Amendment to the Factory Act

On 5 July 2016, the cabinet approved an amendment to the Factory Act of 1992 which does the following: (i) provides a procedure for obtaining a factory licence; (ii) amends the definition of a factory; and (iii) sets the requirements for factory insurance.

Keywords: Mazars, Thailand, Legal, Factory Act

3 August 2016

The key amendments relate to the following issues:

1.    Definition of a factory

The amendment changes the definition of a factory, and states that a factory with a minimum of 50 employees, or having machinery equivalent to 50 horsepower, is required to apply for a factory licence.

2.    Governing control

The amendment gives the Provincial Administrative Organization jurisdiction over small and medium-sized factories.

3.    Increase in insurance coverage

The manufacturer must obtain insurance to cover damages incurred as a result of its operations.

4.    Validity of licence and relocation

The factory licence will be valid for five years from the start of its operations. In the event that a manufacturer relocates, the factory licence will continue to be valid until the factory operator has notified the governmental authorities that the factory at the new location is ready to begin operations.

5.    Transfer of business operator

A new business operator who acquires a factory from the owner must apply for a new licence within 15 days of the acquisition. There is no government fee for obtaining the new factory licence.

6.    Closing the business

If any business operator wishes to close its factory, the business operator must notify the governmental authorities 30 days in advance of the planned closure.

7.    Increase in fees

The official fee for obtaining the factory licence will be increased from 100,000 baht to 1 million baht.

8.    Punishment

 The amendment also increases the penalty for a manufacturer convicted of dumping waste to one year in prison, and increases the fine from 100,000 baht to 1 million baht.

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