A Deep Dive into Thai Labour Law: What Employers Should Know to Stay Out of Trouble

Thailand’s economy is continually changing, which is why it’s a wonderful site for foreign businesspeople and investors to do business in Southeast Asia. However, companies who want to create a compliant, peaceful and long-lasting workplace must learn how to follow Thai labour legislation. This article gives a full overview of the most important labour law principles and offers useful tips to assist employers avoid typical mistakes.

1. Written vs. oral employment contracts

In Thailand, an employment contract might be either written or spoken. Written contracts are highly advised, though, to reduce disagreements and make the terms and conditions explicit.

• The job title and responsibilities
• The hours of work and breaks
• The pay and benefits
• Conditions for ending the contract
• Clauses about privacy and not competing (if they apply)

Employers should make sure that contracts do not include any illegal clauses, including giving up rights under the Labour Protection Act B.E. 2541 (1998) (LPA). The contracts should also avoid any clause resulting in the employer unfairly exploiting the employee; otherwise, the court can intervene and enforce them only to the extent that they are deemed fair and reasonable.

2. Hours of work, overtime and holidays

The LPA says that, for general circumstances, the most hours an employee can work in a day or week are eight hours a day and 48 hours a week (or seven hours a day and 42 hours a week for dangerous jobs). Overtime pay must be at least the following amounts:

• 1.5 times the hourly wage for overtime on ordinary workdays
• 2 times the hourly salary for work on holidays
• 3 times the hourly wage for overtime on holidays

Employers must also give their workers at least one day off each week and honor national holidays and annual leave rights (at least six working days off after one year of service).

3. Ending and severance Pay

The LPA makes it clear what rights are in place for ending a contract. Employers must:

• Give advance notice (at least one pay cycle, but no more than three months if both parties agree) or pay in lieu of notice. This is not applicable for a retiring employee.
• Pay statutory severance to employees who are fired without cause, with the amount depending on how long the employee has worked there (for example, 30 days’ pay for 120 days to 1 year of service, up to 400 days’ pay for 20 years of service or more). This also applies to a retiring employee.

The employer is not responsible for severance pay if the employee is fired for a reason that is legally specified in the LPA, but the reason must be shown in a notice for employment termination given to the employee. Those common reasons include gross misconduct, dishonesty or intentional harm.

In addition to the employee’s rights given under the LPA, an employee who is fired can also go to Thai labor court and file a case against the company for unfair dismissal if he or she thinks that the firing was unfair.

4. Contributions to social security and welfare

Employers must register their workers with the Social Security Office and pay into the following funds: the social security fund (5% of wage, up to THB 750 per month) and the workmen’s compensation fund. Other welfare programs that are required would depend on the employer’s industry.

If you don’t register or send in your contributions, you could be fined or punished.

5. Dealing with employee misbehavior and punishment

If a company has 10 or more employees, it must register its rules, so called the “work rules” or “work regulations”, with the Department of Labour. These rules should clearly spell out what happens when someone breaks them. When dealing with misconduct, you should strictly follow the aforementioned rules, including

• Do proper investigations and hearings.
• Give written warnings (unless for significant offenses).
• Make sure that disciplinary actions are fair.

Claims of wrongful dismissal often come from mistakes in the process rather than the reason for the dismissal.

6. Compliance of foreign employees

Before recruiting foreigners, employers must get work permits and visas. Employers should also make sure that the employment names, duties and locations match the information on the work permit to avoid fines.

7. New things and trends that have happened recently

Thai labour law is changing to be more like laws in other countries. Changes that have already happened or are coming up include:

• Better protections against sexual harassment
• More support for remote work and work-from-home frameworks
• More attention on equal pay and anti-discrimination measures

To be in compliance, employers should keep an eye on changes to the rules.

8. Useful advice for staying out of labour disputes

• Make sure that your HR rules follow Thai law.
• Check the relevant contracts if they are in compliance with applicable and updated labour laws.
• Train managers and supervisors on their legal duties.
• Keep records of hiring decisions, performance assessment and communications.
• Get legal advice for layoffs, redundancies or reorganizations.

In conclusion

Companies who want to conduct business in Thailand need to know and respect Thai labor law. Proactive compliance not only minimizes the possibility of getting into trouble with the law, but it also helps employers and employees get along, which is good for business in the long run.
Contact our employment law specialists right now if you need help creating employment contracts, HR policies, or dealing with labor difficulties.