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Business in Thailand - Labour Regulations

Employment legislation has a direct bearing on labour practices of each type of business. Investors should seek appropriate advice to determine which legislation applies to their line of business.

Labour Protection Act (1998)
In August 1998, the Labour Protection Act went into effect. It applies to all businesses with at least one employee. Under the law, employers, who disregard the law, are subject to fines ranging from 5,000 Baht to 200,000 Baht and imprisonment of up to 1 year. It should be noted that domestic workers (household staff) are not included in the definition of "employee" and are not covered by the Labour Act.
All other employees, whether full or part time, seasonal, casual, occasional or contract employed, are covered.

Important protection regulations contained in the new law are:

Work Hours and Holidays
The maximum number of hours for non-hazardous work is 8 hours a day or 48 hours a week in total. For some types of work as stipulated by law the employer and the employee may agree to arrange the period of working hours, but it still must not exceed 48 hours a week. Hazardous work may not exceed 7 hours a day or 42 hours per week. Employees are entitled to no fewer than 13 national holidays a year and a minimum of 6 days of annual vacation after working consecutively for 1 full year. Employees have the choice of whether they wish to work overtime or on holidays. female employees are entitled to maternity leave for a period of 90 days including holidays, but paid leave shall not exceed 45 days.

All employees are entitled to a daily rest period of at least 1 hour after working 5 consecutive hours. The employer and the employee may arrange the daily rest period to be shorter than 1 hour at each time, but it must not be less than 1 hour a day in total. A weekly holiday of at least 1 day per 6 day working period must be arranged by the employer.

For work performed in excess of the maximum number or working hours fixed either by law or by specific agreement (if the latter is lower), employees must be paid overtime compensation. The rates for overtime vary and range from 1 1/2 to 3 times the normal hourly wage rate for the actual overtime worked. The maximum number of overtime working hours is limited to not more than 36 hours a week.

Minimum Age for Employment
The minimum age for employment is 15 years. Workers below the age of 18 are banned from dangerous and hazardous jobs. They are also prohibited from working overtime, on holidays, or between the hours of 10 p.m. and 6 a.m. Pregnant employees are also prohibited from working overtime, on holidays, or between the hours of 10 p.m. and 6 a.m.

Sick Leave
Employees can take as many days of sick leave as necessary, but if an employee takes 3 months of sick leave, the employer is required to pay only 1 month's wages.

Severance Pay
Employees who have worked more than 120 days, but less than 1 year, are entitled to 30 days severance pay. For employee employed between 1 and 3 years, the severance pay is not less than 90 days' pay. Employees with 3 to 6 years of service will receive 6 months salary, those with more than 6 to 10 years service will receive 8 months salary, and employees with more than 10 years of service will receive 10 months salary as Severance Payment.

Termination of Employment
Conditions for termination of employment are also laid out in the Act and a code governs unfair practices and unfair dismissals, which often are the result of the failure to follow correct legal procedures. Employee Associations and Labour Unions must be registered at the Labour Department and require a license for operation. Finally, a Labour Court specifically settles employment disputes. If an employment contract does not specify any duration, either party can terminate the contract by giving notice at or before any time of payment, to have effect in the next pay period.

Employee Welfare Fund
In companies with at least 10 employees which do not have a provident fund, an Employee Welfare Fund will compensate employees who resign, are laid off, or die in service. Employers and employees will be required to contribute to this fund.
In addition to these provisions, there are restrictions on the kind of work women and children can perform. Guidelines are set for wages and overtime, as well as resolution of labour management disputes. Employers are required to pay compensation if employees suffer injury, sickness or death in the course of work.

Thai Law also requires employers to provide welfare facilities, including medical and sanitary facilities.

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