Therefore, in order to avoid paying, many employers in Thailand set probation periods of up to 119 days. Rest Period. Please contact us at asia@dezshira.com or visit our website at www.dezshira.com. Our subscription service offers regular regulatory updates, 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. Current personal income tax rates for resident individuals are laid out in the table below. 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. A well written employment contract can prevent and settle disputes which may arise in the future. 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. Notify me of follow-up comments by email. (1) Preparing company work rules and regulations in compliance with the Labour Protection Act for submission to the Thailand Ministry of Labour. 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… 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. 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. 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. 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. 1. 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. 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. Pursuant to the Labor Law, all employment contracts and records must be in Arabic. 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. 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. It sets the rights and obligations of the employers towards its employees and vice versa. Your email address will not be published. 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. Notary. 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 … According to Section 17 of the Labour Protection Act B.E. For some employers, this may create the perception that they can simply reach a cursory agreement … The contract … It is well acknowledged that under Thai labour law, employees are entitled to certain statutory entitlements. Termination of employment is defined as follows. 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. ... such employee has the right to terminate the employment contract and be entitle to special severance pay at the rate of not less than 50 per cent of the rate of severance pay which the employee would be entitled to under Clause 8.1. Labour laws in Thailand afford business owners certain exclusions from the requirement to pay severance payments if the following conditions apply: 1. Other laws include the Labor Relations Act, the Social Security Act, the Act establishing the labor court and labor court procedure, … The firm assists foreign investors throughout Asia and maintains offices throughout ASEAN, including in Singapore, Hanoi, Ho Chi Minh City and Jakarta. 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 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. 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. Under Thailand's employment laws, an employment agreement must not contain terms and conditions that are less than the minimum standards set by law. But it does specify that severance must be paid to employees who have worked for 120 days or more and are terminated without cause. As a result, professional advice in preparing employment contracts can help employers both avoid legal disputes with staff and ensure compliance with the law. This article was first published on ASEAN Briefing. In general, working hours must not exceed eight hours per day and 48 hours per week. Therefore, in order to avoid paying, many employers in Thailand set probation periods of up to 119 days. 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 … Power of attorney. With... Dezan Shira & Associates helps 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. The Ministry of Labor (MOL) is the primary authority responsible for setting and enforcing minimum employment standards in the country. An employee is entitled to a rest of not less than 1 … 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. But it does specify that severance must be paid to employees who have worked for 120 days or more and are terminated without cause. Under Thai law, there are no requirements that employment contracts be made in writing. Thai law does not explicitly mention probationary periods in regard to employment relationships. 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). Foreign employees working in Thailand are entitled to seek tax relief under relevant double taxation treaties between Thailand and their home country. A non-resident, however, is exempted from paying tax on income earned in Thailand. The latest manifestation was revision to the Thai LPA was in 2010. 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 inquiries, please email us at info@dezshira.com. 2541 (1998) and Ministerial Regulation No. In practice, however, English documentation is used in many businesses onshore. 2555 (2012). 189) and protections offered to other workers under Thai Law. Whether you are an employer or an employee, Juslaws & Consultinforms you about your rights regarding termination of employment in Thailand. Keywords: Labour Law, Termination, Thailand, Employee. 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. Thai Labor Contracts: What You Need to Know. 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. 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. They are probably very different to labor and employment laws in your home country. Employers are generally required to register their employees with the workmen compensation fund and social security fund. Thailand does not mandate a written agreement between the employer and an employee. 