12 June 2020
Thailand

Following the ongoing COVID-19 situation, the government has issued several guidelines and aids to assist both employers and employees in this trying time. Now that most of the measures have been announced and implemented, we have provided a summary of the guidelines focusing on employment issues for easy reference.

General Requirements

In general, the Occupational Safety, Health and Environment Act B.E. 2554 (2011) (OSHEA) is the main legislation governing all employers in Thailand. It provides that employers must maintain the establishment and employee in a safe and hygienic environment and working condition. For instance, employers have to provide occupational safety, health, environment training to employees and post the statement on rights and duties of the employers and the employees.

Any violation of the Act, the employers may be punished by a fine not exceeding THB200,000 and/or imprisonment not exceeding six months.

In addition, the Communicable Diseases Act B.E. 2558 (2015) (“CDA”) governs the control of any contagious diseases. The CDA prescribes that in the case where an epidemic or a communicable disease has occurred or is suspected of having occurred, owners of a house or a business facility or persons controlling such places have to notify the communicable disease control officer of such situations.

Any breach of the order of the communicable disease control officer or provincial governors is an offence punishable by imprisonment not exceeding one year and/or a fine not exceed THB20,000–100,000 as the case may be.

Quarantine and Sick Leave

When an employee is sick or has contracted COVID-19:

  • The sick employee can take sick leave without having to provide a medical certificate unless the sick leave last for three working days or more;
  • The sick employee can take sick leave for as long as the employee is sick and is entitled for wages for 30 sick leave days per year.
  • The sick employee should get 30 days paid sick leave from the employer and the employee may apply for loss of income benefit of additional days after 30 days from the Social Security Office at 50% normal wage rate calculated on the basis of maximum contributions of THB15,000 (maximum THB7,500 per month) not exceeding 90 days per one sickness or not exceeding 180 days per year as recommended by the medical doctor for treatment. In case of chronic illness, the compensation shall not exceed 365 days as recommended by the medical doctor for treatment. The social security benefit is only applicable to employees affected by COVID-19.
  • If the employer fails to pay for the paid sick leave of 30 days per year, the employee may file complaint with the Department of Labour Protection and Welfare or the provincial office for non-compliance with the labour protection laws of the employer.

Recommendations

  • For compliance with disease control measures and to protect other employees, the employer may require the employee to disclose how they contracted the disease but should do so with data privacy protection concern for the employee’s sensitive data.
  • The employer should not publicly disclose of personal data of the employee contracted or suspected of contracting COVID-19.

When an employee is quarantined due to the risk of infection as ordered or recommended by the Ministry of Public Health or the communicable disease control officers:

  • The employer should allow the employee to take paid sick leave for such period.
  • If the employee chooses not to take sick leave, the employer can agree with the employee to take leave without pay or to apply the no work no pay basis for such period as the case may be.
  • If the employee is on unpaid leave for the quarantine period, the employee may apply for benefit from the Social Security Office on force majeure basis of 62% of normal daily wage rate calculated on the basis of maximum contributions of THB15,000 (maximum THB9,300 per month) during such quarantine period but not exceeding 90 days. The employer must issue a certificate letter in the form prescribed by the Social Security Office for the employee to apply for the benefit.

Recommendations

  • The employer and the employee may mutually agree otherwise, such as to exhaust the annual leave days first and take paid sick leave later. The Department of Labour Protection and Welfare would consider the employee under this circumstance to be sick, so the leave without pay option with or without employee’s consent and agreement may pose the risk of employer breaching the employment contract.
  • The employer should not publicly disclose the personal data of the employee contracted or suspected of contracting COVID-19.

When an employee is quarantined by the order of the employer due to the risk of infection:

  • The employer may allow the employee to take paid sick leave for such period or to take leave without pay.
  • If the employee is on unpaid leave for the self-quarantine, the employee may apply for benefit from the Social Security Office on force majeure basis of 62% of normal daily wage rate calculated on the basis of maximum contributions of THB15,000 (maximum THB9,300 per month) during such quarantine period but not exceeding 90 days. The employer must issue a certificate letter in the form prescribed by the Social Security Office for the employee to apply for the benefit.

Recommendations

  • The employer and the employee may mutually agree otherwise such as to exhaust the annual leave days first and take paid sick leave later.
  • The employer should not publicly disclose of personal data of the employee contracted or suspected of contracting COVID-19.

