Thailand: Amendments to the Labour Protection Act

The draft amendment to the Labour Protection Act (the LPA) has now been approved by the National Legislative Assembly on 29 June 2017, and is awaiting Royal Assent to be given by the King. Once the Royal Assent is given, it will be published in the Royal Gazette and the amendment will become effective from the day following the publication date. Whilst the specific time frame is still unclear, there is a possibility that the draft amendment to the LPA will come into force later this year.

According to the draft, there are four key amendments being proposed: minimum wages rates of certain groups or types of employees, work rules, employees' retirement and criminal penalty for employers. Failure to comply with certain provisions of the LPA will expose employers to criminal liability. Thus, employers should familiarise themselves with the draft amendment at the earliest possible chance.

Key amendments

Minimum wages rates

Currently, in determining the minimum wage rates, the Wage Committee will consider the current wage rates the employees are receiving, together with other factors including the cost of living, inflation, living standards, production costs and capacity, prices of goods and services, GDP and economic and social conditions. The minimum wage rates may be determined specifically for some types of business, work or occupation, and this can be for any locality.

However, in addition to the above, the draft amendment proposes that the Wage Committee may also consider determining minimum wage rates specifically for particular types of employees in the business, work or occupation, and this, again, can be for any locality.

The draft amendment is to encourage employment and protection of certain types of employees. Examples include students, disabled persons and older workers, where the nature of work performed by such types of employees may be different from that performed by other employees.

Work rules

Previously, the LPA provided that an employer with ten or more employees is required to establish work rules in the Thai language and such work rules must be submitted to the Director-General of the Department of Labour Protection and Welfare (or his/her delegate), who will have the power to order an employer to rectify any illegitimate provision in the work rules within a specified timeframe.

Earlier this year, the National Council for Peace issued an Order (No. 21/2017) regarding Law Revision for the Ease of Doing Business (the Order). The Order amends a number of laws, including provisions regarding work rules in the LPA.

According to the Order, employers are no longer required to submit the work rules to the Director-General of the Department of Labour Protection and Welfare or his/her delegate.

The draft amendment to the LPA contains the same amendment as stipulated in the Order. However, employers are still required to disseminate a copy of work rules and post the work rules in the work place where it is easily accessible to the employees. The draft amendment also provides that employers may, in addition to posting physically, disseminate the work rules via electronic means.

Retirement

Another key amendment in the LPA is the inclusion of a provision regarding employees' retirement in the LPA. Currently, the LPA is silent on employees' retirement and this has raised many issues between employers and employees in the

past including whether employers are deemed to have terminated the employment in the event of retirement, what the employees' retirement age is (where this is not stated in the relevant terms of employment), and whether the employees are entitled to severance pay if the employment is terminated due to reaching retirement age.

Under this draft amendment, retirement as agreed between employers and employees, or as determined by the employer, would be deemed to be a termination of employment by the employer. Further, in the event that there is no such agreement or determination, or where the retirement age is agreed or determined to be over 60 years of age, any employees who are 60 years of age or above will have the right to retire. In order to exercise this right, employees will have to expressly notify their intention to retire to their employer and the retirement will take place 30 days after the date of notification. Upon retirement, the employer will need to pay severance payments to the retired employee in accordance with the rates prescribed in the LPA.

Criminal penalty for employers

The amendments in respect of retirement (set out above) are also reflected in the criminal penalty provision. In the event that an employer fails to make a severance payment to a retired employee pursuant to the LPA, it will expose them to a term of imprisonment of not more than 6 months and/or a fine of not exceeding THB100,000.

Key takeaways

As there is a possibility that the draft amendments to the LPA will come into force later this year, it would be prudent for employers in Thailand to consider the key changes relating to minimum wages rates, work rules and retirement in order to prepare themselves for enactment of the amendments to the LPA. In particular, given the potential criminal liability accompanying non-compliance with the new retirement provisions, employers should consider any necessary changes that will result from the enactment of these new provisions.

Written by Emi Rowse, Of Counsel, and Chotika Voravongsakul, Junior Associate