Sources of regulation
The Thai legal sources are various laws, announcements, directives and orders
of the Ministry of Labour and Social Welfare (prior to 1993, it was a Department
of Labour within the Ministry of Interior).
Legal provisions governing termination of contracts of employment are mainly
laid down in:
- The Civil and Commercial Code (CCC) (secs. 575-586);
- The Labour Relations Act, BE 2518, 1975 (LRA); [1]
- The Labour Protection Act, 1998 (LPA).
Severance pay is primarily governed by the Notification of the Ministry
of Interior Re: Labour Protection, 16 March BE 2515, 1972 (NMI), as most
recently amended by the Notification of Ministry of Labour of Social Welfare
Re: Labour Protection, BE 2537, 1994 (NML).
The Act on the establishment of Labour Courts and Labour Court Procedure
BE 2522, 1979 (ALC), governs the judicial settlement of disputes related
to termination of employment.
Scope of legislation
The CCC defines a “hire of services” as a contract whereby a
person, called the employee, agrees to render services to another person,
called the employer, who agrees to pay remuneration for the duration of the
services (sec. 575, CCC).
The LRA does not apply to the central administration, the provincial administration,
the local administration (including the Bangkok Metropolitan and Pattaya
City Administration), State enterprises (sec. 4, LRA).
The LPA excludes from its scope public servants, State enterprise employees,
agricultural and home-based workers.
The NMI does not apply to central, provincial and local administrations,
and to domestic workers (secs. 1 and 2, NMI).
Public servants and State employees are covered by the State Enterprise
Labour Relations Act of 2000.
Contracts of employment
The CCC distinguishes between
contracts concluded for a definite period and indefinite contracts.
Every establishment employing at least 20 employees must
have an agreement on conditions of employment, negotiated between the employer
or his or her representative and a maximum of seven elected representatives
of the employees. This agreement must contain particulars on, inter
alia, conditions of work or employment and termination of employment
(sec. 11, LRA), which will be binding on the employer and the employees
who have given their signatures or who have participated in the election
of representatives to conduct the negotiations (sec. 19, LRA). An
agreement on conditions of employment can only be negotiated following
a request to be notified by the employer or the employees to the other
party following the procedure set out in sec. 13, LRA.
Termination of employment
If upon expiry of a contract concluded for a definite period,
the employee continues to render services with the knowledge of the employer,
then the parties are presumed to have made a new contract of hire on the
same terms. Both employer and employee can, however, terminate the new
contract under the same conditions as a contract concluded for an indefinite
period (sec. 581, CCC).
Dismissal
An employer may dismiss an employee who wilfully disobeys
or habitually neglects the lawful commands of his or her employer; absents
himself or herself from service; is guilty of gross misconduct; or otherwise
acts in a manner incompatible with the due and faithful discharge of his
or her duties (sec. 583, CCC).
The NMI introduced specific provisions governing the retrenchment of workers
due to the restructuring of the work unit, the production process, or the
distribution or provision of services, resulting from the introduction or
change of machinery or technology (sec. 46bis and ter, NMI).
The employer cannot, except with the approval of the Labour
Court, terminate employment of, or reduce the wages of, or punish a member
of an employees’ committee (sec. 52, LRA). Such committees are set
up by employees in establishments employing at least 50 employees (sec.
45, LRA). An employer must meet at least once every three months with
such a committee to discuss matters such as employees’ welfare, employees’ petitions,
pending disputes in the workplace and work rules (sec. 50,
LRA).
It is generally unlawful for an employer
to terminate the employment or transfer the duties of the employees, their
representatives, the committee members, subcommittee members, or members
of the labour union, or committee members or subcommittee members of the
labour federation, who are involved in the presentation, negotiation or
reconciliation of a request to renegotiate an agreement on conditions of
employment. Termination or transfer is, however, lawful if the persons
concerned dishonestly perform their duties or wilfully commit a criminal
offence against the employer; wilfully cause damage to the employer; neglect
work for three consecutive working days without a suitable reason; or violate
the rules, regulations or lawful orders of the employer, provided the employer
has issued a warning in writing. The written warning is not required in
severe cases (sec. 31, LRA). The same protection applies to the
same employees while an agreement on conditions of employment or equivalent
award is in effect, with one additional category of permitted dismissal
(i.e. when the employee commits any act of instigation, encouragement or
persuasion to violate the agreement on conditions of employment or equivalent
arbitration award)
(sec. 123(5), LRA).
The LRA prohibits as an unfair practice the termination
of employment by the employer:
- on
the ground that the employee is a member of the trade union;
- of
certain persons (listed below) carrying out functions of the labour relations
machinery for certain acts related to the fulfilment of their duties;
and
- on
the ground that the employees or the labour union are about to undertake
such acts (sec. 121, LRA).
The persons specifically referred to are employees, employees’
representatives, committee members of the labour union or of the labour
federation. The specified acts are calling a rally, filing a petition,
submitting a claim, filing a lawsuit or negotiating it, appearing as a
witness before or producing evidence to competent officials under the law
on labour protection, the Registrar, labour dispute conciliators, labour
dispute arbitrators, labour relations committee members, or the labour
court.
Notice and prior procedural safeguards
Both employer and employee can terminate a contract concluded
for an indefinite period by giving notice at, or before, any time remuneration
is paid. The termination will normally take effect at the following time
remuneration is paid, but parties are under no obligation to give more
than three months’ notice (sec. 582(1), CCC). If the employer terminates
the contract, he or she has the option of paying the employee his or her
remuneration up to the expiry of the notice instead of having the employee
serve the notice period (sec. 582(2), CCC).
