(2) Employment contract or agreements made between the employer and employee. However, it does specify severance pay for employees who have worked for 120 days or more and are terminated without cause. Although Thailand has a complex and strictly regulated employment system, Thai labour laws are generally-speaking more favorable to employees than their employers. The Ministry of Labour (MOL) is the primary authority responsible for setting and enforcing minimum employment standards within the country. Provisions related to working hours are set out in ministerial regulations issued by the MOL and are based on the nature and type of work. Provisions relating to working hours are set out in ministerial regulations that are issued by the MOL and are based on the nature and type of work being undertaken. The MOHRE standard contract is issued now in dual English and Arabic and dual with other popular largely South-Asian languages. 14 B.E. Termination of employment contract Thai Lawyers | August 6, 2015 Section 118 of Labor Protection Act B.E. Your email address will not be published. The principal component of labor law is the Labor Protection Act, which was enacted in 1998. With... Dezan Shira & Associates helps Thai law does not explicitly mention probationary period in employment relationships. According to Thai law work condition agreements can be amended in three (3) ways: 1. The basic presumption of Thai Labor Law is that the Employer is in a superior position in relation to the Employee therefore Employees require the law to equalize the imbalance of power. Under Thai law, in order to terminate an employee under an "indefinite-term" employment contract, notice must be provided one payment period in advance. 2541 (1998) and the Civil and Commercial Code lay out the rights and responsibilities of both employers and employees. Keywords: Labour Law, Termination, Thailand, Employee. Since its establishment in 1992, Dezan Shira & Associates has been guiding foreign clients through Asia’s complex regulatory environment and assisting them with all aspects of legal, accounting, tax, internal control, HR, payroll and audit matters. An employment contract is defined under the Labour Protection Act BE 2541 (1998) as an agreement, either written or verbal, that clearly or implicitly states that the employee agrees to work for the employer and that the employer agrees to pay a wage throughout the work period. Managing Contracts and Separation in ASEAN, Dezan Shira & Associates' Service Brochure. Your email address will not be published. This article was first published on ASEAN Briefing. In certain circumstances, however, an employer may dismiss an employee without prior notice and due compensation. The employer-employee relationship in Thailand is primarily governed by the Labor Protection Act of Thailand. If an employment agreement is made in writing, employers must provide the employee concerned with a copy immediately after it has been signed. The main Thai labour law consists of the Civil and Commercial Code on contracts relating to the Hire of Services (Book III, Title VI), the Labour Protection Act 1998, the Labour Protection Act (No.2) 2008, the Labour Protection Act (No.3) 2008, the Labour Relations Act 1975, the Act on Establishment of Labour Courts and Labour Court Procedures 1979, the Social Security Act 1990 and the Compensation Act 1994. As a result, most foreign employees working in Thailand qualify as residents and are liable to pay tax on both their income earned in the country and on income earned abroad. We know that every situation is unique, therefore it is essential to seek a consultation with someone who is specialized in Thai Labor Law to fully underst… 2555 (2012). Current personal income tax rates for resident individuals are laid out in the table below. They are probably very different to labor and employment laws in your home country. Thailand does not mandate a written agreement between the employer and an employee. An employee is entitled to a rest of not less than 1 … Thai labor laws are in general more favorable to employees than employers. 2541 states that the employer must pay severance pay to the employee who is terminated. (1) Preparing company work rules and regulations in compliance with the Labour Protection Act for submission to the Thailand Ministry of Labour. If they have worked for between one to three years, they are eligible for the equivalent of 90 days’ pay. Post was not sent - check your email addresses! Visa for Thai citizens. Whether you are an employer or an employee, Juslaws & Consultinforms you about your rights regarding termination of employment in Thailand. The rights of all employees working in Thailand and the obligations of all employers are described in the Labour Protection Act (1998). Notice (Please also see our comment in Q4-5) Under the LPA, unless a longer notice period is provided for in an employment agreement, an employee is generally entitled to receive one full pay period’s This column includes guidance for good employment practices based on the ILO Domestic Workers Convention, 2011 (No. Under the principle of Freedom of Contract, as long as both parties agree to the contract and it is not against the public order or good moral, Thailand will accept the validity of the contract. Pursuant to the Labor Law, all employment contracts and records must be in Arabic. Under Thai laws, the following financial compensations are required to be paid in order to terminate the employment contract. Employment in Thailand may be terminated for a variety of reasons, including the following: Completion