Thailand Overhauls Its Employment Law

 

By Suriyong Tungsuwan © Baker McKenzie July 1, 2019
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​Thailand's redrafted Labor Protection Act (LPA) has introduced major changes to the country's employment law. 

The amended LPA was published in the Royal Gazette on April 5 and took effect May 5. There are no material changes from the draft amended LPA published on Dec. 13, 2018. The key changes are as follows.

Changes to Leave

Maternity leave has been increased from 90 days to 98 days and leave entitlements now include both prenatal and postnatal. The employer must pay up to 45 days' wages during maternity leave.

Personal leave—also known as "business leave"—must be granted at a minimum rate of three working days with pay per year. Previously this period of leave was at the discretion of the employer and there was no guarantee of pay.

Employment Transfers

Transfers of employees from one business entity to another—due to, for example, organization change or a merger—may now be carried out only with the employee's consent.

If an employee does not consent, no transfer will occur. If the worker's employment will be subsequently terminated, he or she will be entitled to severance pay.

Severance Pay

The maximum cap on severance pay has been increased to 400 days of the employee's latest wage rate for 20 years or more of continuous service—previously 300 days for more than 10 years of service.

Relocation of an Employer's Place of Business

If an employer is to relocate to a new place of business (even from one office in Thailand to another existing office in the country), and this materially affects the quality of life of an employee, the employee has the right to refuse the relocation. Subject to the employee satisfying legally prescribed conditions, his or her employment contract shall be deemed to be terminated on the date of relocation. The employee will also be entitled to a special severance pay at the same rate as the severance pay.

Interest on Statutory Payments

The interest that employers must pay to employees for defaulting on the below payments has been increased from 7.5 percent to 15 percent. This interest applies to failure to grant:

  • Payment in lieu of advance notice.
  • Wages, overtime payments, payment for working on holidays and payments for working overtime on holidays.
  • Compensation during temporary cessation of the employer's operations.
  • Severance pay and special severance pay.

Ensuring Equity of Pay

Employers must pay wages—as well as overtime payments and payments for working on holidays—at the same rate for both male and female employees who undertake work of the same type, quality and quantity.

Employers should thoroughly review their employment agreements and work rules to ensure that they comply with the new rules when they come into effect.

There are new requirements under this amended LPA that would affect most companies in their operation and employee management (e.g., new rate of severance pay, new employer relocation requirements, employee consent in mergers and acquisitions). Failure to comply with these requirements would result in civil and criminal liabilities being imposed upon companies and their responsible persons.

It is essential that employers carefully study the amended LPA to ensure their employment policies are consistent with the act, especially in areas where the amendments may distinguish from existing court precedents, for example, in mergers and acquisitions where an employee's consent is required and a new employer must assume all existing rights and obligations of the previous employer.

Suriyong Tungsuwan is an attorney with Baker McKenzie in Bangkok. © 2019 Baker McKenzie. All rights reserved. Reposted with permission of Lexology.

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