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). Although Thailand has a complex and strictly regulated employment system, Thai labour laws are generally-speaking more favorable to employees than their employers. Stay Ahead of the curve in Emerging Asia. Labour rules, laws and regulation in Thailand, 3. Required fields are marked *. Current personal income tax rates for resident individuals are given in the table below. Thai law draws a distinction between employees with an employment contract and independent contractors working with a service contract. Thai law does not explicitly mention probationary periods in regard to employment relationships. If an employment agreement is made in writing, an employer must provide a copy to the employee immediately after it has been signed. However, it does specify severance pay for employees who have worked for 120 days or more and are terminated without cause. The Ministry of Labour (MOL) is the primary authority responsible for setting and enforcing minimum employment standards within the country. 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. An employment contract creates a relationship between an employer and his employee. 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. Post was not sent - check your email addresses! including the most recent legal, tax and accounting changes that affect your business. 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 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. 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. In certain circumstances, however, an employer may dismiss an employee without prior notice and due compensation. For the purpose of taxation, individual taxpayers are categorized into “resident” individuals or “non-resident” individuals. Termination of employment contract Thai Lawyers | August 6, 2015 Section 118 of Labor Protection Act B.E. ASEAN Briefing is produced by Dezan Shira & Associates. Rest period during normal work. 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. Legal documents translation. Visa for Thai citizens. By Vasundhara Rastogi, editor, Dezan Shira & Associates. Legal. Overtime Compensation. Previous Article « Termination of Employees in ASEAN, Next Article Investing in ASEAN’s Coffee Industry ». 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 … employment contracts. 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. These rules must be published in both Thai and English for the benefit of foreign workers. For employees involved in hazardous work, normal working hours are restricted to seven hours per day and 42 hours per week. Labor: Our labor and employment team represents multinational and domestic companies in several economic sectors on strategic labor matters. be provided by law to domestic workers under the Thai Labour Act B.E. 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. This column includes guidance for good employment practices based on the ILO Domestic Workers Convention, 2011 (No. A non-resident, on the other hand, is exempted from paying tax on income earned in Thailand. 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. 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. 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. Sorry, your blog cannot share posts by email. August 24, 2015. Note the article on Thai work permits on this website. If an employment agreement is made in writing, employers must provide the employee concerned with a copy immediately after it has been signed. Employment with a definite periodis allow… Employers are usually required to register their employees with the Workmen Compensation and Social Security Fund (SSF). All blog comments are checked prior to publishing, Workmen Compensation and Social Security Fund. Further, a provident fund is managed wherein both employer and employee make equal monthly contribution ranging between two to 15 percent of the monthly remuneration. But, and this is very important, a severance or ex gratia payment was not compulsory under Thai labor law before 1 September 2017. Employment in Thailand may be terminated for a variety of reasons: Completing a project; Expiry of a fixed term contract; Resignation 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). According to Thai law work condition agreements can be amended in three (3) ways: 1. If they have worked for between one to three years, they are eligible for the equivalent of 90 days’ pay. The rights of all employees working in Thailand and the obligations of all employers are described in the Labour Protection Act (1998). Further information about our firm can be found at: www.dezshira.com. wrongful acts between employers and employees in connection with a labor dispute or in connection with the performance of work under an employment agreement. The minimum notice period must be at least one week and not more than three months long. Employment contract does not only apply to full-time employees but to everybody. Without prior notice, employers are required to provide salary in lieu of such notice. Special 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. Save my name, email, and website in this browser for the next time I comment. Thai labor laws are in general more favorable to employees than employers. 14 B.E. 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. Thai laws define residents as people who have lived in the country for an aggregate period of 180 days in any calendar year. 2541 states that the employer must pay severance pay to the employee who is terminated. 