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. Your email address will not be published. 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. Our subscription service offers regular regulatory updates, If an employment agreement is made in writing, employers must provide the employee concerned with a copy immediately after it has been signed. 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. Therefore, in order to avoid paying, many employers in Thailand set probation periods of up to 119 days. Employment in Thailand may be terminated for a variety of reasons, including the following: Completion of agreed upon work. Power of attorney. Rest Period. 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 … 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. 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. Sorry, your blog cannot share posts by email. Thai labor laws serve as the best safeguard of the rights regarding employment in Thailand. 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. If you are a foreigner working for a Thai company it is important to familiarize yourself with the employment laws and regulations. Thai labor law is relatively flexible for employers. In general, working hours must not exceed eight hours per day and 48 hours per week. 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. Overtime Compensation. 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. Post was not sent - check your email addresses! However, it does impose strict labor regulations with regards to working terms and conditions. wrongful acts between employers and employees in connection with a labor dispute or in connection with the performance of work under an employment agreement. 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. 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. Note the article on Thai work permits on this website. 2555 (2012). Without prior notice, employers are required to provide salary in lieu of such notice. 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. By Vasundhara Rastogi, editor, Dezan Shira & Associates. If an employment agreement is made in writing, an employer must provide a copy to the employee immediately after it has been signed. (1) Preparing company work rules and regulations in compliance with the Labour Protection Act for submission to the Thailand Ministry of Labour. Under Thailand's employment laws, an employment agreement must not contain terms and conditions that are less than the minimum standards set by law. Thai law does not explicitly mention probationary periods in regard to employment relationships. ASEAN Briefing is produced by Dezan Shira & Associates. and grow their operations. 2541 (1998) and Ministerial Regulation No. In general, working hours must not exceed eight hours per day or 48 hours per week. 14 B.E. Foreign employees working in Thailand may seek tax benefits available under relevant double taxation treaties between Thailand and their home country. 2541 states that the employer must pay severance pay to the employee who is terminated. The MOHRE standard contract is issued now in dual English and Arabic and dual with other popular largely South-Asian languages. Thai Labor Contracts: What You Need to Know. Save my name, email, and website in this browser for the next time I comment. Thai laws define residents as people who have lived in the country for an aggregate period of 180 days in any calendar year. Termination of employment contract Thai Lawyers | August 6, 2015 Section 118 of Labor Protection Act B.E. An employment contract creates a relationship between an employer and his employee. Thai law does not explicitly mention probationary period in employment relationships. They are probably very different to labor and employment laws in your home country. 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. An employee is entitled to a rest of not less than 1 … A non-resident, on the other hand, is exempted from paying tax on income earned in Thailand. 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. Managing Contracts and Separation in ASEAN, Dezan Shira & Associates' Service Brochure. 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. As a result, professional advice in preparing employment contracts can help employers both avoid legal disputes with staff and ensure compliance with the law. If they have worked for between one to three years, they are eligible for the equivalent of 90 days’ pay. Labor law or Employment law cases may also involve issues of wrongful termination, breach of contract or injuries that occur during scope of work. Legal. 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). Employment contract does not only apply to full-time employees but to everybody. It sets the rights and obligations of the employers towards its employees and vice versa. 2. August 24, 2015. 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. Although Thailand has a complex and strictly regulated employment system, Thai labour laws are generally-speaking more favorable to employees than their employers. 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. 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 … A non-resident, however, is exempted from paying tax on income earned in Thailand. This column includes guidance for good employment practices based on the ILO Domestic Workers Convention, 2011 (No. employment contracts. Your email address will not be published. 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. 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). 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. Under Thai law, there are no requirements that employment contracts be made in writing. According to Section 17 of the Labour Protection Act B.E. 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. Relations between employers and employees are covered by the Thai Labor Protection Act (LPA). 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 does not mandate a written agreement between the employer and an employee. 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. Editor’s Note: This article was first published on December 18, 2017 and has been updated on December 20, 2018 as per latest developments. Visa for Thai citizens. Thai law draws a distinction between employees with an employment contract and independent contractors working with a service contract. Although Thai Law does say that a contract can be oral or in writing, it has and ideally needs to be in writing. ... 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. Under Thai laws, the following financial compensations are required to be paid in order to terminate the employment contract. Notify me of follow-up comments by email. 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. 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, … For inquiries, please email us at info@dezshira.com. 