Labor and Employment Law In Thailand

Labor Protection Act B.E. 2541

The Thai Labor Protection Act went into effect in 1998 and was again revised in 2019. It was set up to protect the rights of employees, but also outlined employers rights. There are other section of Thai Law that also are important in the employee employer relationship. The Labor Relations Act of 1975 is one example as is the Social Security Act of 1990. Understanding how all these laws affect employee and employer is our expertise. Not only do Thai Nationals benefit from these laws but the laws also extend to Foreign employees working in Thailand.

The Employment Contract

An employment contract is a contract between an employee and an employer. Basically the employee undertakes to perform work (provide a professional capacity) for the employer in return for a defined remuneration. The employment contract is legally binding on both the employee and the employer and usually defines the employee's subordinate relationship to the employer in the performance of their work. This contract is regulated by Thai law, the Labor Protection Act. There are a few things that are very important to note about employment contracts;

  1. Start Date:
    • This should be clear and obvious.
  2. End Date:
    • If there is an End Date it is possible that this contract can be considered as a "Fixed Term" contract and would be affected by certain laws. No end date is a much better option if you are considering a career with a company.
  3. Articles Related To Termination:
    • The Thai Labor Act has a set of standard articles related to termination and the employer can cite those in the employment contract or they can add their own. They are not permitted to write articles which are of lesser value than the Thai Labor Act.
  4. Severance Pay:
    • The Thai Labor Act also has a set of standard articles related to severance pay and the employer can cite those in the employment contract or they can add their own. Pay attention to this article and if it does not meet Thai Labor Law standards make your employer aware that you know your rights.

PCS strongly suggests that if you are about to undertake a position with a Thai Company and you are presented with an employment contract, take it to a labor expert for review. They will let you know exactly what you need to look out for. Some employers may also suggest that you accept offshore payments. Where this may have some Tax appeal it also has problems. This offshore payment can never be claimed if there is an employment dispute.

Termination Letter

Notification of Dismissal or Termination Letter is issued by the employer when they feel that they no longer wish to employ you. The Termination Letter must be carefully drafted. It will serve as a basis for any possible litigation should the employee decide to take the matter to the Thai Labor Board or Court. Here are some points the termination letter should contain;

  • Delivery Date Of Termination Letter - This is very important; The employee should receive the letter on or slightly before Pay Day. If the letter is delivered the day after Pay Day the employee has legal recourse to collect an additional month's salary.
  • Effective Date of Termination - Check the employment contract to insure it complies with the termination article in the employment contract. The contract will state the notice period required. If it does not Thai Labor Law takes into effect which states that the Employer must give the Employee 30 days written notice.
  • Reason For Termination - If the reason for termination is a violation of company rules the company has the right to terminate your contract immediately and they do not have to pay any severance pay. BUT their rules and Thai Law may be different so the employee may have a case in Thai Labor court.
  • Settlement Agreement - In most cases the employer will declare their intention to pay Severance. Then again they may not offer any settlement.
  • Authorized Signatory - The person who signs the Termination Letter must have the power to terminate an employee. The Employee should never sign the termination letter unless they were instructed to do so by a Labor Law expert.

Severance Pay

In the event of termination without cause, the employer must pay the employee severance pay. In the event of termination with cause, the employer may or may not pay the termination indemnities. That is totally up to the employer. If termination is due to a severe infraction they will most likely not pay anything. BUT in all cases the employer should respect the following;

  • The employee's notice period;
  • The payment in Lieu of Notice
  • The payment of the severance pay;
  • The payment of commissions and bonuses if they are due;
  • The payment of unused paid vacations days;

Severance Table

Employment Period - Less Than 120 days - No Severance Pay
Employment Period - 120 days to 1 year - 30 days pay
Employment Period - 1 year to 3 years - 90 days pay
Employment Period - 3 years to 6 years - 180 days pay
Employment Period - 6 years to 10 years - 240 days pay
Employment Period - 10 years to 20 years - 300 days pay
Employment Period - 20 years or more - 400 days pay

Wrongful Dismissal

Wrongful dismissal refers to a situation where an employer has terminated or laid off an employee in a manner that violates the employee’s rights under the Labor Protection Act.

Section 49 of the Labor Court Establishment and Dispute Procedure Act B.E. 2522 (1979) states that in a dismissal case, if the Labor Court thinks the dismissal is unfair, it shall order the employer to reinstate the employee at the same level of wage as at the time of dismissal. However, if the labor court thinks that such employee and employer cannot work together, it shall fix the amount of compensation to be paid by the employer. The Labor Court will consider the age of the employee, the working period of the employee, the employee’s hardship when dismissed, the cause of dismissal and the compensation the employee is entitled to receive. Cases of wrongful dismissal include:

  • Immediate dismissal without a clear and full explanation of the reason or the termination of the agreement without serious cause nor severance pay.
  • The termination of the agreement without payment of the unused annual leave.
  • The termination of the agreement based on the (claimed) violation of the work regulations by the employee without any prior warning.

Labor and Employment Law in Thailand

If you suspect that you may have a case for Wrongful Dismissal you should not hesitate to contact us. Professional Corporate Services (PCS) has extensive knowledge of the Thai Labor Protection Act and can help both employers and employees with any labor or employment disputes.

Our top Labor consultants have made historic settlements for former CEOs, COOs, CFOs, Directors, General Managers, Managers, and common employees. The same Labor consultants have defended outrageous demands by disgruntled employees. PCS fights for what is right.

Regardless of whether you are an Employer or an Employee, Professional Corporate Services is available if you need our help with any Labor or Employment issue. At PCS your 1st consultation is always totally FREE so don't hesitate to Contact Us. Please use the contact form below. We are looking forward to hearing from you!

Contact PCS

Our Address

219/2 Asoke Towers Building, 2nd Floor, Sukhumvit 21 Road

Email Us

info@pcsthai-1.com

Call Us

+66 2 120 9480

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