Employment Laws in Thailand

Laws Governing Employment in Thailand

Thailand's employment landscape is primarily governed by the Labor Protection Act B.E. 2541 (1998). This pivotal legislation sets out comprehensive rules related to Employment contracts, minimum wages, holiday overtime pay, working hours, safety standards, and dispute resolution mechanisms.

However, the landscape is not restricted to this singular Act. It is a combination of several other legal regulations and frameworks that aim to ensure the best working conditions for every worker in the country. These include the civil and commercial codes and Thai labor laws. These additional regulations often apply to specific sectors and offer nuanced protection considering the particularities of each industry.

Labor Protection Act

The Labor Protection Act is a fundamental law and provides broad protections to employees. It addresses a variety of areas, including but not limited to:

• Payment of Wages, Overtime, and Holiday Work Compensation
• Provision of Welfare and Safety at Work
• Suspension from Work
• Severance Pay and Special Severance Pay

Companies expanding their operations to Thailand or setting up remote teams in the country must understand these provisions to prevent any HR compliance mistakes that could potentially harm their reputation and productivity.

Sector-Specific Regulations

While the Labour Protection Act serves as the primary law governing employment in Thailand, certain sectors have specific regulations tailored to their unique needs. Industries like agriculture, fishing, construction, and tech, have additional rules that address their peculiar challenges. These rules must be adequately understood and followed to prevent potential legal troubles.

International Conventions and Treaties

Thailand, as a part of the global community, adheres to several international conventions and treaties related to employment and labor rights. These include conventions by the International Labour Organization, which cover areas such as freedom of association, elimination of forced labor, and the abolition of child labor. As a result, companies hiring remote workers from Thailand or building distributed teams should be cognizant of these treaties to ensure they manage their human resources legally and ethically.

Social Security Act

Beyond the Labour Protection Act, another important legislation affecting employees is the Social Security Act. It provides protection to workers in cases of illness, disability, death, childbirth, child allowance, old-age benefits, and unemployment.

Properly integrating these regulations into your HR strategy can significantly minimize potential legal and tax risks. Furthermore, businesses that provide their employees with comprehensive protections and benefits stand to gain from increased loyalty and productivity, thereby making a solid case for adherence to these regulations.

Types of Employment Contracts in Thailand

Employment contracts in Thailand are essential tools for defining the relationships between employers and employees. They are governed by the Thai labour law and various legal instruments, providing a comprehensive framework for various types of contracts.

Fixed-Term Contracts

Fixed-term or definite contracts are used when the nature of the job is temporary, seasonal, or project-based. For example, if an organization hires a team to work on a specific tech project expected to last for a year, the employment would be on a fixed-term basis.

The employment law requires these contracts to be written, with the duration clearly stated. They cannot exceed two years, and there must be a valid reason for the fixed term, such as the completion of a specific project. Not adhering to these conditions can lead to potential penalties for misclassification of independent contractors.

Indefinite Contracts

Indefinite contracts do not specify an end date and may be verbal or written. However, providing a written contract helps prevent potential misinterpretations. This is especially essential for tech companies employing remote ans distributed teams where face-to-face communication is limited. It’s also useful for dealing with the legal and tax risks of remote employees working from abroad.

Despite not having a specific end date, these contracts can be terminated by either party, given they comply with the termination provisions stipulated in the Labor Protection Act and the contractual terms.

Hybrid Contracts

While less common, hybrid contracts also exist. These are contracts that begin as fixed-term but continue on an indefinite basis once the initial term ends. It's crucial for businesses to handle these contracts appropriately to avoid common global HR compliance mistakes.

Independent Contractors

Tech talents often work as independent contractors, where they provide their services to businesses but are not considered employees. It’s crucial to clearly differentiate between contractors and employees as the legal obligations and benefits differ significantly. Misclassification could lead to penalties and legal issues, as explained in this comprehensive guide about hiring international contractors versus employees.

The Labor Protection Act B.E. 2541 (1998) is a key piece of legislation that governs employment in Thailand, specifying a framework for the rights and responsibilities of both employees and employers. Below are some key provisions of the Act:

Wages

The Act sets a minimum wage that employers must pay their workers. The minimum daily wage paid to employees stands at 331 Baht, though this may vary across regions. The Act also prescribes that wages should be paid at least once a month.

Understanding these regulations is essential for businesses, especially for those managing remote employees or hiring international contractors, as it ensures the workers are compensated aptly and helps to prevent any potential legal risks.

Working Hours and Overtime

Under the Labor Protection Act, the standard working hours must not exceed 8 hours per day or 48 hours per week for non-hazardous jobs. For hazardous jobs, the limit is 7 hours per day or 42 hours per week.

Overtime work is also governed by this Act. The Act states that employees who work overtime should receive an overtime pay rate of not less than 1.5 times the hourly rate derived from the last wage rate on a working day.

Complying with these rules can help businesses avoid common HR compliance mistakes, particularly when dealing with complex working arrangements within distributed teams.

Rest Periods and Holidays

The Act also provides for rest periods and holidays. It states that employees are entitled to at least one hour of rest after 5 consecutive hours of work and at least one day off per week. In addition, employees are entitled to minimum 13 national holidays per year.