of agreed upon work. A well written employment contract can prevent and settle disputes which may arise in the future. In Thailand, the employee-employer relationship is governed by a series of laws and regulations, the chief one being the Thai Labor Protection Act B.E.2541 (LPA) and the Thai Civil and Commercial Code (TCCC). An employee whose employment is stipulated in a contract set for a definite periodand the employment is terminated at the end of that period, if this form of employment is in compliance with the Thai labour laws and regulations (Section 118 of the Act). Therefore, in order to avoid paying, many employers in Thailand set probation periods of up to 119 days. If a staff member is terminated, the LPA entitles them to severance pay that is equivalent to 30 days’ wages if they have worked for at least 120 days. Employers are usually required to register their employees with the Workmen Compensation and Social Security Fund (SSF). Foreign employees working in Thailand may seek tax benefits available under relevant double taxation treaties between Thailand and their home country. The latest manifestation was revision to the Thai LPA was in 2010. Essay on Thai Labour Law on Employment Termination "If the parties have not fixed the duration of the contract either party can terminate it by giving … While there is a general recognition of freedom to contract, it is not possible to contract around the minimum standards imposed by applicable Thai labor law. Thailand Severance Pay and Termination Issues. As a result, to avoid paying severance, many employers in Thailand set probation periods of up to 119 days. An employment contract creates a relationship between an employer and his employee. employment contracts. 189) and protections offered to other workers under Thai Law. Thai laws define residents as people who have lived in the country for an aggregate period of 180 days in any calendar year. These laws cover all areas related to employment such as working hours, holidays and leave, notice, overtime, sick pay, and severance, and are applicable to both Thai and foreign employees. Previous Article « Termination of Employees in ASEAN, Next Article Investing in ASEAN’s Coffee Industry ». Although Thai Law does say that a contract can be oral or in writing, it has and ideally needs to be in writing. However, it does impose strict labor regulations with regards to working terms and conditions. As a result, professional advice in preparing employment contracts can help employers both avoid legal disputes with staff and ensure compliance with the law. Employment in Thailand may be terminated for a variety of reasons: Completing a project; Expiry of a fixed term contract; Resignation Furthermore, there is also a provident fund into which both employers and employees are required to make equal monthly contributions, ranging at between two and 15% of the worker’s monthly remuneration. The Ministry of Labor (MOL) is the primary authority responsible for setting and enforcing minimum employment standards in the country. In this issue of ASEAN Briefing magazine, we analyze the various market entry options available for investors ... Dezan Shira & Associates´ brochure offers a comprehensive overview of the services provided by the firm. Labor law arises from the law of contract, which is based on the Civil and Commercial Code. Employers are generally required to register their employees with the workmen compensation fund and social security fund. However, a fixed-term employment contract must be made in writing. The contract … Other important legislation includes the: These laws, which are applicable to both Thai and foreign workers, cover all areas related to employment such as working hours, holidays and leave, notice, overtime, sick pay and severance. Relations between employers and employees are covered by the Thai Labor Protection Act (LPA). Employment with a definite periodis allow… As a result, all foreign employees working in Thailand qualify as resident individuals and are liable to pay tax on their income earned in the country as well as on the income earned from abroad. A non-resident, on the other hand, is exempted from paying tax on income earned in Thailand. Save my name, email, and website in this browser for the next time I comment. Our assistance includes both complex labor matters and routine queries related to human resources practices or general labor law aiming to assist the day-to-day operations of the client. The first time one enters or hired by the company, they should have to sign an employment contract and understood everything that is stated therein. Those working for six to 10 years, meanwhile, are entitled to 240 days’ pay, while staff with more than 10 years’ service are entitled to 300 days-worth. 