Compliance with Thailand’s Labour Laws and Regulations
- Posted by Oscoworks
- On January 9, 2025
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Hiring in Thailand requires a careful understanding of the country’s labor laws and cultural practices
Employment Contracts
It is highly recommended that both employers and employees establish a comprehensive written employment contract to ensure clarity and legal protection for both parties. The employment contract should be drafted in Thai or in a bilingual format (Thai and English) and must clearly specify the following terms:
- Job Scope: The employee’s official job title, detailed duties, responsibilities, and scope of work.
- Compensation: The agreed-upon salary, bonuses, and other benefits, all expressed in Thai Baht. The contract should specify the payment frequency and methods.
- Working Hours and Leave:
- Standard working hours shall not exceed 48 hours per week.
- The contract should detail provisions for overtime, rest periods, and shift arrangements.
- Entitlements for annual leave, minimum of 6 days after completing one year of service.
- Sick leave entitlement, up to 30 paid days per year.
- Public holidays and associated leave policies.
The employment agreement must adhere to the provisions stipulated by the Thai Labour Protection Act and any relevant regulations to ensure its enforceability. It is advisable for both parties to review and execute the contract with proper legal guidance to safeguard their respective rights and obligations.
Working Hours
- Not exceed 8 hours per day and 48 hours per week.
- For work that may be harmful to health or safety, as prescribed by Ministerial Regulations, working hours shall not exceed 7 hours per day and 42 hours per week.
Rest Periods
- Employees must be granted at least a one-hour rest period after working the first consecutive hours of the day.
- Rest periods can be agreed upon in advance to be less than an hour but not less than 20 minutes each, with a total daily rest period of at least one hour.
- In cases where continuous performance, work damage, urgency, or nature of work necessitate, the employer may require employees to forego rest periods with the employee’s consent
Holidays
Weekly Holidays
- Employees are entitled to at least one day off per week, with no interval exceeding six days between weekly holidays.
- Employees shall receive their basic pay on weekly holidays, excluding daily, hourly, or output-based workers.
- The specific day can be agreed upon in advance as the weekly holiday.
- For certain sectors (hotel, transport, forestry, fisheries, extinguishing work, or other regulated sectors), weekly holidays may be accumulated and taken later within four consecutive weeks.
- For unidentified weekly holidays, employers must notify employees at least three days in advance and report to Labour Inspectors within 7 days.
Traditional Holidays
- Not less than 13 days, including National Labour Day.
- If a traditional holiday falls on a weekly holiday, employees are granted an additional day off on the following working day.
- Employees shall receive their basic pay on traditional holidays.
Annual Vacation
- Employees with at least one year of continuous service are entitled to a minimum of six working days of annual leave.
- During annual leave, employees shall receive their normal basic pay.
- For employees with less than one year of service, leave may be granted on a pro-rata basis.
- Employers can arrange and notify employees of annual leave in advance, and agreements can be made to carry over or accumulate leave to the following year.
Leave Entitlements
- Sick Leave: Up to 30 working days per year, with full pay based on normal daily pay.
- Maternity Leave: Up to 98 days per pregnancy, including holidays, with pay not exceeding 45 days at normal pay rate.
- Sterilization Leave: Leave as prescribed by a medical practitioner, with full pay during the leave.
- Military Service Leave: Up to 60 days, with pay at the normal rate.
- Training Leave: For skills development, without entitlement to pay unless otherwise agreed.
Compensation and welfare
Ensuring fair compensation and welfare for employees in Thailand is governed by the Labour Protection Act B.E. 2541 (1998). Below are key provisions for basic pay, overtime, and holiday work, designed to help employers maintain compliance while fostering a supportive workplace.
Basic Pay
Basic pay refers to the agreed-upon compensation for work performed under an employment contract during normal working hours, calculated on an hourly, daily, weekly, monthly, or other periodic basis, or based on the employee’s output. It also includes payments for holidays or leave periods when no work is performed but the employee is entitled to payment under the Act.
- Minimum Wage: Employees must receive at least the minimum wage rate set by the Wage Committee, which varies by province (e.g., THB 400–480 per day as of 2025, subject to updates). If no minimum wage is specified for a locality, the base minimum rate applies.
- Compliance: Employers must ensure basic pay meets or exceeds the applicable minimum wage to avoid penalties from the Ministry of Labour.
Overtime Work and Holiday Work
Employers may require employees to work overtime or on holidays under specific conditions, as outlined below:- Overtime Work: Overtime is permitted when work requires continuous performance (e.g., stoppage would cause damage) or is urgent. Employers must obtain employee consent for non-urgent overtime.
- Holiday Work: For businesses such as hotels, restaurants, theaters, transport, medical establishments, or others specified in Ministerial Regulations, holiday work requires employee consent for each instance.
- Rest Periods: If overtime extends beyond two hours after normal working hours, employees are entitled to a minimum 20-minute rest period before starting overtime, except for continuous or urgent work where the employee consents to forgo the break.
Overtime Pay, Holiday Pay, and Holiday Overtime Pay
Employers must compensate employees for overtime and holiday work at rates prescribed by the Labour Protection Act:
- Overtime Pay on Working Days:
- Employees must receive at least 1.5 times the hourly basic pay rate for overtime hours worked on a normal working day.