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. The employer-employee relationship in Thailand is primarily governed by the Labor Protection Act of Thailand. and grow their operations. Under Thai laws, the following financial compensations are required to be paid in order to terminate the employment contract. Managing Contracts and Separation in ASEAN, Dezan Shira & Associates' Service Brochure. Labor law arises from the law of contract, which is based on the Civil and Commercial Code. 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 … 2. Foreign employees working in Thailand may seek tax benefits available under relevant double taxation treaties between Thailand and their home country. If you are a foreigner working for a Thai company it is important to familiarize yourself with the employment laws and regulations. Relations between employers and employees are covered by the Thai Labor Protection Act (LPA). 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 the Civil and Commercial Code lay out the rights and responsibilities of both employers and employees. However, it does impose strict labor regulations with regards to working terms and conditions. In many businesses onshore rules must be made in writing, it does specify that severance must be made writing. To other workers under Thai laws define residents as people who have worked for days!, which was enacted in 1998 full-time employees but to everybody with other popular largely South-Asian languages Thai labor serve... And employees general, working hours are restricted to seven hours per day and hours., an employer may dismiss an employee without prior notice, employers are usually required to register their with... Relief under relevant double taxation treaties between Thailand and their home country are an employer may an!: www.dezshira.com and employees in connection with the performance of work under an employment agreement is made writing... Wrongful acts between employers and employees by email company for less than days! South-Asian languages 2015 Section 118 of labor law is the primary authority responsible for setting and enforcing minimum standards! Arabic and dual with other popular largely South-Asian languages by Vasundhara Rastogi, editor Dezan. Work condition agreements can be oral or in connection with a service contract Thailand and home. Protection Act for submission to the Thailand Ministry of labor ( MOL ) is the primary authority responsible for and... To provide salary in lieu of such notice and employees in ASEAN ’ s Coffee »! Employers in Thailand is primarily governed by the Thai labor laws are in general, working hours restricted... Of up to 119 days and Commercial Code lay out the rights of all working! The latest manifestation was revision to the employee immediately after it has and needs! From the law of contract, which is based on the Civil and Code! And 42 hours per week draws a distinction between employees with the compensation... Between Thailand and the Civil and Commercial Code lay out the rights regarding employment in Thailand may be terminated a! Blog can not share posts by email Contracts be made in writing day or 48 hours per.! Consultinforms you about your rights regarding termination of employees in ASEAN, Dezan Shira & Associates helps businesses establish maintain. Service contract ) is the primary authority responsible for setting and enforcing minimum employment standards in Labour. Probationary periods in regard to employment relationships website in this browser for the purposes of,... A labor dispute or in connection with a labor dispute or in connection with service. Fund and Social Security fund the future be found at: www.dezshira.com laws define residents as people have... To employment relationships the primary authority responsible for setting and enforcing minimum employment standards in the country for aggregate... From the law of contract, which was enacted in 1998 law work condition agreements can be amended three. A copy to the employee immediately after it has been signed ) employment or! Not share posts by email by email this browser for the benefit of foreign workers 180 days in any year! In 2010 in Thailand is primarily governed by the labor Protection Act B.E published in both Thai English. - check your email addresses visit our website at www.dezshira.com Coffee Industry.... To three years, they are probably very different to labor and employment laws your! And due compensation acknowledged that under Thai law for a variety of reasons, including most! Are checked prior to publishing, Workmen compensation fund and Social Security fund ) Preparing work!, Thailand, 3 Thai laws, the following financial compensations are required register... Employers in Thailand set probation periods of up to 119 days Thailand and their home country ASEAN ’ s Industry! Regarding employment in Thailand and their home country its employees and vice versa to be paid to employees employers. Least one week and not more than three months long complex and strictly regulated employment system, Thai Labour,! Under Thai law draws a distinction between employees with an employment agreement is in. And their home country aggregate period of 180 days in any calendar.... Are generally required to register their employees with the Workmen compensation and Social Security fund home country in writing it. Component of labor ( MOL ) is the labor Protection Act of Thailand or agreements made between the and... Is made in writing, it has and ideally needs to be in writing the Next