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. 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. Required fields are marked *. But it does specify that severance must be paid to employees who have worked for 120 days or more and are terminated without cause. Current personal income tax rates for resident individuals are given in the table below. Thailand Severance Pay and Termination Issues. Stay Ahead of the curve in Emerging Asia. For the purpose of taxation, individual taxpayers are categorized into “resident” individuals or “non-resident” individuals. Labour laws in Thailand afford business owners certain exclusions from the requirement to pay severance payments if the following conditions apply: 1. A well written employment contract can prevent and settle disputes which may arise in the future. 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. Previous Article « Termination of Employees in ASEAN, Next Article Investing in ASEAN’s Coffee Industry ». 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. As a result, to avoid paying severance, many employers in Thailand set probation periods of up to 119 days. 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 … Labor law arises from the law of contract, which is based on the Civil and Commercial Code. The Ministry of Labour (MOL) is the primary authority responsible for setting and enforcing minimum employment standards within the country. In practice, however, English documentation is used in many businesses onshore. Employers often believe that fixed-term employment contracts provide advantages over indefinite-term agreements because of the complexity of terminating workers under Thai law. Labour rules, laws and regulation in Thailand, 3. The Ministry of Labor (MOL) is the primary authority responsible for setting and enforcing minimum employment standards in the country. 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. 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. Labor: Our labor and employment team represents multinational and domestic companies in several economic sectors on strategic labor matters. For the purposes of taxation, individual taxpayers are categorised into “resident” or “non-resident” individuals. The firm assists foreign investors throughout Asia and maintains offices throughout ASEAN, including in Singapore, Hanoi, Ho Chi Minh City and Jakarta. According to Thai law work condition agreements can be amended in three (3) ways: 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. Probationary agreements are considered "indefinite-term." This article was first published on ASEAN Briefing. In certain circumstances, however, an employer may dismiss an employee without prior notice and due compensation. Notary. Therefore, in order to avoid paying, many employers in Thailand set probation periods of up to 119 days. The latest manifestation was revision to the Thai LPA was in 2010. Employment in Thailand may be terminated for a variety of reasons: Completing a project; Expiry of a fixed term contract; Resignation 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. 2541 (1998) and the Civil and Commercial Code lay out the rights and responsibilities of both employers and employees. Under Thai law, in order to terminate an employee under an "indefinite-term" employment contract, notice must be provided one payment period in advance. 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. 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. All blog comments are checked prior to publishing, Workmen Compensation and Social Security Fund. Current personal income tax rates for resident individuals are laid out in the table below. 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. Special Thai law does not explicitly mention probationary periods in regard to employment relationships. The Labor Protection Act of B.E. including the most recent legal, tax and accounting changes that affect your business. 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. Employers are generally required to register their employees with the workmen compensation fund and social security fund. Termination of employment is defined as follows. Pursuant to the Labor Law, all employment contracts and records must be in Arabic. The principal component of labor law is the Labor Protection Act, which was enacted in 1998. But it does specify that severance must be paid to employees who have worked for 120 days or more and are terminated without cause. Since its establishment in 1992, Dezan Shira & Associates has been guiding foreign clients through Asia’s complex regulatory environment and assisting them with all aspects of legal, accounting, tax, internal control, HR, payroll and audit matters. 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. Employment with a definite periodis allow… 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 … 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. The minimum notice period must be at least one week and not more than three months long. Further information about our firm can be found at: www.dezshira.com. 1. 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. Keywords: Labour Law, Termination, Thailand, Employee. (2) Employment contract or agreements made between the employer and employee. 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 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. Legal documents translation. But, and this is very important, a severance or ex gratia payment was not compulsory under Thai labor law before 1 September 2017. With... Dezan Shira & Associates helps For some employers, this may create the perception that they can simply reach a cursory agreement … However, a fixed-term employment contract must be made in writing. These laws cover all areas related to employment such as working hours, holidays and leave, notice, overtime, sick pay, and severance, and are applicable to both Thai and foreign employees. 189) and protections offered to other workers under Thai Law. An employee has served the company for less than 120 days. Employers are usually required to register their employees with the Workmen Compensation and Social Security Fund (SSF). 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. Thailand has a complex and strictly regulated employment system. Furthermore, there is also a provident fund into which both employers and employees are required to make equal monthly contributions, ranging at between two and 15% of the worker’s monthly remuneration. The Workmen compensation fund and Social Security fund amended in three ( 3 ):!, many employers in Thailand and their home country to everybody described in the country “ non-resident ” individuals as. To publishing, Workmen compensation and Social Security fund accounting changes that affect your business,! 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