New Thai Labour Law gives better Protection

The Act has taken effect on August 19, 1998, 180 days after its publication in the Royal Gazette. Through the new Act, the parliament widens the scope of protection given to employees under the present Labour Law.

The Act is similar to the present Labour Law, but many sections have been modified in order to better protect workers and incorporate both Supreme Court judgements and provisions of the Thai Civil and Commercial code. Furthermore, the scope of enforcement has been broadened. As the new sections will prevail over conflicting provisions of any employment contract or work regulations of companies, all employers must be aware of these amendments.

Scope of Enforcement
The Act applies to all corporations which seek economic profit unless prescribed otherwise by the Ministry of Labor and Social Welfare (the “Ministry”). It does not apply to central, provincial and local administrations, nor to state enterprises.

Under the Act, all individuals working for remuneration, including domestic servants, are considered employees and benefit from the protection of the Act.

The Act also expands the definition of “employer”. A business owner/entity is considered the “employer” of all its contractors’ employees working at the owner/entity’s place of business. Furthermore, in case the employer is a subcontractor, all prior subcontractors up to the main contractor are jointly liable for the payment of wages, overtime payment, payment for holidays and compensation payment required to be paid under the Act.

Chapter 1: General Provisions

• Security Deposit
  An employer cannot request or receive a security deposit from its employees, with the exception of those responsible for money and property of the employer who have the potential for causing harm to the employer, as shall be determined by the Ministry. The prohibition is absolute for child employee.

• Priority Rights
  All money debts to be paid by an employer under the Act shall have preferential rights ranked at the same level as tax debts.

• Change of Employer
  A change of employer for any reason, including transfer of employment, shall not effect the rights granted to employees by the previous employer. The new employer shall accept the transfer of the rights and obligations of the previous employer.

• Equal Treatment/Sexual Harassment
  Employers shall equally treat male and female employees unless the nature or the condition of the work does not allow for such as equal treatment. Furthermore, sexual harassment against female or child employees is prohibited under the Act.

Chapter 2: Working Conditions

• Normal Working Hours
  The normal working hours have been modified. The maximum working hours shall not exceed 8 hours per day and 48 hours per week for any type of work, except for work detrimental to the health and body of employees, in which case normal working hours shall not exceed 7 hours per day with a maximum of 42 hours per week.

• Overtime Work, Work on Holidays, Rest Periods
  An employer may request its employees (except pregnant employees) to work longer than the regular working hours or on holidays, but consent must first be obtained from the employees. Where the work is of a continuous nature or in case of emergency, the employer may request employees to work outside or longer than the regular working hours or on holidays as deemed necessary.
  
  The employer shall provide the employee with a rest period of not less than 20 minutes before the employee starts working overtime work will take longer than 2 hours.
  
  Rest periods shall not be counted as working hours unless they exceed 2 hours, in which case the portion over 2 hours shall be counted as working hours.

• Leave days
  
  - Sick leave: Employees shall be en titled to take sick leave if they are sick but shall be entitled to be paid only for 30 days per year.
  
  - Sterilization: Employees shall be entitled to take leave with pay for sterilization if supported by medical certificate.
  
  Personal Leave: Employees shall be entitled to personal leave according to the company’s work regulations.
  
  - Weight Limitation: The Act protects women and children. It also protects male employees by prohibiting employers to call upon male employees to lift, shoulder, carry with both hands, carry something on one’s shoulder with a carrying pole, carry something on the head, and pull or push anything heavier than the weight to be determined by the Ministry.

Chapter 3: Female Labour

• Pregnant Employees
  Under the Act, pregnant employees are not allowed to work between 22.00 - 06.00 hrs, work overtime, work on holidays, or do other work as shall be announced by the Ministry.

• Termination of Employment Contract
  Employers are not allowed to terminate the employment of a female employee because of her pregnancy.

Chapter 4: Child Labour

• Minimum Age of Employment
  Minimum age of employment is modified. It is prohibited to engage a child under 15 years of age. Furthermore, an employer shall not engage a child under 18 years of age without informing the Labour Inspector.

• Prohibited Work for Children
  No employer shall assign employees aged less than 18 years to work on holidays, work overtime, or work between 22.00 - 06.00 hrs.
  
  No employer shall allow employees aged less than 18 years to carry out work which is detrimental to the child employee’s health, including work in places which may cause moral degeneration.

• Child Development
  A child employee has the right to take leave to attend meetings, seminars, training, etc. organized by the government or by private companies as approved by the Director-General. The employer shall allow the said employee to take such leave and pay wages equivalent to a normal working day’s wages but for not more than 30 days.
  

