current workplace to a new establishment, the employer must post an announcement at the current workplace (stating which employees will be relocated and the scheduled date of relocation) for at least 30 days in advance of the relocation; (v) employers must not transfer employees from one employer to another without obtaining consent from the employees who will be transferred; and (vi) male and female employees who are undertaking the same work must be paid equally. Several penalties for employers who fail to comply with any provisions in the LPA have also been amended to extend them to cover the new amendments.


 

Increase to Minimum Wage

The National Wage Committee of Thailand's Ministry of Labour announced a new minimum daily wage which came into effect from 1 January 2020. The new minimum wage varies by province on a sliding scale ranging from THB 313 to THB 336 (approximately USD 10.35 to 11.10) per day. This amounts to an increase of THB 6 for workers in nine provinces, and by THB 5 for workers in all other provinces.


 

Social Security relief measures

The Thai Government has recently introduced social security relief measures in response to the COVID-19 pandemic. From 1 March 2020 to 28 February 2022, insured employees under the Social Security Act are entitled to receive benefits during periods of unemployment caused by the economic crisis as follows:

  • If an employee's employment is terminated by an employer during this period, the Social Security Office will compensate the former employee at the rate of 70% of their daily wages for up to 200 days; and
  • If an eligible employee resigns, or their fixed-term employment contract expires and is not renewed, the employee can receive compensation at the rate of 45% of their daily wages for up to 90 days.

These regulations do not grant employers broad discretion to cease operations without paying employees' wages and employers should note that they are still required to meet all of their obligations regarding termination, compensation and severance pay.

 

KEY DEVELOPMENTS FOR 2019


 

Reforms to the Labour Protection Act

Substantial labor reforms will be made in 2019 under the Labor Protection Act. Virtually all employers are expected to be affected by the reforms. It should be noted that the draft amendments have merely been considered by the National Legislative Assembly of Thailand. The final version of the amendments that will be enacted in 2019 may differ slightly.


 

Gender equality in the workforce

An on-going global push for gender equality in the workforce has made significant headway in Thailand and this is expected to continue with reforms that are under consideration. One of the suggested reforms requires employers to state wages, overtime payments, payments for working on holidays, and payments for working overtime on holidays at the same rate for male and female employees at positions of equal level.

Another proposed amendment will require employers to pay wages to pregnant employees, who must take leave for prenatal exams prior to delivery. Successful implementation of these amendments will further propel gender equality in Thailand’s workforce and place the country at the forefront of initiating just labor laws.


 

Ensuring safe working conditions

Monitoring and, in turn, guaranteeing that working conditions for employers are up to standard and safe is in the best interests of the government, employers, and employees in Thailand. One amendment currently under consideration for enactment in 2019 would assist the government with standardizing and controlling working conditions around the country. The proposed revision would require companies to submit a report on the conditions of employment and the working conditions at the place of employment to a competent authority. Companies that fail to comply with this request will be subject to penalties.

 

KEY DEVELOPMENTS FOR 2018


 

Crackdown on Unlawful Foreign Employment, Increased Penalties for Employers, Licensees and Workers

Under a new royal decree, the legal definition of “work” has been expanded and employers’ duties to notify the government of employment changes have increased.

In addition, penalties for certain offences by employees and employers, including those licensed to recruit foreigners, have been increased—some by up to 400%—effective January 1, 2018.


 

New Labour Protection Act B.E. 2560 (2017)

Substantial labor reforms were made in 2017 under a new incarnation of the Labor Protection Act. The reforms include, inter alia:

  • new provisions treating retirement as termination for the purposes of severance pay;
  • removing the requirement to submit new or amended work rules to the relevant government authorities; and,
  • increasing the scope of power for the Ministry of Labor’s Wage Committee, allowing it to set minimum wage rates for specific groups of people (rather than just for specific categories of work or working locations).

 

Work Permit and Visa System Streamlined for Foreign Experts under Board of Investment (BOI) scheme

The BOI, Ministry of Labor, and Immigration Bureau are cooperating to streamline the process by which qualifying non-Thai nationals can simultaneously apply for BOI endorsement letters, visas, and work permits.

Under a new scheme, called the “Single Window”, an application can be submitted online. If successful, the applicant will receive an “e-Permit” instead of a standard work permit, along with their visa, without need to submit a full, hard-copy application. The new process is currently in a limited trial phase, and is expected to come into force for the general public in 2018.

With thanks to Pimvimol (June) Vipamaneerut, Eric Minh Huu Huynh, Derik Schmidt and Zac Robinson of Tilleke & Gibbins for their invaluable collaboration on this update.