It's important for employers to offer these benefits to their employees as required by law, to maintain morale and productivity while avoiding potential HR compliance issues.

Leave Entitlements

The Act prescribes various types of leave that employees are entitled to, including sick leave, maternity leave, personal leave and annual leave. Adherening to these provisions can help in building an engaging work environment and maintaining a strong relationship with employees. More details about these benefits can be found here.

Type of Workers Protected by Thai Employment Laws

Thai employment laws are designed to offer protection to all categories of workers, irrespective of their employment status or nationality. Let's delve into the specifics of each category.

Permanent Employees

Permanent employees, regardless of whether they are local or foreign, are protected by the provisions of the Labor Protection Act. They are entitled to all the benefits and protections under the law, like minimum wage, working hours, annual leave, sick leave employees and termination rights.

Temporary Workers

Temporary workers are also protected under Thai employment laws. The law applies equally to them, and they are entitled to all rights and benefits akin to permanent employees, making Thailand a conducive place to engage in temporary or project-based work.

Part-time Workers

Part-time workers, who typically work fewer hours compared to full-time employees, are also safeguarded by Thai employment laws. They are entitled to the same rights as full-time workers on a prorated basis, including rest periods, holiday pay, and overtime pay. Employers should be careful to avoid HR compliance mistakes when dealing with part-time employees.

International Contractors

Thailand's employment laws extend protection to international contractors as well. Such individuals are not employees per se, but rather self-employed individuals or entities that provide services under a contract. As these contractors are not employees, they do not enjoy the same level of benefits or protections as employees do.

Mandatory Leaves in Thailand

In Thailand, labor laws carefully outline mandatory leave periods to ensure employee welfare. Employers must provide these periods of leave, creating a balanced environment that aids in employee productivity and job satisfaction. Understanding these laws is essential to avoiding common global HR compliance mistakes.

Annual Leave

After one year of continuous service, employees are entitled to a minimum of six days of paid annual leave. This annual leave is in addition to traditional holidays and weekly holidays. It is essential for employers to note that any unused annual leave cannot be forfeited and must be carried forward to the next year.

Sick Leave

Regardless of the length of service, all employees are entitled to sick leave. The Labor Protection Act does not limit the number of days for sick leave; however, the employer is obligated to pay a sick employee for the first 30 days of absence in a year. For remote employees, clear communication and compliance with these rules is essential.

Maternity Leave

Female employees are entitled to a maximum of 90 days maternity leave per pregnancy, including holidays. This leave includes childbirth, miscarriage, or other circumstances related to pregnancy. Of these 90 days, the employer is required to pay up to 45 days' wages.

Termination of Employment

Termination of employment in Thailand is governed by several statutory obligations that must be adhered to. This includes providing proper notice, respecting employees' rights, and in some cases, paying severance.

Notice Period

According to the Labor Protection Act, the standard notice period for terminating an employment contract is at least one pay period in advance. This means, if an employee is paid on a monthly basis, the notice should be provided a month before termination. If an employer fails to provide this notice, they are required to pay wages in lieu of notice.

Non-compliance with these notice period requirements can lead to legal risks and potential HR compliance mistakes, especially when dealing with remote employees working from abroad.

Severance Pay

Severance in Thailand is directly linked to the duration of service an employee has given to a company. The Labor Protection Act specifies the following severance rates:

• An employee who has worked for less than 120 days does not receive any severance pay.
• An employee with service between 120 days and one year receives severance equal to 30 days' wages.
• An employee with service of one to three years receives severance equal to 90 days' wages.
• An employee with service of three to six years receives severance equal to 180 days' wages.
• An employee with service of six to ten years receives severance equal to 240 days' wages.
• An employee with service of more than ten years receives severance equal to 300 days' wages.

It is essential for companies, especially those operating remotely, to understand and follow these guidelines to maintain smooth business operations and avoid HR issues within distributed teams.

Anti-Discrimination Laws in Thailand

Thailand enforces strong anti-discrimination laws. The Constitution of Thailand, for instance, prohibits discrimination based on "national origin, race, language, sex, age, disability, physical or health condition, personal status, economic or social standing, religious belief, education or political view."

Data Privacy Laws in Thailand

The Personal Data Protection Act (PDPA), effective since June 2020, governs the collection, use, and disclosure of personal data in Thailand. Organizations need to ensure compliance to avoid HR compliance mistakes, especially within distributed teams.

Ensure compliance in Thailand with Skuad

Ensuring your organization remains compliant with Thai employment laws enables organizations to avoid unnecessary fines and penalties and also fosters a productive work environment.

As a comprehensive Employer of Record platform, Skuad enables organizations to hire and onboard contractors and employees compliantly across more than 160 countries, including Thailand. With Skuad, legal risks and fines become a worry of the past, as the platform ensures your organization's complete adherence to country-specific laws and regulations.

Book a demo with Skuad to know more.

FAQs

What is the labor law in Thailand?

The latest labor passed in Thailand is the Work from Home Bill, officially called the Labour Protection Act (No. 8), 2023, which makes provisions for remote work.

How long is a work day in Thailand?

Usually, the workday in Thailand is eight hours long.