Thai Employment Law and other practical issuesA. Overview of Thai Employment Law
Principally, labour and employment issues in Thailand are governed by:
(1) Civil and Commercial Code
(2) Labour Protection Act (1998)
(3) Labour Relations Act (1975)
(4) Act on the Establishment of Labour Courts and Labour Procedure (1979).Other legislation which governs the labour and employment issues include:
(5) Act on Occupational Welfare for Thai Nationals (1956)
(6) Act on Alien's Work (1978)
(7) Act on Recruitment and Protection of Employment Seekers (1982)
(8) Act on Social Security (1990)
(9) Workmen's Compensation Act (1994) - Compensation Fund
(10) Act on Occupation Training Promotion (1994)(1) Civil and Commercial Code
The provisions regulating the principles of employment which are set out under Title VI: Hire of Services are part of Book III of the Civil and Commercial Code (CCC). Book III, which incorporates 23 Titles of Specific Contracts ranging from Sale, Hire of Property, Carriage of Goods and Passengers to Suretyship, Mortgage and Pledge, and from Agency, Current Account, Insurance, Bills to Partnerships and Companies.Book III was first promulgated on 1 January 1924 and later revised and re-enacted on 1 January 1928.
(2) Labour Protection Act, B.E. 2541 (1998)
The Labour Protection Act has the principal aim of regulating the rights and duties of the employers and employees and lays down the minimum labour and employment requirements and standards in general. The Act governs the use of labour being made of women and minors, remuneration for work performed, welfare, safety at work, severance pay for termination of employment, and the employee welfare funds. Labour officials are empowered by the Act for the purposes of providing protection to employees and ensuring equity and fairness and the pursuit of the ultimate interests of Thailand.
(3) Labour Relations Act, B.E. 2518 (1975)The Labour Relations Act deals with the process of negotiations and bargaining in relation to labour issues between the employers and employees. It set outs the procedure for the submission of demands for amendment of the conditions of employment, the settlement of labour disputes, the rights of the employers and employees to set up associations and labour unions for the purposes of employment and the welfare of employees. The establishment of employee committees to serve as a vehicle for the holding of consultations between the employees and their employers is also covered by the Act.
(4) Act on the Establishment of Labour Courts and Labour Procedure (1979).
The reason for promulgating this Act is that labour cases are special in character and different from other civil and criminal cases. Labour cases deal with disputes between the employers and the employees arising from the employment contracts or are concerned with the rights of the employers and the employees under the law on labour protection and labour relations. These disputes should be considered by judges who understand the problem of labour disputes and also by associate judges who are appointed from the representatives of both the employers and the employees. These cases should be heard in the manner in which judgments could be rendered quickly, equally and fairly having regard to the fact that the parties should have the chance of compromise and can work together without the feeling of antagonism against one another. In order to achieve this end, it is necessary to exempt certain steps and procedures prescribed in the Civil Procedures Code to ensure flexibility.
(5) Act on Occupational Welfare for Thai Nationals (1956)
The Act was legislated and enforced in Bangkok Metropolis to increase employment opportunities among the Thai people. It compels such commercial and industrial entities as prescribed by ministerial regulations which employ ten or more people to have a minimum number of Thai employees as prescribed by the ministerial regulations.
(6) Act on Alien's Work (1978)
The Act reserve to the Thai people certain occupations which the Thai people are capable of performing. It restricts foreigners generally from seeking employment in those occupations. However, certain types of foreigners are permitted to apply for permits to work in other capacities not barred by the Act. Those foreigners include those:
(i) who are temporary residents in Thailand and are not tourists or travelers in transit;
(ii) who are permitted to work in Thailand pursuant to the provisions of the law on investment promotions or other laws; and
(iii) who are banished or pending banishment from the country, or who were born in Thailand but were not granted Thai nationality, or whose Thai nationality was withdrawn by the Thai Government.
(7) Act on Recruitment and Protection of Employment Seekers (1982)
As its name implies, this Act seeks to protect those people who are seeking employment overseas and to regulate recruitment agencies. The Act was amended a number of times following an increase in the number of Thai people seeking employment overseas and reports of these job-seekers having been defrauded. Essentially, the Act seeks:
(i) to set up government recruitment offices to provide free recruitment services to the public;
(ii) to protect those seeking employment from being treated unfairly and to provide assistance to those in need; and
(iii) to regulate and supervise the operations of private recruitment agencies. In this respect:
An applicant for a permit to operate a domestic recruitment business in Thailand must be a Thai national and place a bond of Baht 100,000 with the Recruitment Registrar to secure his compliance with the recruitment law. An incorporated applicant must also be of Thai nationality (i.e. having a majority Thai shareholders) and its manager possesses lawful qualifications.
An applicant for an international recruitment service licence must be a private or public company with a registered, paid-up capital of at least Baht One Million. A five-million-baht bond must be deposited with the Recruitment Registrar.
(iv) to require that the licensed international recruitment service provider arrange for job seekers' skills to be examined and tested by a private or government agency.