- For output-based employees, overtime pay is at least 1.5 times the rate per unit of output on a normal working day.
- Holiday Pay During Normal Hours:
- Employees Entitled to Holiday Pay: Employees who normally receive basic pay for holidays are entitled to an additional payment of at least 1x the hourly basic pay rate (or 1x the rate per unit of output for output-based employees) for work performed during normal hours on a holiday.
- Employees Not Entitled to Holiday Pay: Employees who do not receive basic pay for holidays must be paid at least 2x the hourly basic pay rate (or 2x the rate per unit of output) for work during normal holiday hours.
- Holiday Overtime Pay:
- For overtime work on holidays, employees must receive at least 3x the hourly basic pay rate (or 3x the rate per unit of output for output-based employees) for hours worked beyond normal working hours.
Termination and Severance Pay
Underthe Labour Protection Act, the employers must adhere to strict rules regarding severance pay and termination procedures to ensure compliance and avoid disputes. Below is a comprehensive guide to severance pay obligations, special severance pay, and exemptions.
Standard Severance Pay
An employer must pay severance to an employee terminated without cause. The amount is based on the employee’s consecutive years of service and is calculated at their most recent basic pay rate:
- 120 days to <1 year: 30 days’ basic pay.
- 1 year to <3 years: 90 days’ basic pay.
- 3 years to <6 years: 180 days’ basic pay.
- 6 years to <10 years: 240 days’ basic pay.
- 10 years or more: 300 days’ basic pay.
Special Severance Pay for Technological or Structural Changes
If termination results from improvements to work processes, production, distribution, or services due to machinery or technology changes, leading to a reduction in workforce, employers must follow these specific rules:
- Advance Notification: The employer must notify both the Labour Inspector and the affected employee(s) at least 60 days before the termination date. The notice must specify the termination date, the reasons for termination, and the names of the affected employees.
- Failure to Notify: If the employer fails to provide the required 60 days’ notice (or provides shorter notice), they must pay special severance pay in lieu of notice. This payment is equivalent to 60 days’ basic pay at the most recent rate (or the last 60 days’ pay for output-based employees).
Additionally, for employees with 6+ years of service, employers must pay special severance pay in addition to standard severance:
- Rate: 15 days’ basic pay per complete year of service (or 15 days’ pay for output-based employees).
- Cap: Total severance (standard + special) must not exceed 360 days’ basic pay.
- Calculation: Periods exceeding 180 days in a partial year are rounded up to one year.
Relocation of Business
If an employer relocates their business in a way that significantly impacts an employee’s or their family’s living situation:- Notification: The employer must notify the employee at least 30 days before the relocation.
- Employee Rights: An employee who chooses not to relocate has the right to terminate their contract and receive special severance pay equivalent to 50% of the standard severance rate.
- Failure to Notify: If the employer fails to provide the 30-day notice, they must pay special severance pay in lieu of notice, equivalent to 30 days’ basic pay at the most recent rate.
Exemptions from Severance Pay
Employers are not required to pay severance if the termination is due to any of the following reasons:- Voluntary Resignation: The employee voluntarily resigns from their position.
- Dishonesty or Criminal Acts: The employee engages in dishonest conduct or commits an intentional crime against the employer.
- Intentional Loss: The employee deliberately causes a loss to the employer.
- Gross Negligence: The employee’s actions, through gross negligence, result in severe loss to the employer.
- Violation of Rules: The employee breaches lawful and equitable work rules, regulations, or orders. A written warning (valid for one year) is typically required, unless the violation is considered severe enough to warrant immediate termination without a warning.
- Neglect of Duties: The employee is unjustifiably absent for three consecutive workdays, regardless of any intervening holidays.
- Imprisonment: A final court judgment leads to the employee’s imprisonment.
- Fixed-Term Contracts: The employment is for a specific project, temporary work, or seasonal work with a written agreement (lasting no more than two years) signed at or before the start of employment. Examples include:
- Special projects outside the employer’s normal business with fixed start and end dates.
- Temporary work with a defined schedule.
- Seasonal work where employees are engaged only during the season.
Welfare:
The employers with 50 or more employees are required to establish a Welfare Committee at their business establishment to ensure employee well-being and compliance with labor regulations. Below are the key requirements and responsibilities for maintaining a compliant welfare framework.Welfare Committee Requirements
- Establishment: Employers with 50 or more employees must form a Welfare Committee comprising at least five employee representatives. These representatives should reflect the workforce’s interests and be selected in accordance with labor regulations.
- Purpose: The committee facilitates collaboration between employees and employers to enhance workplace welfare, ensuring benefits and conditions align with legal standards and employee needs.
Employment Laws for Companies (for businesses with 10+ employees)
The employers with ten or more employees must comply with the following:- Work Rules: Prepare and display a set of work rules in Thai in a visible location. These rules must cover essential employment terms, including:
- Working hours
- Holidays and leave policies
- Overtime regulations
- Pay structure and schedule
- Disciplinary procedures
- Termination policies
- Employee Register: Maintain a detailed and accurate register of all employees.
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