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Employment in Thailand

Shield GEO can contract directly with the company to employ and payroll their staff in Thailand. Shield GEO supplies local employment contracts for the staff which ensure that local statutory requirements are met covering issues such as termination, probation periods, leave entitlements and statutory benefits.  Shield GEO is able to advice companies how to cover local employment regulations whilst still providing consistent global employment policies. Understand more about outsourced employment through Shield GEO.

Thailand labour market is governed by strict rules and regulations. It’s important that appropriate advice is sought out based on the business structure that would be established in Thailand.

Some of the rules and regulations that govern Thai labour market include:

  • Labor Protection Act B.E. 2541 (1998)
  • Labor Protection Act B.E. 2551 (2008)
  • Labor Relations Act (No. 2) B.E. 2518 (1975)
  • Social Security Act of 1990 as amended in 1999
  • Workmen’s Compensation Act of 1994
  • State Enterprise Labour Relations Act B.E. 2543 (2000)
  • The Labour Court and Labour Court Procedure B.E. 2522 (1979)
  • Thai Civil and Commercial Code
  • Provident Fund Act B.E. 2530 (1987)
  • Alien Employee Act B.E. 2521 (1978)
  • Employment and Jobseeker Protection Act B.E. 2528 (1985)

For these and many other reasons the following are only guidelines in the broadest sense, and professional legal services are recommended when employing in Thailand.

Key points on employment

  • Minimum daily wage is 300 Baht per day
  • Maximum probationary period is 120 days
  • Maximum number of work hours per day varies between 8 hours and 9 hours, while maximum work hours per week varies between 48 hours and 42 hours per week
  • In addition to the 13 public holidays, each employee is entitled to a minimum of 6 days of annual leave
  • Employees are entitled to 30 days of sick leave

There are several key areas to be aware of within Thailand’s employment regulatory framework, especially for companies that plan to initiate a full local office and human resources department.  These challenges can be mitigated by use of a locally sourced payroll provider who is familiar with all of the local laws and rules for both local employees as well as foreign nationals.

  1. Contracts

    An employment contract can be written or verbal as per the Labour Protection Act.  Thai Civil and Commercial code and the Labour Protection Act stipulate the following statutory entitlements be included in employment contracts.

    • Entitlement to rest, sick leave, annual leave and holidays
    • Entitlements to remuneration (wages, overtime pay, holiday pay, severance pay)
    • Notice period and the right to receive wages in case of termination of employment
    • Restrictions on suspension from work

    Different types of employees based on nature of employment contract:

    Temporary workers:

    • Have the same rights as permanent employees  such as minimum wages, working hours, fairness etc
    • Are considered employees under the Labour Protection Act
    • Employees whose period of employment is fixed to 2 years and is terminated  according to that period will not be entitled to severance payment

    Agency workers:

    • Outsourced/agency workers are protected under the Thai Labour Laws.
    • As per the 2008 Labour Protection Act a business operator who utilizes outsourcing service for its employees is
      • Considered as an employer of outsourced workers
      • Ensure that the benefits to outsourced employees are similar to direct employees who have the same description

    Part time workers:

    • Receives wages based on an hourly rate
    • Minimum wage per hour is 40 Baht

    Permanent workers:

    • Are protected under the Thailand Labour protection Act

Employee Entitlements

Information Explanation
Time Off Work ?

An employee is entitled to a minimum of 6 days of annual leave after working consecutively for one full year. For an employee who has not completed one year of service, the employer may provide an annual leave on a pro-rate basis.

Medical Leave ?

An employee is entitled to take sick leave with 30 days of paid sick leave per year. An employer may request a medical certificate if an employee is absent for three consecutive days. Days on which the employee cannot work because of injury or illness caused by work shall not be deemed sick leave.

Employment Termination

Information Explanation
Severance / Redundancy Pay ?

An employee can be terminated without a specific cause and subject to all payments including severance pay, unused annual leave, overtime pay, and other payments due under the employment agreement within 3 days from the termination of employment.

