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Legal Update

Proposed Changes To Labour Law

25 June 2007
Mayer Brown Legal Update

Summary

Newly proposed amendments to the Labour Protection Act B.E. 2541 (the "Act") will necessitate changes in the work place, particularly in labour intensive businesses such as construction and manufacturing industries. 

There are two draft amendments to the Act, one proposed by the Ministry of Labour and Social Welfare ("MOL") and the other proposed by The National Legislative Assembly ("NLA"), for consideration.

Full Update

Background

The draft proposed by the MOL is essentially an attempt to completely overhaul the Act. Provisions of all chapters (except chapters 6, 8, 10 and 15) have been amended. The draft proposed by the NLA focuses on three areas relating to the benefits of employees (i) who are not directly employed by a business operator or employees engaged by a lump sum payment, (ii) in the case of a temporary suspension of a business or (iii) in the case of a relocation of the work place.

What Are The Similarities?

Comparing the two drafts, the similarities of the proposed changes are in connection with three main areas.

1.  Benefits for the primary contractor's employees and employees engaged to work and compensated by a lump sum payment

Where a business operator engages any employee to work and compensates him/her by a lump sum payment or assigns any person to procure an employee to work, the business operator is responsible for the benefits received by those employees.
 
2.  Business suspension

If it is necessary for an employer to temporarily suspend its operations wholly or partially, the employer must ensure proper management by payment of wages and give notice in writing in advance to the employees prior to the business suspension.

3.  Relocation of the workplace

A notification of not less than 30 days must be given to employees by the employer before the date of any relocation of the workplace which materially affects the ordinary course of living of the employees or their families. If any employee does not want to join the employer at the new location, such employee has the right to terminate the employment contract and is entitled to a special severance pay.

What Are The Differences?

The differences between the drafts of the MOL and NLA are as follows:

1.  Benefits for primary contractors' employees

Under the draft proposed by the NLA, if the primary contractors' employees are employed to work at the same type of work as the employees directly employed by the business operator, the business operator will have to arrange for those primary contractor's employees to receive the same standard of benefits as the business operator's employees do.

Under the draft proposed by the MOL, the employers do not have to treat employees engaged to work and compensated by a lump sum payment equally if the types of work and conditions cannot be defined as similar.

2.  Suspension of business

Under the draft proposed by the NLA, 80% of the normal working day's wages is to be paid for the entire period that the business is in suspension. A notice of not less than 3 days must be given in advance before the business suspension.

Under the draft proposed by the MOL, 50% of the normal working days' wages is to be paid for the period that the business is suspended and a notice of not less than 7 days in advance must be given before the business suspension.

3.  Relocation of the workplace

Under the draft proposed by the NLA, if any employee wants to exercise the right to terminate an employment agreement, due to the relocation of the workplace, the employee is entitled to receive 100% of the severance pay in accordance with the period of employment.

Under the draft proposed by the MOL, employees are entitled to 50% of the rate of severance pay in accordance with the period of employment. In the event that any employee requests the Labour Welfare Committee to consider whether the relocation of workplace will impact the course of living of the employees or their families, the employees are entitled to take leave without pay. If employees do not want to terminate their employment, they must resume work within 7 days from the date that the Labour Welfare Committee's order is received by the employees.

What Are The Additional Amendments Proposed By The MOL?

The MOL draft proposes the following additional amendments to the Act:

(1)  The definition of 'an employer' is clarified as a person who directly employs employees or assigns any person to employ. If a juristic person is an employer, the person authorised to act on behalf of such juristic person and the person designated to act on behalf of the authorised person are also included.

(2)  Employment agreements with rules, regulations or employer's orders that are unfair, the court has the power to remedy the agreements to be fair and reasonable.

(3)  Any termination of employment during the probational employment contract period, a notice in writing must be given in advance.

(4)  Any performance that the employer is required to inform the Director-General or a labour inspection official, the procedures and methods of communication issued by the Director-General must be followed.

(5)  Restrictions of some types of work for female employees or employees aged under eighteen years.

(6)  Restrictions to overtime payments for some types of work.

(7)  In case of any employment termination, an employee is entitled to receive wages for accumulated annual holidays.

(8)  Any employer who employs more than 10 employees, a report of conditions of employment and work place and a report of any alterations must be submitted to the Director-General within a specified timeframe.

(9)  No severance pay is required if the employer indicates one of the grounds in section 119 of the Act, and the reasons in a letter of employment termination.  Section 119 provides that

    "The employer is not required to pay severance pay to an employee whose employment has been terminated under any of the following conditions:-

    • Performs dishonestly toward his duties or intentionally commits a criminal act against the employer.
    • Intentionally causes the employer to suffer losses.
    • Performs an act of gross negligence which causes the employer to suffer severe losses.
    • Violates the employer's work rules and regulations or orders which are legal and fair. If the employer has already given a written warning, except in serious situations for which the employer is not required to give a warning.
      The written warning shall be effective for a period of one year as from the date of the employee committing the violation.
    • Having been absent from work for three consecutive working days without a reasonable reason, whether or not there is a holiday intervening in such period.
    • Having been imprisoned by a final judgment, except for the offences arising out of negligent acts or for petty offences.

      Any employer shall raise any grounds stated in section 119 as a defence unless a letter of termination states a reason for such termination."

(10)  The methods and procedures of submissions of complaints.

(11)  Penalties are applied to any employer who fails to comply with the Act.

The Impact Of The Proposed Amendments On Employers

These proposed amendments by the NLA and the MOL will have an impact on the operations of a business owner.

The Draft proposed by the MOL has been approved by the cabinet in principle. The draft proposed by the MOL and the draft proposed by the NLA are now being considered by the Office of the Council of State. Then both drafts will be reconsidered at the same time by the NLA. We will issue a further update upon receipt of any decisions.

For further information, please contact:

Name:
Phone: +662 677 7555 x150
Fax: +662 677 7599

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