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Asia employment law bulletin 2021

Thailand

Developments in the light of COVID-19

It is undeniable that the pandemic and the government’s response to it have had a significant impact on Thailand’s population and the economy. The business sector has had to adapt and adjust their business strategy, including the management of its workforce, to survive the crisis. During this time, the Ministry of Labour has also answered many labour law-related questions from employers.

Managing force majeure

The term ‘force majeure’ is broadly defined in the Thai Civil and Commercial Code (CCC) as an unforeseeable event beyond one’s control. Whether COVID-19 constitutes a force majeure event for each business has to be determined on a case-by-case basis. However, based on the CCC, if a business is ordered by the government and/or local administrative agencies to close temporarily in order to curb the spread of COVID-19, an employer that is required to suspend its business operations does not have to pay wages to its employees during this period. On the other hand, there is no event of force majeure if an employer is not ordered to close by the government or where an employee can work from home based on the employer’s policy.

While certain businesses may rely on COVID-19 as a force majeure event to suspend their operations and dismiss certain employees (including downsizing to meet reduced demand), they have to decide on such matters carefully given the other costs to be paid (including statutory severance) under the Labour Protection Act.

However, if a business has to shorten its operating hours or temporarily suspend business operations for reasons other than due to force majeure, in such case, the employer is required to pay its employees at least 75 per cent of their wages that they would have received for normal working days, for the entire period that the employer does not require them to work. A written notice of the reduction in operating hours or suspension of business must be given to employees and the local Labour Office at least three working days in advance. The local Labour Office will consider and approve the temporary suspension of business on a case-by-case basis based on the justifications provided by the employer such as having insufficient funds to fully operate the business.

Severance payments following the dismissals due to economic hardships of the employer

Currently, Thai labour law does not specify the COVID-19 pandemic as a reason for termination without statutory severance payment. Therefore, even if an employer terminates its employees in order to cope with the economic effects of COVID-19, or if an infected employee is no longer able to fulfil his/her duties to the company, the provisions of the Labour Protection Act relating to severance payments and other relevant compensations must still be complied with and remain unaffected by any consideration of the economic effects of COVID-19.

The rates of severance payment under the Labour Protection Act depend on the employees’ duration of service

In April 2020, the Ministry of Labour published two regulations as short-term measures to help affected workers.

The first one, known as the Force Majeure Unemployment Benefits Regulation, provided that insured employees who ceased working temporarily between 1 March and 31 August 2020 are entitled to receive compensatory benefits, during the period of temporary business closure but for not more than 90 days.

An employee who has received (or will receive) 75 per cent of his or her wages from the employer, due to suspension of the employer’s business, is not entitled to collect such amount from the Social Security Office (i.e. no double claim/ payment).

The other regulation, known as the Economic Crisis Unemployment Benefits Regulation, provides that insured employees are entitled to receive compensatory benefits from the Social Security Office during periods of unemployment caused by the economic crisis between 1 March 2020 and 28 February 2022 as follows:

  1. in case of termination by the employer, the employee is entitled to receive compensation at the rate of 70 per cent of their daily wages, limited to 200 days for each termination; and
  2. in case of resignation or expiration of fixed-term employment, the employee is entitled to receive compensation at the rate of 45 per cent of their daily wages, limited to 90 days for each period of unemployment.

A third regulation, known as the Ministerial Regulation on Receiving Unemployment Benefits Due to Force Majeure Caused by the Pandemic of Dangerous Communicable Diseases under the Law on Communicable Disease, announced in December 2020 entitles insured employees who are unable to work due to the fact that they are required to be quarantined, self-quarantine or their employer’s business is ordered by the government to close temporarily to contain the spread of COVID-19, to receive unemployment benefits equal to 50 per cent of their daily wages (as opposed to 62 per cent of daily wages given to those affected by the first wave of COVID-19) during the period of temporary business closure but for not more than 90 days.

As highlighted above, the Thai government has implemented short-term labour policies to help affected employees. For the future, more long-term labour policies will be required to assist Thailand’s recovery from the COVID-19 pandemic, for example, through job creation policies, skill development policies, and wage subsidies for businesses to support employment.

Stephen John Bennett, Hunton Andrews Kurth
Wipanan Prasompluem, Hunton Andrews Kurth