(8) Act on Social Security (1990)
The Act requires that the employers, the employees and the Government pay contributions to a fund which will be utilised for the protection of employees who are injured, taken ill, crippled, or die outside of employment. The benefits also include maternity and child welfare, old-age and unemployment assistance. The tri-partite combined rates of contributions for injuries, illness, disability, death, and maternity will not exceed 4.5 per cent of wages, 9 per cent for child and old-age welfare scheme, and 15 per cent for unemployment. The timing for implementation of the welfare schemes will be fixed by royal decree.
(9) Workmen's Compensation Act (1994) - Compensation Fund
It is another important piece of legislation aimed at protecting the employees or those persons in the employ or dependency of the employer. The Act, in force since 1 July 1994, requires the employer to make compensation to those persons who sustain injuries, illness, or death in consequence of the performance by them of work for the employer. As a result, a Compensation Fund was set up by virtue of this Act.
Since the primary purposes of the Act lie in the protection of the employees, interpretation of the provisions of the Act, in the case of doubt, will be rendered in the manner that accords protection or benefits to the persons entitled to compensation.
The universal concept of compensation to workers who receive injuries, ailments, or death centers on the belief that the employer is to be held liable for these unfortunate and, at times, tragic incidents. These incidents almost always resulted to the employees from their use or operation of or attendance to tools, equipment and machinery installed or provided for by the employer. Alternative, the employees were denied the right of choice as to which item of the tools, equipment and machinery is safe and appropriate for them to use. Theoretically, faulty or defective tools, equipment and machinery were believed to be the cause of injuries, illness and death to the employees. Therefore, the employer, as provider of these tools, equipment and machinery, were made to assume liability therefor.
The Act applies to the employer of all types of operations and activities who employs one or more employees, except:
(a) the Central, the Provincial and the Local Governments;
(b) state enterprises under the law governing state enterprise labour relations;
(c) an employer of a private school business pursuant to the law governing private schools, particularly in relation to teachers and principals;
(d) an employer whose business is not in pursuit of economic gains;
(e) any other employer prescribed by ministerial regulations (Section 4);
(f) an employee of household work which does not include the operation of business (Section 5).
Compensation Fund
Section 26 of the Workmen's Compensation Act stipulates that a Compensation Fund (Fund) be set up and managed by the Social Security Office from which compensation is made to the employee on behalf of the employer who pays contributions to the Fund under Section 44. Management of the Fund by the Social Security Office, instead of by the Ministry of Finance, is to ensure speedy payment of compensation from the Fund to the employees.
Under Section 27, the Fund comprises:
(i) the original Compensation Fund that existed under an announcement of the National Executive Council, dated 16 March 1972;
(ii) contributions paid by the employers;
(iii) benefits accruing to the Fund pursuant to Section 29;
(iv) surcharge for late payment of contributions at 3% per month (Section 46);
(v) property seized from the employer who fails to pay contributions pursuant to Section 47; such seized property vests to the Fund;
(vi) fine or penalty imposed under Section 66;
(vii) subsidiaries or donations made to the Fund;
(viii) other income;
(ix) fruits accruing to the Fund.
Under Section 44, an employer must pay a contribution to the Fund where it has ten or more employees. When an employee of the contributing employer sustains an injury, illness or death, the Fund will pay compensation directly to the employee on behalf of the employer.
This scheme of compensation is similar to that adopted by an insurance company. This similar scheme of insurance ensures that the affected employee receives his or her compensation in full from the Fund notwithstanding the financial condition of the employer at the time an entitlement under the Fund arises to the employee.
Under Section 28, the Ministry of Labour and Social Welfare is empowered to allocate 22 per cent of the Fund's fruits towards the treatment and restoration of the working capacity of employees. In addition, the ministry can set aside 3 per cent of the fruits to cover expenses arising from the administration of the Office of the Compensation Fund.
The employer is obligated by Section 44 to file a registration form for the payment of contributions to the Fund and a register (list) of employees with a local Fund office within 30 days of the date on which the number of its employees reaches ten. However, an employer is not required to contribute to the Fund who engages in farming, fishery, forestry or animal raising that do not employ workers throughout the year and whose operations do not include other descriptions of work.
The rate of contributions vary from business to business dependent on its type. In no case, however, will it exceed 5 per cent of the amount of wages paid to all the employees in one year. According to an Interior Ministry announcement dated 2 July 1997, the minimum rate has been fixed at 0.2 per cent and the maximum rate at 1 per cent.
The Ministry may vary the rate of contributions paid by each employer to the Fund by having regard to the frequency of accidents that have occurred to the employees of each such employer.
(10) Act on Occupation Training Promotion (1994)
The Act seeks (i) to promote and encourage the training of those in prime working ages in such areas of work that are in demand of the industrial and commercial community, (ii) to enhance the skills of workers in the fields in which they are presently employed, and (iii) to organise tests of the employees' work performance skills. Cooperation between the industrial and the educational establishments is encouraged so that students can be admitted for training at various industrial concerns.B. Updates on the Development of the Employment Laws Issues
1. An Act promulgated in 2002 which applies the Social Security Act (1990) to all employers having one or more employees under their employment.
