To help companies better understand and adapt to Thailand's labor policies, we have compiled common practical questions and provided detailed answers in a Q&A format, aiming to offer practical guidance for smooth operations in Thailand.

• labour Protection Act

• Labour Relations Act

• Social Security Act

• Workmens Compensation Act

• Act on the Establishment of and Procedure for Labor Courts

• Foreign Workers Act

An employment contract is formed when an employee agrees to work for an employer, and the employer agrees to pay the corresponding wages during the work period. According to Thai law, an employer can also be the individual.

An employment contract can be either in written or oral form. With regard to employment contracts of a specific duration not exceeding two years, such as seasonal work, the employer shall conclude a written contract with the employee. Moreover, according to the 8th amendment of the Labour Protection Act, in certain situations, the employer should record contract details such as normal working hours, rest periods, overtime, and the scope of the employee's duties in written or electronic form. Therefore, it is recommended that employers establish labor contracts in written form.

Q3. Under what legal circumstances can an employer unilaterally terminate a employment contract? What responsibilities does the employer undertake when terminating the contract legally? Is it necessary to provide notice when terminating a employment contract? How is the notice period determined? If an employer unlawfully terminates a contract, what legal consequences will they face?

Under Thailand's Labour Protection Act, an employer may unilaterally terminate an employment contract in the following lawful circumstances:

(a)  Where an employer and an employee enter into a non-fixed-term employment contract, the employer may terminate the employment contract by giving the other party prior notice in writing on or before any due date for the payment of wages, and the termination of the contract will take effect on the next due date for the payment of wages；

(b) Dishonest performance of labour obligations or intentionally committing a criminal offence against the employer;

(c) Intentionally causing damage to the employer;

(d) Having acted negligently and caused serious damage to the employer;

(e) Violates the employer's lawful and fair work rules, regulations or orders and has been warned in writing by the employer, except in cases where the gravity of the situation does not require the employer to give a warning;

(f)  Being absent from work without a valid reason for three consecutive working days, regardless of whether or not he/she was on leave during that period;

(g) If he/she has been sentenced to a term of imprisonment by a final court judgement.

In the case of (a), the parties may agree on a longer notice period, but the maximum notice period shall not exceed three months. In the case of termination with advance notice, the employer shall normally pay severance pay, and if the employer has not given advance notice, the employer shall pay the appropriate payment in lieu of notice; in the cases of (2)-(7) where the employee is at fault, the employer is not required to give advance notice or pay severance pay.

Severance pay varies according to the employee's specific duration of employment and is payable at the following rates:

In case of unlawful dismissal by the employer, it is possible that

(a) the employer will be fined a certain amount of money;

(b) the employee will be reinstated in his/her job or the employer will pay the corresponding compensation to the employee. When awarding compensation, the Labour Court often takes into account the age of the employee, the duration of the employment, the difficulties of the employee at the time of dismissal, the reasons for dismissal and the compensation to which the employee is entitled.

"Wages" are determined by mutual agreement between the employer and the employee as payment for work done by the employee on an hourly, daily, weekly, monthly or other basis, or for piecework done during normal working hours on a working day, and including holiday pay, etc.

The Wages Committee determines the minimum wage rate mainly by taking into account the employee's current wage level as well as other factors such as the cost of living index, inflation rate, standard of living, cost of production, price of goods and services, capacity of the enterprise, labour productivity, GDP and economic and social conditions.

The minimum wage in Thailand varies by region. Since 1 January 2024, the minimum wage in Thailand has increased by an average of 2.4%, ranging from 330 baht to 370 baht per day. For example, Phuket has the highest minimum wage at 370 baht per day, while Narathiwat has the lowest minimum wage at 330 baht per day.

The Thai Minister of Labour stated in May 2024 that the Thai Government planned to gradually raise the national minimum wage to 400 baht per day.

• overtime wages

(a) Working day wages: Overtime wages shall be not less than 150 percent of the normal working hour wages.

(b) Holiday wages: Holidays under the Thai Labour Protection Act include weekly holidays (rest days), traditional holidays (statutory holidays) and annual leave. The uniform standard for holiday wages is that wages for daily working hours shall be not less than 200 percent of the normal working time wages; and wages for hours worked in excess of daily working hours shall be not less than 300 percent of the normal working time wages.

Overtime wages for working days and holiday wages shall be paid at least once a month.

• sick leave wages

The employer pays sick leave wages at 100% of the normal working hour wages, but not more than 30 days per year.

Q7. What are the different types of contract terms? Is there any non-fixed-term employment contracts?

Employment contracts in Thailand are mainly divided into fixed-term employment contracts and non-fixed-term employment contracts. Generally, a probationary period contract is also considered a non-fixed-term employment contract.

Q8. What special regulations or additional considerations are there for foreign employees? How is a work permit for foreign employees processed?

When foreign employees come to work in Thailand, they should be aware that

(a) Some occupations in Thailand are restricted to Thai citizens and foreign employees are not allowed to work in them.

