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An Overview of Thailand's Labor Regulations

(for our 2011 labor cost for Thailand, please read "Minimum Wage 2011 Increases")

Source: Thailand Board of Investment's Investment Review Publication

The BOI Investment Review is a monthly publication of the Thailand Board of Investment.  www.business-in-asia.com and Runckel & Associates believe that much of this information needs wider dissemination.  We are therefore working with the BOI to help promote these useful articles and index them into categories that are easy to find.

Thailand’s codified employment laws, administered by the Department of Labor, Protection and Welfare, stipulate working conditions such as maximum work hours, holidays, sick leave, minimum wage and severance pay. The laws, which may significantly affect a firm’s decision to do business in Thailand, also provide employers with flexibility in managing labor, such as in staff recruitment processes, retrenchment policies and employee transfers.Work Hours, Holidays and Sick Leave

 

The maximum number of work hours is eight per day or 48 per week, except for work deemed by law to be hazardous, in which case employment is limited to seven hours per day and 42 hours per week. Overtime compensation must be paid at a rate of between 1.5 to three times the normal hourly rate to qualifying employees.

Employees are entitled to 13 national holidays per year, plus a minimum of six days of vacation after one year of consecutive work. Thirty annual paid sick days is standard, and an employer may require a doctor’s certificate for sick leave of three days or more. Female employees are entitled to 90 days of maternity leave, including 45 days of paid leave. The minimum daily wage rate varies, depending upon location, from 137 baht (US$ 3.43) in some provincial areas to 175 baht (US$ 4.38) in Bangkok. Salaries for full-time office and management staff range from approximately 15,000 baht per month (US$ 375) for general office staff to 150,000 baht per month (US$ 3,750) for an IT manager.

Staff Recruitment and Transfers

Employers often recruit staff through advertisements in either Thai or English language newspapers, and there are several domestic and international personnel recruitment services. Employers may specify criteria such as preferences for an applicant’s age and sex. Employers have the right to transfer staff to other locations, provided that the transfer is not ordered with the intent to create hardship for them. An employee’s refusal to transfer is legal cause for dismissal.Social Security

The Social Security Act requires all employers to withhold social security contributions of 5% from the monthly salary of all employees, up to a maximum of 15,000 baht (US$ 375) per month. Employees with social security registration may file compensation claims for injury, illness, disability or death which is not due to work performance, childbirth, child welfare, retirement and unemployment.

Severance Pay

Severance pay is mandated according to employment duration as follows:

If business conditions necessitate cutbacks, firms have freedom in determining retrenchment policies; there is no “first in, last out” requirement in Thailand.

Workmen's Compensation

The Workmen’s Compensation Act requires an employer to provide benefits at rates prescribed by law for employees who suffer injury, illness or death while performing their work. In general, the compensation amount is paid monthly at a rate of 60% of monthly wages, between a minimum of 2,000 baht (US$ 50) and a maximum of 9,000 baht (US$ 225) per month. Actual and necessary medical expenses must be paid up to 35,000 baht (US$ 875) for normal cases and 50,000 baht (US$ 1,250) for serious injury.

Employment rehabilitation expenses must be paid as necessary, up to 20,000 baht (US$ 500).

In the case of death, funeral expenses will be paid at a maximum amount equal to 100 times the minimum daily wage rate.

Investors should seek appropriate advice to determine how Thai labor laws apply to their specific business circumstances.

 For more information on doing business in Thailand, visit www.boi.go.th.


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