2. A Royal Decree (2002) issued pursuant to Section 4(6) of the Social Security Act (1990) excluding the following employees from the ambit of the Social Security Act:
(a) Employees of the Bar Council;
(b) Employees of the Chulabhorn Research Institute;
(c) Employees of the Thai Red Cross Society;
(d) Employees of state enterprises under the law governing state enterprise labour relations;
(e) Employees of any of the business of plantation, fishery, forestry, and animal husbandry which does not make use of the labour of their employees throughout the year, and which does not involve the work of other descriptions;
(f) Employees who are employed for works that are of occasional, casual, or seasonal descriptions;
(g) Employees who are employed by a natural person and whose work involves no business operation;
(h) Employees who carry on small businesses of the nature in which the merchandise is displayed for sale in booths or on stalls or stands or not at a fixed place;
3. The Labour Relation Act (No. 3), promulgated in 2001 and excluding the following from the application of the Labour Relation Act:
(a) the Central Government Administration;
(b) the Provincial Government Administration;
(c) the Local Administrations, including the Bangkok Metropolis Administration and the Pattaya City Administration;
(d) the business of state enterprises under the law governing state enterprise labour relations, except in the case where the Labour Federation becomes a member of the Congress of Employee Organisation;
(e) other business to be proclaimed by Royal Decree.
C. Law versus Practice
1. Pre-signed Letters of Resignation
Some employees were asked to sign letters of resignation well in advance in some cases or upon their being recruited in others so that the resignation would take effect when arbitrarily dated and approved by the employer.
Though the practice renders no effect to the resignation, as the Thai court holds that the intent element on the part of the employee was wanting at the time the letter of resignation was dated by the employer, it has become a preference for many unscrupulous employers.
In such case, the termination of employment would be deemed to be initiated by the employer. The employee would thus be entitled to all the benefits and compensation accruing from such termination.
2. Punch in, Punch out
Employees would be caught and penalised time and again for punching the time clock either to report arrival at work or departure from work of other fellow employees.
Regarding these incidents, the Thai Supreme Court has held that if the punched time records were made falsely by an employee for another employee contrary to the company's work rules (i.e. reporting that the other employee who was absent had reported to work), the puncher would be guilty of a gross misconduct. Accordingly, the employer could justifiably terminate that employee without prior notice nor compensation by reason of the termination (see Thai Supreme Court Judgment No. 2648/2525).
On the contrary, if an entry was made in the manner similar to the foregoing case with the exception that the time entry was true, the Supreme Court has ruled that though the act was in breach of the company's work rules, the records were true and the company sustained no serious damage. This was because the employee on whose behalf the punching was made did actually report to work. The court believed the company had incurred no serious damage as it was not required to pay wages to the employee in excess of the amount to which he/she was entitled. The company was therefore ordered to pay termination-related compensation to the employee (see Thai Supreme Court Judgment No. 3095/2537).
3. Hire of Services/Hire of Work
The issue of whether a contract of employment constitutes a hire of services or a hire of work has become another source of contention between the employers and employees. If a contract is heard to be a hire of work, all entitlements and compensation related to the termination of employment, normally enjoyed by an employee under a hire of services contract, will be denied to the employee under the hire of work contract.
Regarding a hire of services, Section 575 of the CCC provides:
"A hire of services is a contract whereby a person, called the employee, agrees to render services to another person, called the employer, who agrees to pay a remuneration for the duration of the services."
Under a labour protection notification of the Ministry of Interior, dated 16 April 1972, a remuneration or wage includes a payment made in money, or in money and in kind, in compensation of work done during the normal working hours on a working day, or a payment computed as a result of the work accomplished by an employee.
Regarding a hire of work, Section 587 of the CCC provides:
"A hire of work is a contract whereby a person, called the contractor, agrees to accomplish a definite work for another person, called the employer, who agrees to pay him a remuneration of the result of the work."
Court cases regarding this issue abounds. However, the distinction drawn by the court is that if an employee is subject to the work rules of the company and to the command, supervision and instructions of his/her employer in the course of his/her work, irrespective of whether the remuneration is computed on a piecemeal basis, the contract governing his/her employment is considered to be a hire of services.
D. Termination of Employment
1. Termination of Employment
The term denotes an act of the employer showing that he no longer hires the employee so that the relationship between them as employer and employee comes to an end.
Termination may be communicated by a party to the other verbally or in writing.
2. Laws applicable to Termination of Employment
(a) Termination of Employment
Section 118 of the Act on Labour Protection
The second paragraph of Section 118 provides for the termination of employment in two cases:
(i) The employer no longer wants the employee to continue working and stops paying wages by reason of the term of employment coming to an end or otherwise.
(ii) The employee does not perform work and is not paid wages by reason of the employer being unable to continue his business.
(b) Advance NoticeSection 582 of CCC:
"If the parties have not fixed the duration of the contract either party can terminate it by giving notice at or before any time of payment to take effect at the following time of payment. But no more than three-month notice need be given.
