Thailand’s employment laws are
administered by the Department of Labor, Protection and Welfare. They
stipulate working conditions including maximum work hours, holidays, sick
leave, minimum wage and severance pay.
Employment legislation has a direct
bearing on labor practices for each type of business. Investors should seek
appropriate advice to determine which legislation applies to their line of
1.1. Labor Protection
In August 1998, the Labor
Protection Act (1998) went into effect. It applies to all businesses with at
least one employee. Under the law, employers who disregard the law are
subject to fines ranging from 5,000 baht to 200,000 baht and imprisonment of
up to one year. It should be noted that domestic workers (household staff)
are not included in the definition of “employee” and are not covered by the
Labor Act. All other employees, whether full or part time, seasonal, casual,
occasional or contract, are covered.
Important protections contained in
the law are:
The maximum number of hours for non-hazardous work is eight hours a day or
48 hours a week in total. In some types of work as stipulated by law, the
employer and the employee may agree to arrange the period of working hours,
but it still must not exceed 48 hours a week. Hazardous work may not
exceed seven hours a day, or 42 hours per week. Employees are entitled to
no fewer than 13 national holidays a year, and a minimum of six days of
annual vacation after working consecutively for one full year. Employees
have the choice of whether they wish to work overtime or on holidays. A
female employee is entitled to maternity leave for a period of 90 days
including holidays, but paid leave shall not exceed 45 days
All employees are entitled to a
daily rest period of at least one hour after working five consecutive
hours. The employer and the employee may arrange the daily rest period to
be shorter than one hour at each time, but it must not be less than one
hour a day in total. A weekly holiday of at least one day a week at
intervals of a six-day period must be arranged by the employer.
For work performed in excess of
the maximum number or working hours fixed either by law or by specific
agreement (if the latter is lower), employees must be paid overtime
compensation. The rates for overtime vary and range from 1-1/2 times to
three times the normal hourly wage rate for the actual overtime worked.
The maximum number of overtime working hours is limited to not more than
36 hours a week.
age for employment
is 15 years, and workers below the age of 18 are banned from dangerous and
hazardous jobs. They are also prohibited from working overtime, on
holidays, or between the hours of 10 p.m. and six a.m. Pregnant employees
are also prohibited from working overtime, on holidays, or between the
hours of 10 p.m. and 6 a.m.
can take as many days of sick leave as necessary, but if an employee takes
three months of sick leave, the employer is required to pay only one
month’s wages. The employer may require the employee to produce a
certificate from a qualified doctor for a sick leave of three days or
Employees who have worked more than 120 days, but less than one year, are
entitled to 30 days severance pay. For personnel employed between one and
three years, the severance pay is not less than 90 days pay. Employees
with three to six years of service will receive six months salary, those
with more than six to 10 years service will receive eight months salary,
and employees with more than 10 years service will receive 10 months
Conditions for termination of employment are laid out in the Act, and a
code governs unfair practices and unfair dismissals, which often are the
result of the failure to follow correct legal procedures. Employee
associations and labor unions must be registered at the Labor Department,
and require a license for operation. Finally, a Labor Court specifically
settles employment disputes. If an employment contract does not specify
any duration, either party can terminate the contract by giving notice at
or before any time of payment, to have effect in the next pay period.
For companies with at least 10 employees that do not have a provident fund,
an Employee Welfare Fund will be established to compensate employees who
resign, are laid off, or die in service. Employers and employees will be
required to contribute to this fund.
In addition to these provisions,
there are restrictions on the kind of work women and children can perform.
Guidelines are set for wages and overtime, as well as resolution of labor-management
disputes. Employers are required to pay workers compensation if an
employee suffers injury, sickness or death in the course of work. Thai law
also requires employers to provide welfare facilities, including medical
and sanitary facilities.
1.1.1 Workmen’s compensation
The Compensation Act prescribes
that an employer must provide the necessary compensation benefits for
employees who suffer injury or illness or who die as a result or in the
performance of their work at the rates prescribed by law. The
compensation benefits can be grouped into four categories: The
compensation amount, the medical expenses, work rehabilitation expenses,
and funeral expenses.
The payment of compensation
benefits is made in accordance with the criteria and rates prescribed by
law depending on the seriousness of the case. In general, the
compensation amount must be paid monthly at the rate of 60 percent of
the monthly wages of the employee but not lower than 2,000 baht and not
exceeding 9,000 baht a month.
Actual and necessary medical
expenses must be paid but not exceeding 35,000 baht for normal cases and
50,000 baht for serious injury. The work rehabilitation expenses must be
paid as necessary according to the criteria procedures and rates
prescribed by law but not exceeding 20,000 baht. In the case of death,
funeral expenses will be paid at a maximum amount equal to 100 times of
the minimum daily wage rate prescribed by law.
