Therefore, in order to avoid paying, many employers in Thailand set probation periods of up to 119 days. In practice, however, English documentation is used in many businesses onshore. As a result, to avoid paying severance, many employers in Thailand set probation periods of up to 119 days. 2541 (1998) and Ministerial Regulation No. Thai law draws a distinction between employees with an employment contract and independent contractors working with a service contract. Without prior notice, employers are required to provide salary in lieu of such notice. 2541 states that the employer must pay severance pay to the employee who is terminated. Thailand does not mandate a written agreement between the employer and an 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. 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. 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. Pursuant to the Labor Law, all employment contracts and records must be in Arabic. businesses establish, maintain, Required fields are marked *. This column includes guidance for good employment practices based on the ILO Domestic Workers Convention, 2011 (No. 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 … The firm assists foreign investors throughout Asia and maintains offices throughout ASEAN, including in Singapore, Hanoi, Ho Chi Minh City and Jakarta. Under Thailand's employment laws, an employment agreement must not contain terms and conditions that are less than the minimum standards set by law. Labor: Our labor and employment team represents multinational and domestic companies in several economic sectors on strategic labor matters. 1. For employees involved in hazardous work, normal working hours are restricted to seven hours per day and 42 hours per week. 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. 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. 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. A non-resident, however, is exempted from paying tax on income earned in Thailand. Thailand has a complex and strictly regulated employment system. Legal documents translation. However, it does impose strict labor regulations with regards to working terms and conditions. Our assistance includes both complex labor matters and routine queries related to human resources practices or general labor law aiming to assist the day-to-day operations of the client. Special Whether you are an employer or an employee, Juslaws & Consultinforms you about your rights regarding termination of employment in Thailand. Thai labor law is relatively flexible for employers. Rest Period. It sets the rights and obligations of the employers towards its employees and vice versa. August 24, 2015. Sorry, your blog cannot share posts by email. Labour laws in Thailand afford business owners certain exclusions from the requirement to pay severance payments if the following conditions apply: 1. 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. 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. The MOHRE standard contract is issued now in dual English and Arabic and dual with other popular largely South-Asian languages. By Vasundhara Rastogi, editor, Dezan Shira & Associates. 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. The latest manifestation was revision to the Thai LPA was in 2010. 2555 (2012). 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 laws include the Labor Relations Act, the Social Security Act, the Act establishing the labor court and labor court procedure, … However, it does specify severance pay for employees who have worked for 120 days or more and are terminated without cause. 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. An employment contract creates a relationship between an employer and his employee. Our subscription service offers regular regulatory updates, Employment in Thailand may be terminated for a variety of reasons: Completing a project; Expiry of a fixed term contract; Resignation Termination of employment is defined as follows. Labor law arises from the law of contract, which is based on the Civil and Commercial Code. But, and this is very important, a severance or ex gratia payment was not compulsory under Thai labor law before 1 September 2017. In general, working hours must not exceed eight hours per day or 48 hours per week. While Thailand does not mandate a written agreement between employers and staff, it does impose strict labour regulations with regards to working terms and conditions. Your email address will not be published. For the purpose of taxation, individual taxpayers are categorized into “resident” individuals or “non-resident” individuals. All blog comments are checked prior to publishing, Workmen Compensation and Social Security Fund. The principal component of labor law is the Labor Protection Act, which was enacted in 1998. 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. Thailand Severance Pay and Termination Issues. As a result, professional advice in preparing employment contracts can help employers both avoid legal disputes with staff and ensure compliance with the law. 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. Further information about our firm can be found at: www.dezshira.com. Probationary agreements are considered "indefinite-term." 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 … Keywords: Labour Law, Termination, Thailand, Employee. Foreign employees working in Thailand are entitled to seek tax relief under relevant double taxation treaties between Thailand and their home country. Although Thai Law does say that a contract can be oral or in writing, it has and ideally needs to be in writing. wrongful acts between employers and employees in connection with a labor dispute or in connection with the performance of work under an employment agreement. Provisions related to working hours are set out in ministerial regulations issued by the MOL and are based on the nature and type of work. 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 Thai law does not explicitly mention probationary period in employment relationships. (1) Preparing company work rules and regulations in compliance with the Labour Protection Act for submission to the Thailand Ministry of Labour. The contract … 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. including the most recent legal, tax and accounting changes that affect your business. 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. For inquiries, please email us at info@dezshira.com. ASEAN Briefing is produced by Dezan Shira & Associates. If you are a foreigner working for a Thai company it is important to familiarize yourself with the employment laws and regulations. 2541 (1998) and the Civil and Commercial Code lay out the rights and responsibilities of both employers and employees. 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). 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 … (2) Employment contract or agreements made between the employer and employee. 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). 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. 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. 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 … As a result, most foreign employees working in Thailand qualify as residents and are liable to pay tax on both their income earned in the country and on income earned abroad. 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. Save my name, email, and website in this browser for the next time I comment. The Ministry of Labor (MOL) is the primary authority responsible for setting and enforcing minimum employment standards in the country. Employment contract does not only apply to full-time employees but to everybody. Your email address will not be published. Foreign employees working in Thailand may seek tax benefits available under relevant double taxation treaties between Thailand and their home country. Rest period during normal work. 14 B.E. As a result, all foreign employees working in Thailand qualify as resident individuals and are liable to pay tax on their income earned in the country as well as on the income earned from abroad. The employer-employee relationship in Thailand is primarily governed by the Labor Protection Act of Thailand. In practice, therefore, it is advisable for employers to set out written terms and conditions of employment in order to avoid legal disputes at a later date or liability with regards to remuneration. 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. Overtime Compensation. Employment in Thailand may be terminated for a variety of reasons, including the following: Completion of agreed upon work. Termination of employment contract Thai Lawyers | August 6, 2015 Section 118 of Labor Protection Act B.E. A non-resident, on the other hand, is exempted from paying tax on income earned in Thailand. Current personal income tax rates for resident individuals are laid out in the table below. employment contracts. 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. 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. An employee has served the company for less than 120 days. Employment with a definite periodis allow… Column includes guidance for good employment practices based on the other hand, is exempted paying... Amended in three ( 3 ) ways: 1 period must be at one! 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