Chapter 5: Payment of Wages

• Wages
  An employer shall pay wages, overtime payment and payment for work on holidays to its employees at their place of work unless the employees agree otherwise.

• Compensation for Leave not Taken
  In case an employer does not provide a weekly holiday, traditional holidays or annual vacation to its employees, or provides them but they are not taken, the employer shall pay the employees for work and overtime work for leave days not taken at the rate applicable for holidays.

• Temporary Closure of Business
  In case an employer decides to temporarily close its business and such closure is not due to force majeure, the employer shall pay its employees 50% of their wages during that period. The employer must inform the employees and the Labor Inspector before the closing day.

• Debts
  An employer cannot deduct any debts from payments made to its employees under the Act except in five situations and, in each case, not more than a fixed proportion. The employer may deduct more than the fixed proportion with the employee’s prior consent except for deduction of tax debts for which there is no fixed amount.

• Payment of Wages
  Upon termination of employment, payments due to employees shall be paid within 3 days from the termination date (wages together with payments due for overtime work, work on holidays and overtime work on holidays).

Chapter 6: Wage Committee/ Minimum Wage Rates
The structure of the Wage Committee is revised and its powers are extended. Under the Act, there are two minimum wage rates:

• The standard minimum wage rates fixed by the wage Committee; and

• The specific minimum wage rates fixed by the Wage Committee for specific activities or businesses or specific areas or provinces which shall not be less than the standard minimum wage rates. If no specific minimum wage rates have been determined, the standard minimum wage shall apply.

Chapters 7, 8 and 9: Welfare

• Welfare Committees
  The following Welfare Committees shall be established:
  
  - The Labour Welfare Committee as national organization responsible for national welfare policies; and
  
  - Welfare Committees for business entities with more than 50 employees to look after and make recommendations regarding the companies’ welfare rules.

• Safety at Work
  A National Safety Committee shall be established in order to determine guidelines for safety at work, and a private organization shall be established in order to assist, train and provide technology to all employers under the government’s control.

Chapter 10: Suspension of Employees

• An employer shall not suspend an employee under investigation for fault unless permitted by the work regulations, and such suspension shall in no event be longer than 7 days. The employee shall be entitled to receive 50 percent of his/her normal wages during the period of suspension.

• In case the results of the investigation show that the employee is not at fault, the employer has to pay the employee his full wages retroactively from the first day of suspension together with interest of 15 percent per year.

Chapter 11: Severance Pay

• Severance Payment
  Two compensation rates are added. Hence, an employer shall compensate an employee whose employment has been terminated, if the employee has worked for an unbroken period of 120 days as follows:
  
  - If employee has worked for 120 days but less than 1 year: 30 days’ wages
  - If employee has worked for 1 year but less than 3 years: 90 days’ wages
  - If employee has worked for 3 years upwards: 180 days’ wages
  - If employee has worked for 6 years but less than 10 years: 240 days’ wages
  - If employee has worked for 10 years upwards: 300 days’ wages

• Exemption
  An employer shall not pay compensation if an employee has been terminated for one of the statutory causes provided that the employer indicated such cause in the termination notice. Note that a written warning given to an employee who violated work regulations will now be valid for not more than one year from the date the employee committed the offense.

• Special Compensation
  In case an employer relocates its business office to another area and such relocation affects the normal way of living of its employees or their families, the employer shall give 30 days advance notice to the employees. An employee shall be entitled to terminate his/her employment contract, if he/she does not want to be relocated to the new office of the employer and shall receive 50 percent of normal severance pay as special compensation.

Chapter 13: Statutory Retirement/Employee Funds
Business entities with more than 10 employees must establish an Employee Fund if they do not have a registered provident fund or a pension or retirement fund. Under this plan, employees and employer contribute equally to the Fund. The contribution rate shall not be more than 5 percent and the Ministry will manage the Fund.

The Fund is a system for helping employees to save money by compelling employers to pay an allowance into the Fund for the benefit of employees. Should the employer fail to provide such allowance, the company’s properties may be seized.

Chapter 14: Inspector
Competent officials shall have access to places where work is carried out for inspection and fact finding, and may summon persons concerned for statements and demand that evidence or documents be submitted.

Under the Act, the Labour Inspector is given more power. For example, the Inspector may:

• inspect the employer’s workplace;

• collect samples of materials or products in order to analyze the safety in the workplace;

• write orders to the employer and the employee requiring them to comply with the law.

Chapter 15: Punishment
An employee who violates or fails to comply with the requirements of the Ministry shall be punished with imprisonment not exceeding 6 months and/or a fine not exceeding 20,000 Baht. The employer shall be punished with a minimum fine at least equal to 5,000 Baht and imprisonment not exceeding 1 year and/or a fine not exceeding 200,000 Baht.

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