Alert! LPA Updates Signifying a Fast Evolving Thai Workforce

Documented in our latest Onboard Legislation Summary are the changes in the Thai Labour Protection Act (LPA). Passed on December 13, 2018 was a laundry list of amendments. These changes to the LPA were made to enhance worker protection by improving working conditions and imposing sanctions on employers who failed by neglecting to carry out the changes.

Made effective starting back in May 2019, these changes to the LPA signifies a new era, raising the standards of what is expected of employers from the talent’s perspective. Here’s a summary comparing the key changes proposed on the Labour Protection Act.

Necessary Business Leaves

Previously

Now

Preciously, necessary business leaves were implemented at the employer’s discretion and not mandated by the LPA.

With the update, it is now mandatory that employers provide at least 3 days of paid necessary business leaves per year.

 

Maternity Leave

Previously 

Now

Eligible employees can take up to 90 days of maternity leave inclusive of weekend and public holiday. During this period the employer must pay a minimum of 45 days at the employee’s more recent pay rate.

Eligible employees can take up to 98 days of maternity leave inclusive of weekend, public holiday,leaves taken for medical appointments and examinations before the delivery. During this period the employer must pay a minimum of 45 days at the employee’s more recent pay rate.

 

Severance Pay

Previously

Now

For employees who have worked for an uninterrupted period of 10 years or more, severance pay was capped at 300 days of salaries.

Adding a new category for employees over 10 years, employees who have worked for an uninterrupted period of 20 years or more shall be entitled to severance pay equal to 400 days of the most recent pay rate.

 

Workplace Relocation

Previously

Now

Employers wishing to relocate employees to a new workplace and/or to another of its existing workplace are required to notify the employees of such relocation but no period is set by the LPA.

Employees are allowed to refuse to be relocated and upon informing the employers of such refusal, are  entitled to severance pay at the normal rate.

Employers are required to post a notification of relocation for a continuous period of 30 days in advance if they wish to relocate employees to a new workplace and/or to another of its existing workplace.

The notice need to state details of the relocation such as who, when and where the employees shall be relocated.

In the case were the employee does not wish to be relocated, he/she must notify the employer within 30 days following the employer’s notification or on the date of relocation and shall be entitled to severance pay at the normal rate.

Employers may submit an objection to the employees’ refusal to be relocated to the Labor Office.

 

Change of Employer

Previously

Now

All employees’ rights accrued from the previous employer shall automatically be transferred to the new employer.

A consent from the employees being transferred to the new juristic person is required in the incident where there is a change of employer (through merger or acquisition for instance).

All employees’ rights accrued from the previous employer shall also be transferred to the new employer.

Employees have the option of not providing consent, upon informing the employers of such refusal, employees are entitled to severance pay at the normal rate.

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Business Suspension

Previously

Now

Employees are entitled to 75% of their daily pay rate during the suspension period, in a case where the employer needs to suspend the business activities, for any reason other than force majeure, for a temporary period.



In case the employer needs to suspend the business activities, for any reason other than force majeure, for a temporary period, the employees shall be entitled to 75% of their daily pay rate during the suspension period.

Payment should be made at the current workplace, consent from the employee must be obtained, should the payment be made anywhere else.

 

Late Payment Interests

Previously

Now

An interest rate of 15% per annum shall be applied to the following payments in the case where an employer fails to pay employees in due time:

  • Collateral (section 10)
  • Wage, Overtime, Holiday work (section 70)
  • Severance payment (section 118)
  • Payment in lieu of notice (relocation) and other Compensation under section 120, 121, 122

 

An interest rate of 15% per annum shall be applied to the following payments in the case where an employer fails to pay employees in due time:

  • Collateral (section 10)
  • Payment in lieu of notice (termination) (section 17/1)
  • Wage, Overtime, Holiday work (section 70)
  • Suspension of business (section 75)
  • Severance payment (section 118)
  • Payment in lieu of notice (relocation) and other Compensation under section 120, 121, 122

 

Payment in Lieu of Notice

Previously

Now

Employers have the right to terminate employees with advance notice of at least one payment cycle. If they choose to terminate employees immediately, they have the option of doing so by paying salary in lieu of advance notice.

Employers may terminate employees either by advance notice of at least one payment cycles or immediately by paying salary in lieu of advance notice. 

If employers choose to pay in lieu of notice, the payment must be paid on the day of termination.

 

Gender Equality

Previously

Now

Employers must pay wages, overtime payments, payment for working on holidays, and payment for working overtime on holidays, at the same rate for both male and female employees who undertake work of the same nature, quality, and quantity, at an equal rate.

Employers must pay wages, overtime payments, payment for working on holidays, and payment for working overtime on holidays, at the same rate for both male and female employees who undertake work of the same nature, quality, and quantity, or work of the same value, at an equal rate.

 

While these amendments to the LPA in Thailand are by no means drastic and can be seen more as clarifications, the implications of these updates are large. These amendments to the LPA indicate a change in expectations towards the local working standards. 

This move towards a fairer working environment means businesses will have to be more mindful with their employees, so to attract and retain their top talent.

Blog_3 take home message_HRO

Strategic approach towards talent
The rising expectations of working standards opens up a new perspective towards attracting and retaining talent. With the overall society giving more value to this area, it is likely that we’ll see HRs playing a bigger role in Thailand businesses in the near future.

Make sure you know the fine print
Since most of the amendments are clarifications to previous legislation, they can be easily overlooked. HR managers, especially those from MNCs managing various locations need to be careful to keep up with the latest legislation updates.

Optimise through professional outsourcing services
The expanding role of HR, from keeping up with the latest labour laws to coming up with the latest employee engagement strategy can get overwhelming very quickly. For many HR professionals, HR outsourcing is a great way to optimise responsibilities as their role is elevated beyond business operations and into business strategy.

 

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Links International is an award-winning industry leader in innovative human resources outsourcing in Asia. Links was established in 1999 and has offices in Hong Kong, Singapore, Shanghai, Zhuhai, Macau, Malaysia, Taiwan, Vietnam and Australia.

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