"The employer can, on giving such notice, immediately dispense with the services of the employee by paying him his remuneration up to the expiration of the notice."
Similarly, Section 17, paragraph two, of the Labour Protection Act:
"Where the employment contract is of no specific duration, the employer or the employee may terminate the employment contract by giving an advance notice in writing to the other party on or before the date fixed for a payment of wages so that the termination of the employment contract takes effect on the date fixed for the next succeeding payment of wages, provided that the advance notice need not be of a period exceeding three months."
3. Compensation for Termination of Employment
3.1 Upon terminating an employee, the employer is required to pay compensation to the employee whose amount depends on the length of the employee's service towards the employer.
Periods of employment Amounts of severance payment An employee who has consecutively completed 120 days, but less than one (1) year, of work: a payment of not less than 30 days of his or her last wages, or, in the case of an employee who works on a piecemeal basis, not less than the wages of his or her last 30 days of work. An employee who has consecutively completed one (1) year, but less than three (3) years, of work: a payment of not less than 90 days of his or her last wages, or, in the case of an employee who works on a piecemeal basis, not less than the wages of his or her last 90 days of work. An employee who has consecutively completed three (3) years, but less than six (6) years, of work: a payment of not less than 180 days of his or her last wages, or, in the case of an employee who works on a piecemeal basis, not less than the wages of his or her last 180 days of work. An employee who has consecutively completed six (6) years, but less than ten (10) years, of work: a payment of not less than 240 days of his or her last wages, or, in the case of an employee who works on a piecemeal basis, not less than the wages of his or her last 240 days of work. An employee who has consecutively completed ten (10) years, or more, of work a payment of not less than 300 days of his or her last wages, or, in the case of an employee who works on a piecemeal basis, not less than the wages of his or her last 300 days of work. Before the termination of an employment is to take effect, the employer needs to notify his employee in writing on or prior to a wage payment date so that the termination takes effect on the succeeding wage payment date. However, the period of an advance notice need not be more than three (3) months.
3.2 Compensation for Termination of Employment for Other Causes
The employee is entitled to compensation for termination of employment by reason of the relocation of the employer's place of business pursuant to Section 120 of the Labour Protection Act, or by reason of improvements or renovation of the business being made pursuant to Section 121 of the Labour Protection Act.
Section 120 of the Labour Protection Act:
"In case the employer relocates the place of business which relocation materially affects the ordinary course of living of the employees or their families, the employer shall notify the employees not less than thirty days prior to the date of relocation of the place of business. If any employee does not want to go to work for the employer, such employee shall have the right to terminate the employment contract and be entitled to a special severance pay at not less than fifty per cent of the rate of severance pay which the employee shall be entitled to under Section 118.
"In the case where the employer fails to give advance notice of relocation of the place of business to the employees pursuant to paragraph one, the employer shall also pay a special severance pay in lieu of such advance notice in an amount equal to thirty-days pay at the latest wage rate, or the wages received for the last thirty days for employees who receive wage based on work units performed.
"The employee has the right to submit a request asking the Labour Welfare committee to consider within thirty days from the date the employer relocates the place of business, as to whether or not such is the case where the employer must give prior notice or where the employee is entitled to terminate an employment contract with the right to receive a special severance pay under paragraph one.
"The decision of the Labour Welfare Committee shall be final, unless the employer or the employee shall appeal against such decision to the court within thirty days from the date of notification of such decision. In case where the employer is the party bringing a lawsuit to the court, the employer must place a deposit with the court in accordance with the amount which must be paid to the employee submitting a request under paragraph three, in order to proceed with the case.
"The employee must exercise the right to terminate an employment contract under this Section within thirty days from the date the employer relocates the place of business or the date the decision of the Labour Welfare committee or the court judgment becomes final."
Section 121 of the Labour Protection Act:"Paragraph two of Section 17 shall not apply to the case where the employer is to terminate employees because of improvements of the working unit, production process, distribution or service, arising from the utilisation of machinery or the change in machinery or technology, which is the cause for the reduction of employees. The employer shall send notification regarding the date of termination of the employment, reasons for terminating the employment and names of employees, to the labour inspection official and the employees to be terminated, at least sixty days in advance of the employment termination date.
"In the case where the employer fails to give advance notice to the employees to be terminated, or gives advance notice for a shorter period than specified in paragraph one, in addition to severance pay pursuant to Section 118 the employer shall also pay a special severance pay instead of the advance notice, equal to sixty days pay at the latest wage rate, or equal to the wages received for the last sixty days for employees who receive wages based on work units performed.
"In the case where special severance pay is made instead of the giving of advance notice pursuant to paragraph 2, it shall be deemed that the employer has paid remuneration instead of giving advance notice under the Civil and Commercial Code."
4. Termination of Employment without Notice and Compensation4.1 Termination of Employment without Severance Pay
No severance pay need be paid:
(a) Under Section 118 of the Labour Protection Act where:
(i) the employee has worked for a period of less than 120 days;
(ii) the employment is for a specific period and termination takes place at the end of such period;
(iii) the employee is employed in connection with a specific project which is not in the normal course of business of the employer and in which the time for commencement and completion of work is fixed;
(iv) the work is of a temporary nature by which the time for commencement and completion of work is fixed;
(v) the work is of a seasonal nature and employment is engaged during such season,
Provided that such work must be completed within a period of not more than two years and the employment therefor is made in writing.