(b) Foreign employees should apply for a work permit. A work permit specifies the permitted area or place of work, the duration of the work, the type or nature of the work and details of the employer. In addition, the work permit is usually valid for one year and the foreign employee may apply for renewal before the expiry date.

(c) The corresponding employer should meet the requirements of financial status and the number of Thai employees, e.g., the ratio of foreign employees to Thai employees must be 1:4, i.e., one foreigner can be employed for every four Thai employees.

Generally, when applying for a permit, a foreign employee should first have his/her employer or business company prepare and submit the employment contract as well as the business operation documents of the company in order to apply for a work visa, with the exception of those with a Residence Permit and an Expatriate Identity Card. Next, the foreign employee prepares a copy of the passport, proof of employment and other documents to apply for the work permit, and then waits for the issuance of the work permit.

Q9. How shall employers arrange working hours and rest periods for employees? How shall employers handle sick leave, maternity leave, and annual leave, etc.?

Employees may not work more than eight hours per day, and if they work less than eight hours on any one day, the employer and the employee may agree to make up the remaining working hours at other working days, but not more than nine hours per day. The total number of working hours per week may not exceed 48 hours. With regard to specific jobs that may jeopardise the health and safety of the employee, the working day may not exceed 7 hours and the total working week may not exceed 42 hours.

During the working day, the employee may not have a total rest period of less than one hour per day and no less than one day of leave per week at intervals of no more than six days. In addition, employees are entitled to sick leave, maternity leave, annual leave, etc., and the following are the specific leave time provisions:

• Sick leave

An employee is entitled to sick leave whenever he or she is actually sick, provided that the number of paid sick leave days every year does not exceed 30 working days. For sick leave of 3 working days or more, the employer may require the employee to produce a certificate from a first-class doctor or a public medical service. If the employee is unable to produce this certificate, the employee shall give an explanation to the employer.

• Maternity leave

A female employee is entitled to maternity leave for a period not exceeding 98 days for each pregnancy, provided that the number of paid days does not exceed 45 days.

• Annual leave

An employee who has worked continuously for one year is entitled to annual leave of not less than six working days in one year. The employer and the employee may agree in advance that the annual leave not taken in that year will be accumulated and deferred to the following year. The employer may provide annual leave on a pro rata basis for workers who have less than one year's service.

Q10. What special provisions exist for the protection of female employees?

Thailand's Labour Protection Act has a specific section on the work of female employees, which covers the protection of female employees including but not limited to:

(a) Restrictions on the scope of work for female employees, such as prohibiting employers from requiring female employees to mine or construction work to be performed underground, underwater, in a cave, in a tunnel or mountain shaft, except where the conditions of work are not harmful to health or body of the Employee; and prohibiting work on a scaffold of ten metres or more above the ground. Moreover, separate provisions exist in the law on the scope of work for pregnant female employees.

(b) Restrictions on the working hours of female employees, if the employer arranges for female employees to work from 24:00 to 6:00, the labour inspector will report it and generally require the employer to change or reduce the working hours of female employees. At the same time, there is a separate provision in the law regarding the working hours of pregnant women employees.

(c) The law specifies that an employer may not terminate the employment of a female employee on the grounds of her pregnancy.

Q11. How do trade unions play a role in industrial relations?

The role of trade unions in industrial relations includes, but is not limited to, the following:

(a) Trade unions have the right to make demands, negotiate settlements, recognise awards or enter into agreements with employers or associations of employers;

(b) Trade unions have the right to bargain collectively, negotiate working conditions, wages and other labour conditions with an employer;

(c) Trade unions provide information services to their members regarding employment opportunities;

(d) Trade unions have the right to participate in the negotiation of claims for rights or benefits to which both parties in a labour relationship are entitled;

(e) explain or publicise facts concerning labour disputes;

Q12. If an employer and an employee have a labor dispute, how should it be handled?

If a labour dispute arises between an employer and an employee, the following dispute resolution procedures should generally be followed:

(a) The employer and the employee negotiate, if the negotiation fails, a labour dispute shall be deemed to have arisen. The party making the claim shall notify the mediator in writing within 24 hours after the expiry of the statutory period or within 24 hours after an agreement cannot be reached, as the case may be.

(b) An officer of the Labour Department hall conduct conciliation and if conciliation cannot be reached within the statutory period, the labour dispute shall be deemed to be an unresolved labour dispute.

(c) The employer and the employee may appoint a Labour Dispute Arbitrator to resolve the dispute and the employee may take strike action.

Authors:

• KONG Qi, Dacheng Law Offices, Partner. Practice areas: Labor and personnel compliance, dispute resolution
• XU Xiangzhi, Dacheng Law Offices, Senior Lawyer. Practice areas: Corporate compliance, dispute resolution
• ZHANG Yaoyao, Dacheng Law Offices, Paralegal. Email: zora.zhang@dentons.cn