Working Hours/Days Reduction and Salary Reduction

  • Under Thai labour law, the employer can reduce the working days or hours without consent from employees as this is more beneficial to the employees.
  • However, for an employer to unilaterally reduce the wage/salary, either wage/salary reduction alone or together with working hours/days reduction, will be against the protection of the labour law and will require consent from the employees.
  • In any cases, the wage/salary after reduction must not be lower than the minimum daily wage. The minimum daily wage rate varies based on the provinces of the business operation premise.
  • As the employees are still employed and paid by the employers, the employees cannot apply for social security benefits.

Recommendations

  • The consent to reduction of salary/wage should be provable to the Labour Court, as such it is recommended to be in writing.
  • The consent or agreement should not be obtained by way of coercion or threat of termination.
  • There are some commentaries that to reduce only the wage/salary without working hours/days reduction would not be fair for the employees, so the employer should consider proportionate reduction accordingly.

Unpaid Leave/Furlough

  • Thai labour law does not recognise the concept of “furloughing” (i.e., asking employees to go on mandatory unpaid leave for a specified period).
  • The general employment law principle is that employees should be paid if they are ready and willing to work, whether or not an employer can provide work.
  • For furloughing or leave without pay to work, the employer and the employee must rely on contractual agreement.
  • If the employees are still employed, the employees cannot apply for social security benefits for unemployment.

Risks

  • By suspending the employees on indefinite unpaid leave would mean that the employer stops requiring the employees to work and stop paying wage/salary so it meets the definition of termination of employment under Thai labour law. Depending on the cause of termination, the employer may be subject to paying severance pay, payment in lieu of advance notice, unused annual leave and compensation for unfair dismissal to the employee.
  • There is no explicit definition of “wrongful/unfair dismissal” stipulated. The conduct considered to be wrongful/unfair dismissal is based on the discretion of the competent labour court and the circumstance of each employer due to COVID-19, may be fair or unfair dismissal based on case by case basis.

Recommendations

  • The consent to reduction of salary/wage should be provable to the Labour Court, as such it is recommended to be in writing.
  • The consent or agreement should not be obtained by way of coercion or threat of termination.

Temporary Close Down/Shutdown

Forced Close Down/Shutdown

  • In cases of temporary close down by the order of the Governor of Bangkok or provincial governors, the “no work no pay” basis applies, and the employers do not have to pay wage to employees.
  • If the employers have the means, the employers may partially pay wage to employees to ease the loss suffered by the employees.
  • In cases where the employers require employees to work at the premise or at home during this period (the business is closed for service to customers but is not prohibited to access or maintain so the employees may still need to work), the employers must pay the full wage to the employees.
  • All employee’s leave entitlements remain unused during shutdown.
  • The employees may apply for benefit from the Social Security Office on force majeure basis of 62% of normal daily wage rate calculated on the basis of maximum contributions of THB15,000 (maximum THB9,300 per month) during such quarantine period but not exceeding 90 days. The employer must issue a certificate letter in the form prescribed by the Social Security Office for the employee to apply for the benefit.

Recommendations

  • The consent to reduction of salary/wage should be provable to the Labour Court, as such it is recommended to be in writing.
  • The consent or agreement should not be obtained by way of coercion or threat of termination.
  • The shutdown order may vary from province to province in terms of business operation types to be closed down, duration and starting and ending dates. The employers must adhere to official order from each workplace location and keep the record of such official order for easy reference later if any dispute arises.

Voluntary Close Down/Shutdown

  • For voluntary close down/shutdown, no work no pay basis may be applied on case by case basis. “No work no pay” principle can be applied if employers can prove the voluntary close down/shut down is due to force majeure.
  • The interpretation of force majeure is still arguable and will be interpreted on a case by case basis by Thai labor court. Currently, there is no clear precedent and guideline whether COVID 19 situation can result in a force majeure event or not.
  • Generally, in case of business needs other than force majeure, the employer can adopt the measure under Labour Protection Act (“LPA”) section 75, where employers shall pay not less than 75% wages to an employee for the entire period in which the employers do not require the employees to work and give an advance written notice to the employee and the Labour Inspector at least three working days prior to the close down.
  • In case of temporary close down, not by the order of the governors, due to the impact of COVID-19, the employers may apply the measure under LPA section 75 with at least three advance working days prior to the close down.
  • If the employees are paid (even at a reduced wage rate) during temporary close down/shutdown, the employees cannot apply for social security benefit.
  • All the employee’s leave entitlements remain unused during shutdown.

Recommendations

  • For adoption of this approach, a valid necessity test whether the employer can temporarily shutdown must be assessed.
  • Referring to Supreme Court decisions as guidelines, the necessity should be significant and is not the fault of the employer or the result of mismanagement e.g. the confirmed customers’ orders have been significantly reduced.