1.1.2 Social Security
The Social Security Act
requires that all employers withhold social security contributions from
the monthly wages of each employee. The prescribed rate is currently 5
percent for the first 15,000 baht of salary. The employer is required to
match the contribution from the employee. Both contributions must be
remitted to the Social Security Office within the 15th day of the
Employees with social security
registration may file claims for compensation in case of injury, illness,
disability or death that is not due to the performance of their work,
and for cases of child delivery, child welfare, old age pension and
1.1.3 Termination of
If an employment contract does
not specify any duration, either party can terminate the contract by
giving notice at or before any time of payment, to take effect in the
next pay period. An employee may be dismissed without due notice and
severance pay if the employee:
Intentionally commits a crime or act of dishonesty
against the employer
Intentionally or negligently causes the employer to
Violates the employer’s work rules, regulations or lawful
orders and a written warning has been given (except that such warning is
not required for serious offences)
Has been absent for three consecutive working days
without a reasonable excuse
Is adjudged to serve a prison sentence (except where such
sentence arose due to negligence or petty offense)
An employee terminated without
a valid cause as stipulated by law is entitled to receive severance pay
as specified above.
In the event that the employer
relocates its place of business in a way that essentially affects the
normal living of an employee, the employer must notify the employee of
the relocation at least 30 days in advance or pay an amount in lieu of
the advance warning of 30 days’ wages. If the employee refuses to move
and work in the new location, the employee has the right to terminate
the employment contract and is entitled to receive a special severance
pay of not less than 50 percent of the prescribed severance pay.
In the event the employer
terminates the employment of an employee as a consequence of
streamlining the work units, production process and distribution service,
due to the introduction or change of machinery or technology that
reduces the number of employees, the employer must notify the Labor
Inspector and the employee concerned at least 60 days in advance of the
date of termination of the employee or pay, in lieu of the advance
notice, an amount equal to 60 days’ wages. The terminated employee will
be entitled to the prescribed severance pay. Moreover, if the terminated
employee has worked consecutively for more than six years, the employee
would be entitled to an additional special severance pay at the rate of
15 days’ wages for each full year of service, calculated from the start
of year seven onwards. However, the total amount of this additional
special severance pay is limited to the equivalent of 360 days’ wages.
1.2 Legal Implications of Labor
In general, Thai labor laws provide
for considerable freedom in managing labor. In many countries, it is not
legal to discriminate on the basis of age or sex. Perusal of personnel ads
in Thai newspapers finds employers narrowly defining their needs: “The
successful candidate will be male, under 35 years of age, not a member of a
labor union, and at least 150 cm in height, etc.”
Further, the government does not
interfere with a company’s retrenchment policies when economic conditions
necessitate cutbacks. There is no “first in, last out” requirement in
Thailand. Similarly, Thai employers have the right to transfer employees to
other work locations, provided the transfer is not ordered with the
exclusive intent to create hardship on them. Refusal to transfer is legal
cause for dismissal.
1.2.1 Employee records
An employer with 10 or more regular
employees is required to establish written rules and regulations in Thai
language governing work performance. The regulations must be displayed on
the work premises within 15 days of the date from which the number of
employees reached 10 or more. A copy of these rules and regulations must be
submitted to the Department of Labor within seven days of the date that the
employer announces or displays the working regulations. An employer with 10
or more regular employees is also required to maintain an employee register
in Thai language with documents pertaining to the payment of wages, overtime,
holiday work, etc. The employee register must be maintained for at least two
years after the date of termination of employment of each employee, together
with the supporting source documents.
1.3 Tips on Recruiting and
The ability of a company to attract
and retain staff is considerably enhanced by tailoring compensation packages
to meet individual employee needs. Increasingly, factors such as work
environment, organizational policies, relationships with superiors, and
career path influence decisions whether to join, or remain with, a company.
In a challenging living environment such as Bangkok, these “quality of life”
issues take on even more importance.
Organizing training programs to
upgrade skills helps to motivate staff and demonstrates a company’s
commitment to its employees. Admission to such programs can be seen both as
a reward for good performance and as part of the total compensation package.
1.4 Recruiting Technically-skilled
There are two main English language
daily newspapers that contain significant numbers of advertisements, both in
English and in Thai. Both the Bangkok Post and The Nation boast circulation
figures of close to 60,000 copies per day, and advertising rates of the two
newspapers are similar. In addition to reaching prospective employees
through the print editions of these newspapers, it should be noted that the
newspapers have classified advertisements on-line through their Home Pages.
In addition, the Department of
Employment, Ministry of Labor and Social Welfare, has a web site listing
both job fairs and employment opportunities. It can be found at:
Several domestic and international
personnel recruitment services operate in Bangkok. In addition to securing
personnel, these companies offer services such as advice on issues of
organizational structure, labor relations, and the cultural implications of
managing labor in Thailand.
Developing contacts with
educational institutes to identify and court potential candidates as early
as possible is also recommended. For firms with ongoing manpower needs,
establishing a network of contacts can be especially valuable.
In addition to tailoring
compensation packages to individual need and emphasizing long-term and
organizational benefits, high-end technical employees, such as scientists
and engineers, need to be given work commensurate with their skills. By
allowing them greater challenges, and less narrowly defining their role so
that it may include responsibilities in systems design and possibly
management, technical personnel become more productive and are more likely
to view themselves as integral to the company as a whole.
Concrete, long-term benefits are an
effective retention tool. Long-term benefits motivate personnel to work
through problems and to identify self-interest with company interest.
Committing resources to long-term benefits also insures that companies
realize increased production levels from staff as they gain experience.