1.1 Key statutes
Thailand has a civil law legal system similar to the civil law countries of continental Europe. Its laws consist of the Constitution, as well as Codes, Acts and delegated legislation in the form of decrees, notifications, rulings, announcements and regulations. Judicial precedent is not binding, but decisions of the Supreme Court will be treated with great respect by the lower courts.
The key statutes that impact upon employment arrangements in Thailand are as follows:
- Civil and Commercial Code;
- Labour Courts Act;
- Labour Protection Act;
- Labour Relations Act;
- the Provident Fund Acts;
- the Social Security Acts;
- Unfair Contract Terms Act; and
- Workmen’s Compensation Act.
In addition, the employment of foreigners is governed by the Foreign Employment Act and relevant provisions of the Immigration Act.
1.2 Probationary period
It is generally recommended that employers include a probationary period in the contract of employment, as employees on probation (up to a maximum of 120 days) are not entitled to severance payments as provided for under the Labour Protection Act, provided that the Act’s requirements concerning notice are observed.
An employer and employee may agree to include a provision in the employment contract dealing with the duration and effect of the probationary period. Such provision will be subject to the general power of the court under the Labour Protection Act to review the fairness of the terms of an employment contract.
1.3 Minimum wage
Under the Labour Protection Act, the Minister has power to make minimum wages orders. These orders are made on a province by province basis, setting out the minimum daily wage, and are usually reviewed at least annually.
1.4 Remuneration structure
Wages may be agreed to be paid on a periodical (eg per hour, per day, per week, per month) basis or on a piecework basis. In addition to ordinary wages which are paid for regular full-time work, an employee may be entitled to overtime wages and/or holiday wages and/or wages for overtime work on holidays.
’Wages’, which are used for calculation of severance pay, are to be distinguished from ’payments for welfare’, which are not. The former includes such things as regular allowances, such as a car allowance. The latter includes such things as provident fund contributions made by the employer, income tax where this is paid by the employer, costs of transport to and from work in an employer-supplied vehicle, and discretionary bonuses.
1.5 Working hours
Hours of work
Working hours vary depending on the nature of the work, however the maximum working hours should not exceed 8 hours per day or 48 hours per week.
Where less than 8 hours are worked in a given day, the balance can be carried forward and added to another day, to extend the maximum working hours to 9 hours (note that the employee may still have an overtime entitlement with respect to those hours, and that the weekly 48 hour cap still applies).
Rest periods
In general, an employee is entitled to a break of at least 1 hour but no more than 2 hours after 5 hours of work, unless otherwise agreed to the benefit of the employee. The break period is generally not counted as part of working hours.
An employer must provide an employee with at least one weekly holiday/rest day.
Overtime
An employer cannot require an employee to work overtime without the employee’s consent, except where the nature or type of work necessitates continuous performance, where stoppage may damage the work or in other prescribed circumstances. Regulations prescribe that overtime must not exceed 36 hours per week.
When overtime work lasts for 2 hours or more, the employee is generally entitled to a rest period of at least 20 minutes before the employee starts to work overtime (excluding work which is of a continuous nature or type and which the employee consents to perform or which is urgent).
In broad terms, managerial employees and salespersons employed on a commission basis are not entitled to additional payment in respect of overtime – that is, employees authorised to act on behalf of the employer in hiring, paying compensation, reducing wages or terminating employment.
Employees who do not fall into the managerial employee or commission sales category are entitled to payment for overtime work. Depending on the type of work being performed, the employee will be entitled to payment at either the regular wage rate or at 150% of the regular wage rate. Overtime work during holidays is paid at 300% of the regular wage rate.
1.6 Public holidays
Employees are entitled to a minimum of 13 paid public holidays per year, including Labour Day (1 May).
Employers in certain specified industries may require employees to work on a public holiday (eg hotels, entertainment, transportation, restaurants, healthcare facilities, etc).
An employee who performs work on a holiday is entitled to payment at the rate of 200% of the ordinary wage rate.
1.7 Paid annual leave
After 1 year’s service, an employee is entitled to a paid annual holiday of 6 working days per annum. The timing of the annual holiday may be fixed in advance by the employer or agreed between the employer and employee. Accrued but untaken annual leave must be paid out upon termination of employment.
Although the statutory minimum is 6 working days, a more generous entitlement may be provided for in the contract of employment and/or work rules.
1.8 Other types of leave
Maternity leave
Female employees are entitled to maternity leave for a maximum period of 90 days, 45 days of which is on full pay.
Sickness leave
Employees are entitled to sick leave for as long as the sickness lasts. The first 30 working days of sickness leave per annum is paid leave. If sick leave is taken for 3 or more working days, the employer may require the employee to provide a medical certificate.
Military service leave
Employees are entitled to up to 60 days per annum of paid military service leave for military service, military draft, military training or tests of readiness, as required under the law.