(b) Under Section 119 of the Labour Protection Act where:
"The employer need not make a severance pay to the employee whose employment is terminated in any of the following cases:
(i) being dishonest in the course of performing his duties or intentionally committed criminal offences against the Employer;
(ii) intentionally causing the employer to suffer damage;
(iii) acting negligently causing the employer to suffer serious damage;
(iv) violating the work rules or violate the fair and lawful rules or orders of the employer and having been warned by the employer in writing, save for serious violations where warning is not necessary. A written warning is effective for a period of no more than one year from the date of a misconduct is committed by the employee
(v) abandoning duty for three consecutive work days without reasonable justification whether or not there is a holiday in between or not;
(vi) having been sentenced to imprisonment by a final judgment, except for negligence or petty offence."
4.2 Notice of Cause of Termination under Section 119
Section 17, paragraph three, of the Labour Protection Act:
To take advantage of Section 119 of the Labour Protection Act in connection with a termination of employment, Section 17, paragraph three, provides that if the employer does not specify a reason for the termination of an employment, the employer cannot thereafter set up any of the causes under Section 119 as a defence.
4.3 Termination of Employment without Notice or Compensation
Section 583 of CCC:
"If the employee wilfully disobeys or habitually neglects the lawful commands of his employer, absents himself from service, is guilty of gross misconduct, or otherwise acts in a manner incompatible with the due and faithful discharge of his duty, he may be dismissed by the employer without notice or compensation."
5. Unfair Termination
5.1 Section 49 of the Act on the Establishment of the Labour Court and Labour Procedure, B.E. 2522 (A.D. 1979)
Besides the payment of severance pay, an employer may be ordered by the labour court, upon the employee's request to it pursuant to Section 49, either to reinstate the dismissed employee or to pay damages to him or her if it is found that the dismissal is unfair.
Section 49 provides:
"In the trial of a case of dismissal of an employee by an employer, if the labour court is of the opinion that such a dismissal is not fair to the employee, the labour court may order the employer to accept the said employee to work at the rate of wage payable at the time of dismissal. If the labour court is of the opinion that the employer and the employee cannot work together any longer, the labour court shall fix the amount of damages as compensation to be paid by the employer by taking into consideration the age of the employee, the length of employment of the employee, the hardship of the employee at the time of dismissal, cause of the dismissal and the compensation to which the employee is entitled."
5.2 Unfair Termination Not Defined
The law has no definition as to what constitutes an unfair termination of employment. Thai Supreme Court decisions provide a basis for it.
(a) Unfair Employment Terminations
Thai Supreme Court Judgment No. 7492/2542
Generally, in considering the fairness of termination of employment the court has regard to the existence of reasonable cause for the termination in conjunction with the work rules of the company which are regarded as an agreement on the condition of employment between the employer and the employees.
Thai Supreme Court Judgment No. 3574/2526
An employee had committed 11 counts of wrongdoings some of which warranted a dismissal by the employer and denied the wrongdoer necessary protection under the labour law. The employer did not dismiss the employee in question by reason of the wrongdoing, but elected to impose a lighter disciplinary action against him. Subsequently, the employer decided to dismiss the employee after he failed to report to work for one day. Apparently, the dismissal was also made in reliance on the employee's previous wrongdoings. The court held the dismissal as an unfair termination of employment because the employer was believed to have no intention in penalising (i.e. dismissing) the employee at the times the past wrongdoings occurred. Therefore, the employer could no longer rely on the past wrongdoings to dismiss the employee again.
Summary of What Constitutes an Unfair Termination
In addition, on the basis of court judgments, an unfair termination of employment may be summarised to include
(i) a dismissal without cause, or with cause but such cause is unreasonable, or
(ii) it is not to such an extent as to warrant a dismissal, or
(iii) it lies outside a company's work rules or an employment contract, or
(iv) a dismissal in which an alleged offence of an employee cannot be proved or in which an employee has committed no offence, or
(v) a dismissal which is intended to harass or persecute an employee.
(a) Employment Terminations Not Considered Unfair
(i) A termination of employment on the basis of unsatisfactory work performance records was not considered to be unfair (see Supreme Court Judgments Nos. 2914-2915/2523, 3538/2524, and 2671/2527)
(ii) A hotel management work rule in respect of the handling of keys to quest rooms requires that maids hang them round their necks or waists and that they may not be left elsewhere nor lent to any other person. Therefore, the employer's dismissal of a maid who lost the keys to all the rooms on the 6th floor was not deemed to be unfair. The court held the loss of the keys to be a material breach of the work rule (see Supreme Court Judgment No. 3416/2525)
6. Termination of Employment Forbidden
(a) Under Section 121 of the Labour Relations Act, an employer may not terminate an employee for reasons stipulated in that Section, such as the employee having taken part in the submission of demands to the employer or of requests for negotiations relating to labour-related problems, or the employee being a member of a labour union.