Severance pay rates vary based on the length of employment.

Severance pay rate               Work period

30 days pay                           120 days – less than 1 year

90 days pay                           1 year – less than 3 years

180 days pay                         3 years – less than 6 years

240 days pay                         6 years – less than 10 years

300 days                                10 years and over

Severance pay is not made if:

  • The employment contract is for a fixed duration such as projects
  • The work is periodic in nature and has a fixed term or ending upon completion, seasonal work etc.

Conditions under which there would be non-severance payment:

  • Dishonesty or deliberate act of crimes against the employer
  • Intentionally causing damage to the employer
  • Negligence resulting in serious damage to the employer
  • Violation of work regulations subsequent to a warning letter from an employer
  • Desertation of work for 3 consecutive working days without reasonable cause
  • Being imprisoned

Conditions under which a special severance would be paid:

  • If the employer relocates the its place of business, employees must be notified at least 30 days in advance or pay an amount equal to 30 days’ of wages. Employees have the liberty to terminate employment contract and is entitled to receive no less than 50% of the prescribed rates of severance pay.
  • If the employer terminates employment due to streamlining of work units, production process, distribution process, due to the introduction or change of machinery and technology, at least 60 days of notice or 60 days’ of wages should be paid to the employee. In the interim a labour inspector should also be notified.
  • If the terminated employee has worked consecutively for over 6 years, the employee would be entitled to an additional severance pay of 15 days of work for each year starting from the seventh year. However, such additional special severance payment should be limited to 360 days of wages.
Termination of Employment ?

Either party to an employment contract can give at least 1 days of notice and terminate employment, if the employment contract does not specify such terms. If an employee is dismissed for a statutory reason, such reasons should be kept on record. An employee may not be dismissed for due to the following reasons:

  • Pregnancy
  • Trade union membership
  • Participation in trade union activities

Unfair dismissal:

Under the Labour Court’s Act, a Labour Court can re-instate an employee at the same wage rate that applied prior to the dismissal. However, if the Labour Court determines that the employer and employee cannot work together due to specific conditions, then it may order the employer to pay compensation.

Ceasing operations temporarily:

When employers encounter this issue the affected employees can be paid at a reduced rate of 25% of their normal pay rates.

Workmen’s compensation

Includes 4 categories

  • Compensation amount
  • Medical expenses
  • Work rehabilitation expenses
  • Funeral expenses

Compensation amount should be paid monthly at the rate of 60% of the monthly wages. Medical expenses must be paid out and should not exceed 45,000 Baht for formal cases and 65,000 Baht for serious injuries. Work rehabilitation expenses should not exceed 20,000 Baht.  In case of death, funeral expenses should be paid at a maximum amount equal to 100 times of the minimum daily wage prescribed by the law.

Outsourcing Employment Through a GEO Employer of Record Service

Compliance with local employment requirements is just one of the issues foreign companies face when employing staff in Thailand. For companies which intend to employ their staff directly through their incorporated Thailand entity, professional legal advice is recommended. Shield GEO provides an alternative path for companies to outsource the employment of their staff in Thailand.

As a Global Employer Organization (GEO), Shield GEO acts as the Employer of Record and ensures the employment is compliant with host country regulations regarding employment. In addition Shield GEO will handle payroll processing, tax and immigration. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Thailand.

The Shield GEO solution is an attractive alternative where

– the company is looking to employ staff quickly

– the company doesn’t have an appropriately incorporated entity in Thailand

– the company wants to work within a defined budget

– the company wants to limit its initial commitment in Thailand

– the company needs help with tax, employment, immigration and payroll compliance in Thailand

Shield GEO can contract directly with the company to employ and payroll their staff in Thailand. Shield GEO supplies local employment contracts for the staff which ensure that local statutory requirements are met covering issues such as termination, probation periods, leave entitlements and statutory benefits.  Shield GEO is able to advise companies how to cover local employment regulations whilst still providing consistent global employment policies. Understand more about outsourced employment through Shield GEO.

 

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