2. Professional advice in preparing an employment contract can significantly help employers avoid legal disputes with their employees and ensure complete compliance with Thai labor laws. Labor law or Employment law cases may also involve issues of wrongful termination, breach of contract or injuries that occur during scope of work. In case of termination, the LPA entitles employees who have worked for at least 120 days to severance pay equivalent to 30 days’ pay; those who have worked for one to three years, to severance pay equivalent to 90 days’ pay; whereas those who have worked for six to ten years are entitled to receive a compensation equivalent to 240 days’ pay. The firm assists foreign investors throughout Asia and maintains offices throughout ASEAN, including in Singapore, Hanoi, Ho Chi Minh City and Jakarta. As per amendments to the LPA, which were passed by the Thai National Assembly on December 13, 2018, employees with at least 20 years of service will be entitled to a severance pay equivalent of 400 days’ of the last drawn salary. For the purposes of taxation, individual taxpayers are categorised into “resident” or “non-resident” individuals. For example, if an employee intentionally causes the employer to suffer losses; does not perform his duties honestly, or commits a crime against the employer or another employee. Power of attorney. In practice, however, English documentation is used in many businesses onshore. Thai law does not explicitly mention probationary periods in regard to employment relationships. Under Thai law, there are no requirements that employment contracts be made in writing. For employees involved in hazardous work, normal working hours are restricted to seven hours per day and 42 hours per week. While Thailand does not mandate a written agreement between employers and staff, it does impose strict labour regulations with regards to working terms and conditions. Overtime compensation must be paid at a rate between 1.5 times on regular days to 3 times on holidays of the normal hourly rate for the actual overtime worked. An employee has served the company for less than 120 days. According to Section 17 of the Labour Protection Act B.E. The minimum notice period must be at least one week and not more than three months, But in certain circumstances, employers may dismiss staff members without providing prior notice or due compensation, for example, if an employee intentionally causes them to suffer losses, does not perform their duties honestly or commits a crime against them or another employee. Current personal income tax rates for resident individuals are given in the table below. Both employers and employees must contribute to the SSF at a rate of 5% of the staff member’s income, up to a maximum of THB750 (US$23) per month. Overtime Compensation. Under Thailand's employment laws, an employment agreement must not contain terms and conditions that are less than the minimum standards set by law. For the purpose of taxation, individual taxpayers are categorized into “resident” individuals or “non-resident” individuals. Further information about our firm can be found at: www.dezshira.com. But, and this is very important, a severance or ex gratia payment was not compulsory under Thai labor law before 1 September 2017. When managing a business in Thailand with employees, senior management should pay attention to the Labour Protection Act (1998) (“ LPA ”) and its related Ministerial Regulations given the broad impact it has coupled with the legal penalties which can … Please contact us at asia@dezshira.com or visit our website at www.dezshira.com. Termination of employment is defined as follows. ASEAN Briefing is produced by Dezan Shira & Associates. Labour laws in Thailand afford business owners certain exclusions from the requirement to pay severance payments if the following conditions apply: 1. In practice, therefore, it is advisable for employers to set out written terms and conditions of employment in order to avoid legal disputes at a later date or liability with regards to remuneration. Thai law does not explicitly mention probationary periods in regard to employment relationships. Fact Sheet #48: Application of U.S. Labor Laws to Immigrant Workers: Effect of Hoffman Plastics decision on laws enforced by the Wage and Hour Division … Special wrongful acts between employers and employees in connection with a labor dispute or in connection with the performance of work under an employment agreement. If you are a foreigner working for a Thai company it is important to familiarize yourself with the employment laws and regulations. Social Security Act, which established the labour court and its procedure; Rules concerning overtime work and working over holiday periods; When and where the payment of basic, overtime, holiday and holiday overtime pay will take place; Termination of employment, severance pay and special severance pay. For employees involved in hazardous work, normal working hours are restricted to seven hours per day and 42 hours per week, Terminating employment contracts and severance pay, If an employment agreement does not specify the contract’s duration, both employers and employees have a statutory right to terminate the contract after giving prior notice. Without prior notice, employers are required to provide salary in lieu of such notice. August 24, 2015. The published rules must include information about the following: In addition, a workplace with 20 or more employees must also provide a written agreement about working conditions as part of an employee’s contractual employment terms. Notary. By Vasundhara Rastogi, editor, Dezan Shira & Associates. Thai labor law is relatively flexible for employers. Our subscription service offers regular regulatory updates, Note the article on Thai work permits on this website. In Thailand, the employer-employee relationship is governed by a series of laws and regulations, the chief ones of which are the Thai Labour Protection Act B.E.2541 (LPA) and the Thai Civil and Commercial Code. Legal. Employers often believe that fixed-term employment contracts provide advantages over indefinite-term agreements because of the complexity of terminating workers under Thai law. A non-resident, however, is exempted from paying tax on income earned in Thailand. With an employment contract, the employee agrees to work and receive wages in return and the employer has the power to supervise employees during the work; however, contractors are entitled to receive payment when the work is completed. For some employers, this may create the perception that they can simply reach a cursory agreement … Furthermore, companies employing 10 or more workers must also publish written work rules at their place of work and file them with the district labour office within a prescribed period. 