(b) Under Section 43 of the Labour Protection Act, an employer may not terminate a woman employee by reason of her pregnancy.
E. Employee in Authority Not Entitled to Overtime Pay
According to Section 65 of the Labour Protection Act, an employee will not be entitled to work-day and holiday overtime pays if he or she has the authority and duty to act on behalf of the employer in relation to the employment of personnel, the payment of remuneration, the reduction of wages, or the termination of employment. However, the employer may agree to pay such overtime pay to the employee if he wishes.
F. Employment Contract Checklists
1. Form of Contract
Under Thai law, a contract of employment need not be made in writing or evidenced by writing. Hence, the terms of an employment may be agreed upon between the parties otherwise than in writing.
In commercial settings, however, it is advisable that an employment contract be recorded in writing for purposes of clarity and compliance by the parties with its terms and provisions. Interpretation and litigation of a dispute in respect of the provisions of employment will also be greatly facilitated before a court of law.
2. Contractual considerations
Contractual considerations usually comprise in an agreement between independent parties in respect of issues outside of the legal considerations or the minimum requirements imposed by law and binding on the employer.
3. Legal considerationsIn order for the provisions of an employment contract to be valid and enforceable in accordance with Thai laws, the parties to it should have regard to the following:
(a) Work Rules
Usually, work rules are required by Section 108 of the Labour Protection Act to be announced by the employer and displayed on the work premises within 15 days when the number of its employees reaches ten.
Though, in practice, work rules are not recited or incorporated verbose in an employment contract, they have binding effect on the employer and all its employees, old or new. Any provisions in an employment contract which contradict the work rules will be unenforceable.
Work rules at least contain the following:
(1) work days, normal working hours and rest period;
(2) holidays and rules for the taking of holidays;
(3) regulations for overtime work and the doing of work on holidays;
(4) days and places where wage, overtime wage, holiday wage and wage for overtime work done on holiday are to be paid;
(5) days of leave and rules for the taking of leave;
(6) disciplinary action and punishment;
(7) the filing of grievances; and
(8) termination of employment, severance pay and special severance pay.
(b) Security Deposit
Under Section 10, an employer may not demand or receive a security deposit from the employee as security for work performance or damage, except in the case where by the nature of his or her work the employee has monetary or property responsibility and where permitted by notification of the Ministry of Interior.
Pursuant to an Interior Ministry notification dated 19 August 1998, the amount of a bond may not exceed 60 times the average daily wages of the employee and may be demanded from the employee who works in the capacity of:
(i) chief accountant,
(ii) cashier,
(iii) person who cares for or guards the premises or property of the employer or under the responsibility of the employer,
(iv) bill collector,
(v) person operating or supervising vehicles, and
(vi) person responsible for the purchase and sale, exchange, lease, hire-purchase, lending, property deposit, mortgage, pledge, warehousing, insurance, money remittances, or banking.
(c) Sexual harassments against woman or minor employee (Section 16)
(d) Consent for Working Overtime
According to Section 24 of the Labour Protection Act, an employer may not require its employees to work overtime on a normal working day unless prior consent is given by the employees from time to time.
In case of a work whose nature requires the performance of work in continuity, or damage will results, or in case of urgency, the employee may be required to work overtime as necessary.
(e) Annual Holiday
Section 30 provides that an employee who has worked continuously for one full year shall be entitled to a leave of not less than six working days which is to be fixed in advance by the employer or by agreement between the employer and the employee.
(f) No termination of Woman Employee by reason of Pregnancy
Section 43 prohibits the employer from terminating the employment of a woman employee by reason of her becoming pregnant.
(g) No Employee below 15
Section 44 prohibits employment of a minor under fifteen years of age.
(h) No Overtime or Holiday Work Affecting Health or Safety
Section 31 prohibits overtime work or holiday work for work which affect the employee's health or safety which, according to a 1998 Interior Minister notification, includes work performed underground, underwater, tunnels, etc., work involving radiation, steel welding, transportation of dangerous materials, production of dangerous chemicals, work involving the use of tools or machinery emitting vibrations to the users which may be dangerous, or work involving extreme heat or coolness which may be dangerous.
(i) No Late Night or Wee Hours Work for Minors
Section 47 does not permit the employer to require employees under eighteen years of age to work during the period from 22:00 hours to 06:00 hours unless written permission is obtained from the director-general.
(j) No Overtime or Holiday Work for Minors
Section 48 does not permit the employer to require employees under eighteen years of age to work over time or on holiday.
Case Study
Section 119 of the Labour Protection Act set forth the circumstances under which the employer needs not make Severance Pay to the employee whose employment is terminated.(1) Dishonest in the course of performing his duties or intentionally committed criminal offenses against Employer:
(2) Intentionally causing Employer to suffer damages:
(3) Act negligently causing Employer to suffer serious damages:
(4) Violate work rules and regulations or violate fair and lawful rules or orders of Employer and having been warned by Employer in writing, save for serious violations where warning is not necessary. A written warning is effective for a period of no more than one year from the date the relevant misconduct is committed by Employee:
(5) Abandon duties for three consecutive work days without reasonable justification and with or without Holidays in between;
(6) Has been sentenced to imprisonment by a final judgment, except for negligence or petty offenses.