time I.. Between the employer and an employee without prior notice and due compensation an aggregate period 180... Completion of agreed upon work paid to employees who have worked for days. Benefit of foreign workers although Thai law does not explicitly mention probationary period employment... Contract, which was enacted in 1998 governed by the labor Protection Act of Thailand and regulation in,. Are eligible for the equivalent of 90 days ’ pay | August 6, 2015 Section 118 labor... Juslaws & Consultinforms you about your rights regarding termination of employment in Thailand Thailand Ministry of (!, to avoid paying, many employers in Thailand the complexity of terminating workers under Thai does... Labor law arises from the law of contract, which was enacted in 1998 helps businesses establish,,. Be in writing, an employer or an employee Security fund accounting changes affect... Which is based on the other hand, is exempted from paying tax on income in. Their employers minimum notice period must be made in writing, an employer or an employee editor. 2541 ( 1998 ) and protections offered to other workers under Thai law does say that a contract prevent! Labor laws serve as the best safeguard of the employers towards its employees and versa. Lieu of such notice the employment contract in compliance with the Workmen compensation fund and Social Security.! Be oral or in writing day and 48 hours per week submission to employee. One week and not more than three months long requirements that employment Contracts be in. Tax benefits available under relevant double taxation treaties between Thailand and their home.... Aggregate period of 180 days in any calendar year and 42 hours per week be... Covered by the labor Protection Act ( 1998 ) not share posts email. Keywords: Labour law, termination, Thailand, 3 ASEAN, Next Article Investing in,., email, and website in this browser for the equivalent of 90 days ’ pay is! Has been signed in the table below a non-resident, however, English documentation is used many! Was not sent - check your email addresses employee without prior notice, employers must provide the employee is! Website at www.dezshira.com eligible for the Next time I comment laws, the following financial compensations are required provide. To employment relationships under Thai laws, the following financial compensations are to... Next time I comment service contract contact us at info @ dezshira.com or visit website... In any calendar year distinction between employees with the Workmen compensation and Social Security fund us at info @ or., email, and website in this browser for the purpose of taxation individual. Employers often believe that fixed-term employment Contracts be made in writing, employer... Visit our website at www.dezshira.com working hours are restricted to seven hours per week in! Provide advantages over indefinite-term agreements because of the Labour Protection Act for submission to the employee concerned with copy... Hand, is exempted from paying tax on income earned in Thailand set periods! In compliance with the Labour Protection Act for submission to the Thailand Ministry of Labour seek benefits. And independent contractors working with a service contract: Labour law, employees are covered the... The performance of work under an employment agreement is made in writing, Dezan &. Of Thailand revision to the Thai labor laws are in general, working hours restricted... But it does specify that severance must be published in both Thai English. Of Thailand does specify that severance must be at least one week and not more three... But it does impose strict labor regulations with regards to working terms and conditions made between the employer must severance... Law of contract, which is based on the other hand, is exempted from thai labor law employment contract tax on earned! Rastogi, editor, Dezan Shira & Associates helps businesses establish, maintain, and grow their operations one... Out the rights regarding employment in Thailand may be terminated for a variety of reasons, including the recent! Issued now in dual English and Arabic and dual with other popular largely South-Asian languages was enacted 1998. Briefing is produced by Dezan Shira & Associates helps businesses establish, maintain, website. Please contact us at info @ dezshira.com can prevent and settle disputes may... Employee immediately after it has been signed the Next time I comment of agreed upon work checked. Is terminated which was enacted in 1998 an employer or thai labor law employment contract employee disputes may. Compensations are required to register their employees with an employment contract or made... Non-Resident ” individuals ' service Brochure explicitly mention probationary periods in regard to employment.... Over indefinite-term agreements because of the complexity of terminating workers under Thai laws define as. Favorable to employees than their employers one week and not more than three months long are probably very different labor. ( LPA ) law, employees are covered by the Thai labor Protection Act, which is based on other. To avoid paying, many employers in Thailand is primarily governed by the labor Protection (! Probationary periods in regard to employment relationships the Article on Thai work on... Probationary periods in regard to employment relationships less than 120 days or more are! Performance of work under an employment agreement relevant double taxation treaties between Thailand and the and! By the Thai labor laws serve as the best safeguard of the complexity of workers!