2541 (1998) and Ministerial Regulation No. and grow their operations. be provided by law to domestic workers under the Thai Labour Act B.E. But in reality, fixed-term contracts are subject to a variety of restrictions under Thai law which can lead to significant, and often unexpected, legal pitfalls for employers. In practice, therefore, it is advisable for employers to set out written terms and conditions of employment to avoid legal disputes or liability with regards to remuneration. The Labor Protection Act of B.E. Required fields are marked *. 1. Stay Ahead of the curve in Emerging Asia. It sets the rights and obligations of the employers towards its employees and vice versa. It is well acknowledged that under Thai labour law, employees are entitled to certain statutory entitlements. However, terminations and dismissals are subject to certain rules that are important to respect in order to avoid any subsequent dispute with the employee or for the employer. In Thailand, the employee-employer relationship is governed by a series of laws and regulations, the chief one being the Thai Labor Protection Act B.E.2541 (LPA) and the Thai Civil and Commercial Code (TCCC). Rest Period. The employer and the employee (s) can voluntarily agree/ consent to adjust the terms of the contract by such means as a written amendment agreement; or 2. Other laws include the Labor Relations Act, the Social Security Act, the Act establishing the labor court and labor court procedure, the State Enterprise Labor Relations Act, the Workmen’s Compensation Act, and the Foreign Employment Act. For inquiries, please email us at info@dezshira.com. Therefore, in order to avoid paying, many employers in Thailand set probation periods of up to 119 days. This covers areas such as working hours, holidays and leave, notice, overtime, sick pay, where summary dismissal is permitted without severance pay or notice, and the calculation of severance pay in a case … Malaysian Labor Contracts: What You Need to Know, Click to share on Facebook (Opens in new window), Click to share on LinkedIn (Opens in new window), Click to share on Twitter (Opens in new window), Click to share on Pinterest (Opens in new window), Click to email this to a friend (Opens in new window), Thai Labor Contracts: What You Need to Know. Sorry, your blog cannot share posts by email. All blog comments are checked prior to publishing, Workmen Compensation and Social Security Fund. If the employment agreement does not specify the duration of the contract, both the employer and employee have a statutory right to terminate the contract after giving prior notice. In general, working hours must not exceed eight hours per day or 48 hours per week. Thai labor laws serve as the best safeguard of the rights regarding employment in Thailand. Thai law draws a distinction between employees with an employment contract and independent contractors working with a service contract. The scope of this law has been expanded, such that relocating employees from one office in Thailand to another existing office in country will benefit from choosing to accept the relocation, or to terminate its employment contract and be entitled to severance pay according to the law. Legal documents translation. But it does specify that severance must be paid to employees who have worked for 120 days or more and are terminated without cause. Other laws include the Labor Relations Act, the Social Security Act, the Act establishing the labor court and labor court procedure, … Rest period during normal work. Thai Labor Contracts: What You Need to Know. Labour rules, laws and regulation in Thailand, 3. Both employers and employees are required to contribute to the Social Security Fund at the rate of 5 percent of the employee’s income, up to a maximum of THB750 (US$23) per month. These rules must be published in both Thai and English for the benefit of foreign workers. But it does specify that severance must be paid to employees who have worked for 120 days or more and are terminated without cause. Notify me of follow-up comments by email. In general, working hours must not exceed eight hours per day and 48 hours per week. The minimum notice period must be at least one week and not more than three months long. including the most recent legal, tax and accounting changes that affect your business. Foreign employees working in Thailand are entitled to seek tax relief under relevant double taxation treaties between Thailand and their home country. Editor’s Note: This article was first published on December 18, 2017 and has been updated on December 20, 2018 as per latest developments. As a full-service consultancy with operational offices across China, Hong Kong, India and ASEAN, we are your reliable partner for business expansion in this region and beyond. If an employment agreement is made in writing, an employer must provide a copy to the employee immediately after it has been signed. Labor: Our labor and employment team represents multinational and domestic companies in several economic sectors on strategic labor matters. Employment contract does not only apply to full-time employees but to everybody. 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