Thailand: Proposed Amendments to the Labour Protection Act

On 21 September 2018, the Minister of Labour announced the National Legislative Assembly's ("NLA") in principle approval of the draft amendment ("Draft Amendment") to the Labour Protection Act B.E. 2541 (1998) ("Act"). Key changes and implications for employers are discussed below.

Key changes

Consent to change of employer

Under the current Act, a change of employer does not require the consent of the employee and employees' rights are automatically transferred to the new employer entity by operation of law. The Draft Amendment proposes a new practice whereby an employer must obtain its employees' consent to a change of employer, including where an employer is registering for a change of entity or a transfer to, or merger with, another legal entity that would result in employees becoming employed by a new entity. When the transfer takes place, the new employer must still assume all existing rights and duties of the previous employer with regard to the employee.

Severance pay

The Draft Amendment increases the maximum cap for severance pay from 300 days at the latest wage rate for an employee with 10 years' consecutive employment to 400 days at the latest wage rate for an employee who has 20 years' consecutive employment.

Changes to business leave and maternity leave conditions

The Draft Amendment proposes changes to business leave and maternity leave under the Act, as follows:

• employees will be granted a minimum of three days' business leave (with pay) per year. Currently, under the Act, personal business leave is only granted in accordance with the specific work regulations of the employer;
• maternity leave entitlements will be increased from a minimum of 90 days to 98 days per pregnancy and will extend to leave taken for pre-natal care such as to attend doctor's appointments.

Payment in lieu of advance notice

Currently, the employees on indefinite contracts must be given advance notice of termination at the time of, or prior to, the date on which their wages are normally paid. Termination becomes effective following the next date on which wages are normally paid, being the next pay cycle.

Where an employer wishes to terminate an employee with immediate effect, the employer must provide the employee with payment in lieu of advance notice in an amount equal to that which would have been paid if notice had been provided.

Currently, the Act does not state at which time payment in lieu of advance notice must be provided. The Draft Amendment seeks to clarify this by providing that the employer must make such payment on the date that the employee is dismissed.

Interest to be imposed on an employer failing to make payments

The Draft Amendment imposes an interest rate of 15% per year on employers who fail to make payment in lieu of advance notice or payment when temporarily ceasing business. This is an increase from the current rate of 7.5%.2

Relocation of employers' business premises

The Draft Amendment introduces a process for employers to notify employees of the relocation of the employer's business premises, either to a new location or to other existing premises, as well provides for an employee to refuse to work at a different location, and the consequences of such refusal. Specifically:

• employers must post a notification in a highly visible public place where the business is located, which clearly states where and when the employees are to be moved. Notification must be posted at the then current business premises at least 30 days prior to the proposed relocation date;
• where an employee deems that relocation will materially affect their ordinary course of living, and does not wish to be relocated, the employee must notify the employer in writing of such intention within 30 days of the employer's notification having been posted. Interestingly, the Draft Amendment does not seem to impose any objective criteria to determine whether relocation will 'materially affect' an employee's 'ordinary course of living'. This may mean that employees will have discretion to determine whether such threshold has been met.

Employees who do not relocate for this reason will continue to be entitled to a 'special severance pay' equal to the severance pay rate the employee is ordinarily entitled.

Key takeaways

Employers should be aware of how their obligations to employees will change following enactment of the Draft Amendment and ensure that they have systems in place to review their internal policies, processes and rules and to ensure compliance with the new law. These proposed changes remain in draft form but it is expected that the Draft Amendment will be finalised and enacted as law in early 2019.