Obtaining a good understanding of Labour Law in Thailand is important when managing a business. There are hundreds of examples of small businesses that have had trouble with employees and ex employees simply because they did not understand or adhere to Labour Law requirements.
Here are some of the more basic parts of the Labour Law that all business owners and managers in Thailand should understand, and are based primarily on the Labour Relations Act 1975 and the Labour Protection Act 1998.
Firstly, you need 4 Thai staff earning minimum salary in order to obtain a work permit.
All staff salaries are deducted 5% (up to Baht 750/month) for the purpose of social welfare. This then provides basic medical benefits for employees at selected hospitals.
Any organisation with more than 6 Thai staff needs to provide employment contracts, rules and regulations and also to put public holidays and an organisation structure on a public notice board. Procedures for utilising leave days should also be posted.
All employees are subject to a 3 month probation period, during which they can be terminated at any time without severance being due. This 3 month period can be extended by 30 days, but this must be notified in writing. Upon passing or failing probation, you must notify an employee in writing.
An employee contract can be terminated for any of the following reasons:
1. Resignation by giving appropriate notice – a minimum of 30 days notice is required for full time staff (although this may be longer if outlined in the Employee’s Contract i.e. for senior management position, but does not need to be more than 90 days), and resignation must be via written notice. Resignation by email, telephone or SMS will not be considered formal resignation.
2. Dismissal for misconduct / negligence resulting in damage to the organisation.
4. Termination as per the terms and conditions outlined in the employment contract, specific to each employee and position.
5. Physical or mental disability as examined and certified by the Organisation’s doctor.
6. Retirement at the age of fifty five, subject to a review by at the sole discretion of the Organisation.
7. Provision of false or misleading information on the employee application or in any document / form submitted by the employee to the Organisation.
8. Termination due to organisation re-structure / budgetary issues, or for the introduction of machinery that reduces the need for human labour.
9. Imprisonment of the employee
Severance must be paid to terminated employees as follows:
1. An employee who has completed 90-120-days of service (probation) but less than a year is entitled to severance pay equivalent to thirty-days of current wage/basic only.
2. An employee who has completed one-year of service but less than three years is entitled to severance pay equivalent to ninety-days of current wage/basic only.
3. An employee who has completed three-years of service but less than six years is entitled to severance pay equivalent to one hundred eighty-days of current wage/basic only.
4. An employee who has completed six-years of service but less than ten years is entitled to severance pay equivalent to two hundred forty-days of current wage basic salary only.
5. An employee who has completed ten-years of service is entitled to severance pay equivalent to three hundred-days of current wage/basic salary only.
6. If the organisation undertakes a relocation of their work location, the employee has the right to refuse assignment at the new location and claim 50% of the customary severance for not-for-cause dismissal. The organisation must also provide 30 days written notice of the impending move.
NO severance will be due to an employee if they have been terminated for the reasons below:
1. Committing an intentional criminal offense against the Organisation.
2. Willful damage to the Organisation – equipment, relationships, business or brand.
3. Serious damage caused to the Organisation because of his negligence and carelessness.
4. Violation of professional rules and regulations or the legal and reasonable orders of the Organisation in spite of written warning given to him/her (with the exception of a very serious damage caused, the Organisation has no need to give a warning). All written warnings will remain on record and in effect not longer than one year from the date of violation, and can be removed sooner in accordance with the performance of the recipient.
5. Unreasonable failure to report for duty to the appropriate senior manager / supervisor as assigned for three consecutive days not including public holidays or days-off.
6. Criminal conviction and receiving final judgment for imprisonment with the exception negligence and misdemeanor.
Working hours and leave
Employees may not be asked to work longer than 48 hours per week, and 6 days per week, or less for jobs defined as dangerous. Working restrictions also exist for pregnant employees.
A wife variety of leave days can be utilised by employees in Thailand, including up to 30 days per year for medical leave. If an employee takes 3 days or more consecutively for medical leave, you may ask to ass a doctors certificate. Additionally, employees are permitted personal leave to handle government issues, and a minimum of 6 days per year annual leave once they have completed a year of employment. Other sources of leave are also permitted relating to monkhood, military service and others.
Additionally, a minimum of 13 public holidays per year must be granted to employees, selected from the standard list.
All managers and owners are encouraged to learn about Thailand Labour Law, and to incorporate strict HR practices at their organisation. A good source of this structure is the Thailand HR Suite, who provide HR templates for businesses in Thailand.
Written by Stuart Blott, General Manager, Fusion Business Concepts - Member of the Sutlet Group