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Workplace
Workplace
relations
General
The principal Thai labor protection laws are the Labor
Relations Act B.E. 2518 (1975), which sets, among other matters, the framework
for formation, operation of labor unions and collective bargaining agreement,
and the Labor Protection Act B.E. 2541 (1998), which sets out various statutory
minimum benefits and welfare for employees.
Currently provident funds are voluntary. All employers must
contribute to the Social Security Fund and the Compensation Fund. The rate of
contribution to the Social Security Fund is 5 per cent of the total salary of
each employee with a cap of 750 per employee per month. Employees can draw on
the Social Security Fund for specific and limited benefits, including
non-work-related injuries, sickness or death, old age pension and unemployment.
The rate of contribution to the Compensation Fund varies depending on the type
of business and the nature of the work, ranging from 0.2 per cent to 1.0 per
cent of the total wages paid to employees per annum. For the purposes of
calculating the Compensation Fund contributions, the annual wage for any single
employee is capped at 240,000. The rate of contribution is subject to change,
depending on the claim history. Employees can draw on the Compensation Fund for
work-related injury, sickness or death.
Terms of employment
In addition to the statutory minimum welfare and benefits
and the individual employment contracts, the terms of employment are also found
in the company’s work rules. Every company with at least 10 employees must file
a set of work rules with the Director General of the Department of Labor
Protection and Welfare.
Termination of
employment
Under Thai labor laws, termination of employment may trigger
one or more of the following:
- payment in lieu of notice
- severance pay
- unfair termination compensation.
The analysis below is not intended to apply to fixed-term
contracts and is subject to the terms of any individual employment contract,
the work rules of the company and the terms of any collective bargaining
agreement.
Payment in lieu under
the Civil and Commercial Code
Under Section 582 of the CCC, termination of employment by
either the employer or the employee (subject to limited exceptions) requires
appropriate advance notice or payment in lieu of such notice.
Notice must be at least equal to one pay period and the
termination must be effective on the next pay day. For example, if an employee
is paid on a monthly basis at the end of the month and notice of termination is
given in the middle of January, the earliest that termination can be effected
is the end of February.
Severance Pay under the Labor Protection Act Under the Labor
Protection Act B.E. 2541 (1998) (LPA), an employer who has terminated the
employment of an employee (other on one of the grounds prescribed in the LPA)
must pay severance. The statutory minimum severance rates are:
- for an employee who has worked for at least 120 consecutive days, but less than one year, the minimum severance amount is equal to 30 days’ pay
- for an employee who has worked consecutively for at least one year, but less than three years, the minimum severance amount is equal to 90 days’ pay
- for an employee who has worked consecutively for at least three years, but less than six years, the minimum severance amount is equal to 180 days’ pay
- for an employee who has worked consecutively for at least six years, but less than ten years, the minimum severance amount is equal to 240 days’ pay
- for an employee who has worked consecutively for more than ten years, the minimum severance amount is equal to 300 days’ pay.
Unfair termination
compensation
Under the Act Establishing the Labor Court and Labor Case
Procedure B.E. 2522 (1979) (ALC), if the employee brings an action for unfair
dismissal in the Labor Court and the Labor Court is of a view that the
termination of employment was unfair, the Labor Court may order the employer to
reinstate the employee; or if the Labor Court is of the view that reinstatement
is not practicable, the Labor Court will determine an amount of compensation to
be paid, taking into account:
- the employee’s age
- his employment period
- any adverse effect of the termination on the employee
- the grounds for termination
- the amount of severance payable. Directors’ liabilities
Under some circumstances a director may incur personal
liability for violation by the company of Thai labor laws.