Unpaid Wage/Salary

  • If the employees continue working while the employers fail to pay wage/salary, the employers are in breach of employment contract.
  • The unpaid employees may file complaint with the Department of Labour Protection and Welfare or the provincial office for non-compliance with the labour protection laws of the employers.
  • Given that the employees’ status still remain employed, the employees cannot apply for social security benefit. The Social Security Office may follow up with the employers to notify the accurate employment status of employees to protect the employees’ benefits.

Lay-off/Retrenchment/Redundancy

  • Under the employment laws of Thailand, employment contract cannot be terminated at will without paying mandatory payments. Depending on the cause of termination, the employer may be subject to paying payment in lieu of advance notice, severance pay and compensation for unfair dismissal to the employee. Termination under COVID-19 situations will not be considered a serious misconduct by the employees that would exempt the employer from paying severance pay and notice in lieu of advance notice.
  • The employer can terminate an employment contract by giving a prior written notice to the employee at or before any due date of wage payment in order that the termination will become effective on the following due date of wage payment, unless otherwise stated in the employment agreement or work rules and regulations, or pay the payment in lieu of advance notice.
  • According to section 118 of the LPA, if an employer terminates an employment contract of an employees, the employer is required to pay severance pay to the terminated employee in accordance with the following criteria:
    1. if the employment period is more than 120 days but less than one year, severance pay shall not be less than 30 days’ pay;
    2. if the employment period is more than one year but less than three years, severance pay shall not be less than 90 days’ pay;
    3. if the employment period is more than three years but less than six years, severance pay shall not be less than 180 days’ pay;
    4. if the employment period is more than six years but less than 10 years, severance pay shall not be less than 240 days’ pay;
    5. if the employment period is more than 10 years but less than 20 years, severance pay shall not be less than 300 days’ pay; and
    6. if the employment period is more than 20 years, severance pay shall not be less than 400 days’ pay.
  • There is no explicit definition of “wrongful/unfair dismissal” stipulated. The conduct considered to be wrongful/unfair dismissal is based on the discretion of the competent labour court and the circumstance of each employer due to COVID-19, may be fair or unfair dismissal based on a case by case basis. In the case that the termination is considered as wrongful/unfair dismissal, according to section 49 of the Act on the Establishment of and Procedure for Labour Court, B.E. 2522 (1979), the competent labour court may exercise its decision to require the employer to continue employment relationship with the employee who was unfairly terminated or pay compensation due to wrongful/unfair dismissal to the employee who is terminated.
  • If employers can prove to the court that termination is due to substantial loss due to the impact of COVID-19, it can be considered as fair termination.
  • There are no special restrictions or specific notification or approval necessary to be obtained as the result of the COVID-19 situation when the employer consider termination of employment. The same standard and mandatory payments under the laws are still applicable.
  • The Social Security Committee increased the compensation for unemployment caused by COVID-19 to provide for eligible insured workers/employees to be compensated from the social security fund as follows:
    • in case of resignation, compensation is at the rate of 45% of the wage calculated on the basis of maximum contributions of THB15,000 (maximum THB6,750 per month) not exceeding 90 days for the unemployment period;
    • in case of employment termination, compensation is at the rate of 70% of the wage calculated on the basis of maximum contributions of THB15,000 (maximum THB10,500 per month) not exceeding 200 days for the unemployment period.

Postponement of Songkran Holidays

On 17 March 2020, the Thai Cabinet resolved to approve a resolution of restriction measures and on 18 March 2020, the Department of Labour Protection and Welfare issued a guideline asking for employers’ cooperation.

The implications are that:

  • The Songkran traditional holidays on 13-15 April 2020 has been cancelled and it has been advised that it will be replaced with other traditional holidays or public holidays that the government will announce from time to time or religious holidays or other local traditional holidays instead.
  • The total holidays per year must not be lesser than 13 days and must not be lesser than what the employers have already announced for the year 2020.
  • If the employers still insist on using the Songkran traditional holidays on 13-15 April 2020 as holidays, there may be dispute with the employees later as the Department of Labour Protection and Welfare will not recognise the dates as traditional holidays so the total valid holidays per year may be lesser than 13 days or lesser than what the employers have already announced. The employer may later have to adopt the replacement holidays as will be announced by government anyway.

Recommendations

If the employer has already allowed the employees to leave on 13-15 April 2020 as holidays, the employer should also consider allowing additional replacement holidays as will be announced by the government to the traditional holidays this year as well.

If you have any questions or require any additional information, please contact Threenuch Bunruangthaworn, Archaree Suppakrucha, Panwadi Maniwat of ZICO Law Thailand or the partner you usually deal with.


This alert is for general information only and is not a substitute for legal advice.