The facts given below are actual labor disputes brought to the Thai Labor Court and fought up to the Supreme Court. Apply the provisions of Section 119 given above to the facts given below, answer the questions and see how good you are.
Case No. 1 They are my friends
Lee is an HR manager of ADB Ltd. (ADB). He is responsible for receiving and screening job applications before passing them to ADB's Managing Director for further actions. In the process of screening the job applications, Lee had intentionally discarded some of the applications of those unknown to him and presented to ADB's managing director only those of his friends and relatives. It does not appear that Lee receive any undue benefit from his friends and relatives whose job applications have been presented to the managing director, however, such a practice caused ADB to lose the opportunities to recruit better qualified persons. His action also enhances Lee's status among his friends and relatives.
Question: Does Lee's practice amount to "dishonest in the course of performing his duties"
Answer (case no. 1): The Court adjudged that the benefit Lee enjoys from such practice is merely the respect from his friends and relatives which is not in the form of money and therefore Lee's practice is not a "dishonest in the course of performing his duties"
The opportunities that ADB lost can not be calculated in money. It is the authority of Lee that ADB vested on him so he has right to screen people in his favor.
Case No. 2 Mom's not home
Heng is a foreman in CD factory "CD". His wife went to visit her parents in up-country for 2 weeks leaving their two kids under Heng's care. Having no one to cook lunch and dinner for his two kids, Heng orders one of his subordinate in the factory to take about one hour off before the factory lunch break and another one hour off before the closing of the working hour to cook lunch and dinner for his kids at his house for ten consecutive days. Heng was discharged from his work by CD's manager on the account of "dishonest in the course of performing his duties". What is your opinion?
Answer (case no. 2): The Court held that Heng seeked undue benefit for himself from the position he holds for which a person in the position like Heng should not have done, that such practice caused damages to his employer (for loss of works which should have been performed for CD's benefit by Heng's subordinate) and amounted to "dishonest in the course of performing his duties".
Case No. 3 Cheers
Rambo is a security personnel of a beer factory, he found during his rounding of the factory's store that some of the factory staff were having a small birthday party in the store and drinking beers which were kept in the store. Rambo was invited to join the party and he drank some beer which were offered to him having been fully aware that the beer the staff and he were drinking belong to the employer. You are the manager of the beer factory, on what cause would you terminate Rambo's employment?
Answer (case no. 3): Intentionally committed criminal offenses against Employer since the drinking of beer which belongs to the Employer is an offense of "Theft" or "Receiving of Stolen Property". The Supreme Court had also ruled in many cases that drinking of alcoholic drink during the working hours or while on duty is a serious violation of the employer's work rules.
Case No. 4 It's time for Siesta
Snoozy is a janitor and she always feels sleepy after her lunch break. She would pretend to be busy cleaning the store room of the factory while in fact she would sneak into a small cubicle in the store room and take a Siesta. The Siesta turned to be a nightmare when one day she was caught snoring loudly in the cubicle. She was ordered to leave her job on grounds of " dishonest in the course of performing her duty and intentionally causing Employer to suffer damage" (for the reason that the Employer has to pay Snoozy's wage while she was having a Siesta).
Do you think the causes used by Snoozy's employer in the termination of her employment is justifiable? Is Snoozy entitled to Severance Pay upon being terminated?
Answer (case no. 4): The Supreme Court adjudged that the work rule of the Employer did not indicate that sneaking out of work (to take a nap) is a serious violation (of work rules) or not, and what should be the penalty of such violation. It therefore cannot be deemed that Snoozy had committed a serious violation of the work rules. Nor can it be regarded as "Dishonesty in the course of performance of one's duties or intentionally causing damages to the Employer" eventhough the Employer had to pay the employee's wage during the time she took a nap. The Employee is entitled to Severance Pay upon the termination of her employment.
Case No. 5 Just a piece of paper
Moody committed a minor violation of his employer's work rules, he was called to his MD's office where he was given a lengthy verbal criticism of his work performance and ended up with being given a written warning of his violation of the work rules. Moody is so arrogant, he took the warning from his MD's hand, smiled sarcastically, slowly tore the warning into small pieces, threw them into the MD's bin and left the MD's office without saying a word. The next day he received an employment termination notice from his MD on the ground that the tearing of the warning notice was an act intentionally caused damages to the employer. His employment was terminated without Severance Pay and advance notice. What is you opinion?
Answer (case no. 5): The Supreme Court held that the warning notice was merely a letter from the employer informing the employee of what wrong the employee had done, the tearing of the notice did not amount of "Intentionally causing damages to the employer. The termination of Moody's employment is an Unfair Dismissal" (for both unjustified cause and personal conflict).
