Tax News Flash Issue 9 | KPMG | TH

Tax News Flash Issue 9

Tax News Flash Issue 9

Proposed amendment to the Labor Protection Act

1000

Key Contacts

Related content

Proposed amendment to the Labor Protection Act

Thailand: Thai Cabinet endorsed the proposed amendment to the Labor Protection Act

On 4 January 2017, the Thai Cabinet approved the proposal of the Ministry of Labor to amend the Labor Protection Act with regard to determination of the minimum wage, submission of employer’s Work Rules, and retirement. 

 

After the Cabinet’s approval, the proposal will proceed with further necessary steps before becoming an enforceable law.  According to the relevant officers, it is expected that the draft amendment to the Labor Protection Act (the “amended Act”) may be enforceable by May 2017.

Key proposed amendment

  • Determination of the minimum wage based on a specific group of employees: Currently, the minimum wage can be determined by the Wage Committee based on the type of business, work or occupation, or the locality. 

    The amended Act will authorize the Wage Committee to determine the minimum wage based on a specific group of employees, e.g. minors, senior citizens or disabled employees, in addition to the existing criteria.

  • Release of employer’s requirement on submission of Work Rules: According to the amended Act, employers having 10 or more employees will no longer be required to submit a copy of the Work Rules to the Department of Labor Protection and Welfare as required under the current Labor Protection Act.  Such employers will only be required to prepare, announce and post the Work Rules openly at their workplaces at all times.

  • Employment termination due to retirement: Specific provisions on retirement issues are proposed to be added to the Labor Protection Act:  

    - Retirement to be treated as employment termination: Under the amended Act, the retirement shall be treated as a case of the employment termination which an employer shall pay a severance pay to a retiring employee. 

    - Retirement age: The amended Act prescribes the statutory retirement age at 60 in the case where the employers do not stipulate the retirement age of employees in their employment contracts, Work Rules and internal policies.   

    After the retiring employee has received severance pay according to Thai labor law, the employer and the employee may enter into a new employment contract which is different from their previous employment contract.

    - Penalty of employer: The amended Act also prescribes a penalty on an employer who fails to give a severance pay to a retiring employee, i.e. a maximum of six-month imprisonment, or a maximum fine of Baht 100,000, or both. 

KPMG’s Comments

Employers should prepare and announce the Work Rules including the amendment.  

 

Under the current law, upon submission of a copy of the Work Rules to the labor officers, the labor officer may order the employer to revise any illegal Work Rules.

 

As the amended Act does not require the employer to submit Work Rules and the amendment to the labor officers, the employer should carefully review the Work Rules to ensure that the Work Rules do not contain any illegal provision before announcement. Among other employment documents, Work Rules could be one piece of important evidence to support the employer in the case of a labor dispute. 

 

In addition, employers should observe the new retirement provisions and carefully consider the impact of such provisions to their existing Work Rules and/or any other agreement, particularly for the impact on senior employees or expatriates where there is no clear retirement policy.  If employers would like to amend their existing Work Rules and/or any other agreement regarding retirement, they should consult with a professional lawyer in order to ensure compliance with Thai labor law and to mitigate the risk of being liable to imprisonment and/or a fine under the amended Act. 

 

To mitigate the risk of non-compliance under Thai labor law, KPMG Legal Team can assist in reviewing and drafting any relevant documents upon your request.  Should you require any assistance, please feel free to contact us.

Tax & Legal News Flash

Tax & Legal News Flash

KPMG Thailand Tax's bi-monthly newsletter which covers the latest issues in taxation and government announcements relating to tax matters.

© 2017 KPMG Phoomchai Tax Ltd., a Thailand limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Connect with us

 

Request for proposal

 

Submit