An employee dismissed for misconduct as outlined in the
previous section is not entitled to notice or compensation (sec. 585,
CCC).
The employee is entitled to a certificate stating the length
and nature of his or her services. If the employer has borne the costs
of the journey of an employee originating from a place other than the place
of work, the employee can also claim the costs of return upon termination
of the contract, subject to three conditions:
- the
applicable contract does not provide otherwise;
- the
contract has not been terminated due to an act or fault of the employee;
and
- the
employee returns within a reasonable time to the place from where he
or she was transported (sec. 586, CCC).
In the event of retrenchment due to restructuring, the
employer must, at least 60 days in advance of the date of termination of
employment, inform the labour inspection services and the employees of
the grounds for termination and the names of employees affected (sec.
46bis, NMI).
Severance pay
The employer must pay compensation to the employee when
terminating the contract of employment, or when the employer commits any
act to prevent the employee from continuing to work or discontinues payment
of wages to this end. This compensation is also due when the termination
is the result of the employer’s inability to continue business operations.
The compensation is not due upon termination of a contract concluded for
a definite period (sec. 46, NMI), or when the employee:
- has
been dishonest on duty;
- has
deliberately committed a criminal offence against the employer;
- has
intentionally caused damage to the employer;
- has
violated working rules or lawful orders from the employer;
- has
been absent for three consecutive working days without justification;
- has
caused serious damage to the employer due to negligence; or
- has
been sentenced to imprisonment (sec. 47, NMI).
The provisions on compensation apply to fixed-term employment
up to a maximum of two years on a temporary project or seasonal work which
is not part of the employer’s core business, provided that the employment
relationship has been put in writing from the beginning (sec. 46,
NMI).
The amount of compensation depends on the length of service.
For an uninterrupted period of service between 120 days and one year the
compensation for time-rate and piece-rate work alike amounts to the last
30 days’ wages. For a period of service between one and three years, compensation
equals the last 90 days’ wages. For a period of service of over three years
the amount of compensation corresponds to the last 180 days’ wages. The
period of service includes holidays, leave days and days that the employee
has been exempted from work for the convenience of the employer. Discontinuity
of the employee’s service intended by the employer to deprive the worker
of his or her rights is disregarded, regardless of the assignment of the
employee and the length of the gap between assignments (sec. 75,
NMI).
In the event of retrenchment following restructuring, an
employer who does not give notice or gives notice less than 60 days in
advance must pay compensation in lieu of notice, equal to the last 60 days’
wages (sec. 46bis, NMI). This compensation substitutes for the normal
compensation in lieu of notice provided for in the CCC. If the employee
has been employed for at least six years, however, the employer must pay
additional compensation equal to 15 days’ wages for every year of employment,
with a maximum amount equal to 360 days’ wages. With respect to this additional
compensation, a period of work of more than 180 days constitutes a year
(sec. 46ter, NMI).
Avenues for redress
An employee whose employment has been terminated following
an unfair practice by the employer may file a complaint with the Labour
Relations Committee [2] within 60 days of the violation (sec.
124,
LRA). This Committee will issue an award and an order within a further
90 days,
unless
the Minister
has decided to extend the period for decision (sec. 125, LRA).
The employee can also file a criminal complaint against the employer, but
only
after the Labour Relations Committee has passed an arbitration award and
the employer has failed to comply with the Committee’s order (sec.
127,
LRA).
Disputes regarding termination of employment must be brought
before a labour court. This can be the Central Labour Court if the place
of work is Bangkok Metropolis or its surrounding provinces, a regional
or provincial labour court if one has been established in the region or
province of the place of work, or a Court of First Instance if the place
of work is not situated within the territorial jurisdiction of any labour
court (secs. 5, 6, 7 and 9, ALC). Administrative remedies provided
under the NMI and LRA must be exhausted, however, before a lawsuit may
be filed with a labour court (sec. 8, ALC).
Employers and employees may give power of attorney to the
employers’ association or the labour union of which they are members, or
to the competent officer empowered to take legal action under the NMI or
LRA, to proceed on their behalf (sec. 36, ALC).
If the labour court considers that an employee has been
unfairly dismissed, the court may order reinstatement at the level of remuneration
applying at the time of dismissal (sec.
49, ALC). If a labour court considers that the cooperation between
employer and employee has been disrupted beyond repair, the court may fix
an amount of damages as compensation to be paid by the employer by taking
into consideration the age of the employee, the length of service, the
hardship of the employee at the time of dismissal, the cause of the dismissal
and the compensation the employee is entitled to receive (sec. 49,
ALC).
Any judgement or order is binding
only upon the parties in the proceedings, unless the court prescribes that
the judgement be also binding upon other employers and employees having
a joint interest in the case (sec. 53, ALC). A judgement or order
can be appealed to the Supreme Court within 15 days of its pronouncement,
but only on points of law (sec. 54, ALC).
Further information
[1] All Thai legislation is officially dated “BE”. BE stands for Buddhist Era, an era which began in 543 BC. Thus the year LRA 1975 is the equivalent of BE 2518.
[2] The Labour Relations Committee is established
within the Ministry of Labour and Social Welfare (sec. 8, LRA)
to settle particular labour disputes with an award (see Ch. 2,
LRA). It is composed of between eight and 14 members, three of whom must
be employers’ representatives and three employees’ representatives (sec.
37, LRA).
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