Case No. 6 I didn't do it twice
Lucy had been previously given warning notices by her employer in two separate occasions, the first was for non compliance with the company's work rules with respect to the application for sick leave and the second was for the false statement given by her in her application for sick leave. She was terminated by her employer without Severance Pay upon submitting an application for business leave in violation to the work rules. Reason was given for her termination that she " repeated violation of work rules after having been previously warned by Employer in writing."
She took her employer to the Court demanding for Severance Pay on the ground that she has never been warned by her employer for violation of work rules with respect to application for business leave, that the two warnings she previously
received from her employer were those for violations of work rules of different matters.What is your opinion?
Answer (case no. 6): Lucy won the case. The Supreme Court ruled that the violation of work rules which the employer relies on in terminating the employee must be of the same matter that the employee had previously committed and had been warned in writing.
Case No. 7 The Real Boss
KATHY IS A BEAUTIFUL AND DUTIFUL SECRETARY OF A SMART AND HANDSOME MD, JIM. THE QUANTUM OF WORK REQUIRES THAT KATHY REGULARLY AND VOLUNTARILY WORK OVERTIME WITH HER MD IN HIS OFFICE. JIM'S WIFE, SUSAN, IS THE DAUGHTER OF THE CHAIRMAN OF THE COMPANY, SHE WAS RESPECTED AND FEARED BY THE EMPLOYEES OF THE COMPANY FOR HER STATUS AS WIFE OF THE MD AND DAUGHTER OF THE CHAIRMAN, EVENTHOUGH SHE DOES NOT WORK FOR NOR HAVE ANY POSITION IN THE COMPANY. AT 7 P.M. OF ONE LUCKY FRIDAY, SUSAN STORMED INTO JIM'S OFFICE, AS JIM WAS LATE TO PICK HER UP FROM THEIR HOUSE TO GO THE HER FRIEND BIRTHDAY PARTY, JUST TO FIND JIM AND KATHY WORKING TOGETHER IN FRONT OF JIM'S COMPUTER. AFTER A HEAT ARGUMENT WITH JIM, SUSAN TURNED TO KATHY AND TOLD KATHY THAT SHE NEED NOT COME TO WORK AT THE COMPANY ANY MORE. ASKED BY KATHY WHETHER THAT MEANT HER EMPLOYMENT WITH THE COMPANY WAS TERMINATED, SUSAN CONFIRMED THAT IT WAS.
Kathy took the case to the Court alleging that her employment was terminated without causes and demanding for Severance Pay and compensation for unfair dismissal. You are legal counsel of the Company, what defence do you have?
Answer (case no. 7): The employment of Kathy has never been terminated because Susan is not a Company director or manager, she has never been authorized by the Company with the authority to engage or disengage the employment of the employees. (Supreme Court judgment no.1989/2535)
Remarks: There are several Supreme Court judgments which ruled that the father, mother, sister or relatives of the company's manager are not the employer and have no authority to terminate the employment of the employees. However, in the Supreme Court judgment no. 4659/2536 the Court ruled that the husband of the owner of the enterprise who also works for the enterprise is deemed to be the employer and has the authority to terminate the employee's employment.
Case No. 8 Do and say it right
Can the following statements or acts of the employer be deemed as termination of employment:-
a. Employer to the employee "If you refuse to sign to acknowledge this warning, I'll fire you"
Answer (Case 8.a): It is only a threatening statement, not a termination statement.
b. In the heat of the argument between the employer and employee, the employer said " Get out, you don't have to work. You better not work if your work is like this. You better go. I won't pay for this kind of work."
Answer (Case 8b.): It's only a statement expressing dissatisfaction of the employee's work. Nothing in the statement can be construed as termination of employment.
c. The employee ignored the employer's order to clean the sewer saying that it's beyond his duty under the employment agreement. The employer then said "If you can't do it, then you must leave this company"
Answer (Case 8.c): It cannot be construed as a formal statement of termination.
d. Employees made an emergency visit to his family in up-country, since his wife had been engaged in a serious car accident, without applying for leave in accordance with the company's work rules. When he came back to work 4 days after, he found that his desk was taken over by another new comer and his employer ignored his presence and treated him like a stranger.
Answer (Case 8d): The employer's act is deemed to be a termination of employment and was ordered to make severance pay to the employee on the ground that the employee abandoned his duty for more than 3 consecutive days with reasonable justification.
Paragraph 2 of section 118 of the Labor Protection Act defines "Termination" as any act by the employer which results in the Employee not being allowed to work and not being paid, due to the termination of employment Contract or any other reasons, including the instances where the Employee can no longer work and no longer getting paid because the Employer has ceased his business operation.
Remarks: Employer should be patient when employee is found to be absent from work without applying for leave in advance. He should not terminate the employment before hearing the reason of absence from the employee. Even for an absence of work for more than 3 consecutive days without advance application, the employee may apply for sick leave after he returns to work and furnish a medical certificate to justify for the leave. If a premature decision is made by the employer (or act which can be construed as a termination of employment), he will end up losing some money in the form of severance pay, or in some worse case, compensation for unfair dismissal.