Draft amendments to the Labour Protection Act

On 20 September 2018, the National Legislative Assembly (“NLA”) approved, in principle, draft amendments to the Labour Protection Act, 2541 B.E. (1998 A.D.) (“Draft Amendments”). Significant changes introduced by the Draft Amendments are summarized below.

Keywords: Mazars, Thailand, Legal, Labour Protection Act, Severance, Retirement

15 November 2018

  • Severance pay

The Draft Amendments extend the cap for severance pay from the current cap of 300 days at the latest wage rate for an employee with 10 years of consecutive employment to 400 days at the latest wage rate for an employee with 20 or more years of consecutive employment.

  • Changing the employer

Under the current Labour Protection Act, a change of employer does not require the consent of the employee. However, the Draft Amendments state that the employer must obtain the consent of the employee in the event that employers will change, or if a legal entity registering for a change, a transfer to, or a merger with another legal entity that would result in an employee becoming the employee of a new employer. When the transfer takes place, the new employer must assume all existing rights and duties of the previous employer in regard to the employee.

  • Business leave

Currently, an employee is granted business leave only if the work rules allow this. However, under the Draft Amendments, an employee must be granted a minimum of 3 days’ business leave a year, and full pay for a maximum of 3 working days a year while on business leave.

  • Maternity leave

The Draft Amendments increase maternity leave from the current minimum of 90 days to 98 days per pregnancy, with full pay for a maximum of 45 working days, and further define maternity leave to include leave taken for prenatal care.

  • Temporarily ceasing business operations

Currently, an employer that temporarily ceases doing business, whether in whole or in part, for certain specific reasons, must pay an employee at least 75% of the wages that he received before the business ceased. However, the conditions for paying these wages are not set out. The Draft Amendments propose that the place and time for paying these wages be set out clearly.

  • Relocation of the employer’s business premises

The Draft Amendments set out a method for notifying employees of the relocation of the employer’s business premises, an employee’s right to refuse to work at the new location, and the consequences of such a refusal. The details are as follows:

(1)   Method of notifying employees of the relocation – The employer must post an announcement of the pending relocation in a prominent place on the current business premises at least 30 days before the relocation.

(2) Employee’s right to refuse to work at the new location – Any employee whose normal living conditions will be affected by the relocation of the employer's business premises has the right to refuse to work at the new location by giving written notice of such to the employer within 30 days of the announcement.

(3) Consequences of such a refusal – After the employee exercises the right mentioned above, his employment will be considered terminated as of the date of relocation, and the employee will be entitled to special severance pay.

  • Payment in lieu of advance notice

Currently, in order for an employer to terminate an employee who has an indefinite employment agreement, the employer must give the employee advance notice of termination at the time of or prior to the date on which wages are normally paid, and the termination becomes effective as of the subsequent date on which wages are normally paid.

If an employer wishes to terminate an employee immediately, the employer must provide payment in lieu of advance notice to the employee equal to that which would have been paid if notice had been given as stated in the paragraph immediately above.

Currently, the Labour Protection Act does not state when payment in lieu of advance notice should be provided. The Draft Amendments state that, in order to avoid disputes as a result of this, 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 Amendments state that an interest rate of 15% a year will be imposed on employers failing to make the following payments:

(1) Payment in lieu of advance notice; and

(2) Payment when temporarily ceasing business.

Since the Draft Amendments were approved in principle only, certain parts of them may be revised by a committee appointed by the NLA.

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