The amended Labor Protection Act (“LPA”) was published in the Royal Gazette on 5 April 2019 and became effective from 5 May 2019.
There are no material changes from the draft amended LPA published on 13 December 2018. The key changes are as follows:
Changes to leave
Maternity leave has been increased from 90 days to 98 days and leave entitlements now include both prenatal and postnatal. The employer must pay up to 45 days’ wages during maternity leave.
Personal leave (also known as “business leave”) must be granted at a minimum rate of three working days with pay per year. Previously this period of leave was at the discretion of the employer and there was no guarantee of pay.
Transfers of employees from one business entity to another (due to, for example, organisation change or a merger) may now only be carried out with the employee’s consent.
If an employee does not consent, no transfer will occur. If their employment will be subsequently terminated, they will be entitled to severance pay.
The maximum cap on severance pay has been increased to 400 days of the employee’s latest wage rate for 20 years or more of continuous service (previously 300 days for more than 10 years of service).
Relocation of an employer’s place of business
If an employer is to relocate to a new place of business (even from one office in Thailand to another existing office in the country), and this materially affects the quality of life of an employee, the employee has the right to refuse the relocation. Subject to employee satisfying legally-prescribed conditions, their employment contract shall be deemed to be terminated on the date of relocation. The employee will also be entitled to a special severance pay at the same rate as the severance pay.
Interest on statutory payments
The interest that employers must pay to employees for defaulting on the below payments has been increased from 7.5% to 15%. This interest applies to failure to grant:
- payment in lieu of advance notice
- wages, overtime payments, payment for working on holidays, and payments for working overtime on holidays
- compensation during temporary cessation of the employer’s operations
- severance pay and special severance pay
Ensuring equity of pay
Employers must pay wages (as well as overtime payments, payments for working on holidays, etc.) at the same rate for both male and female employees who undertake work of the same type, quality, and quantity.
Employers should thoroughly review their employment agreements and work rules to ensure that they comply with the new rules when they come into effect.
There are new requirements under this amended Labor Protection Act that would affect most companies in their operation and employee management e.g., new rate of severance pay, new employer relocation requirements, employee consent in mergers and acquisitions. Failure to comply with these requirements would result it civil and criminal liabilities being imposed upon companies and their responsible persons.
It is essential that employers carefully study the amended Labor Protection Act to ensure their employment policies are consistent with the act, especially in areas where the amendments may distinguish from existing court precedents, for example, in mergers and acquisitions where an employee’s consent is required and a new employer must assume all existing rights and obligations of the previous employer.