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published on 2 April 2020 | reading time approx. 6 minutes
The Thai government issued further regulations with extensive consequences for employers and employees in Thailand:
Under the recent Announcement (No. 4) of the Bangkok Metropolitan Administration, the Governor of Bangkok orders the following businesses to temporarily cease operations from 28 March 2020 until 30 April 2020:
These closures also apply in the provinces Nakhon Pathom, Nonthaburi, Pathum Thani, Samut Prakan, Samut Sakhon. Other provinces have made similar announcements. Violations of the order can be penalized with confinement and/or fined with up to THB 100,000 per violation.
Under the Communicable Disease Act, COVID-19 has been labeled as dangerous communicable disease and therefore, health authorities may order people to isolate, quarantine, or be controlled for observation. Furthermore, the Act allows orders to owners, occupiers or residents of houses, tenements, etc. where cases of COVID-19 have occured, to disinfect and/or destroy items contaminated and/or to improve sanitation to ensure hygienic conditions in order to control and prevent the transmission of the disease.
Owners or persons controlling places where a person got infected or can reasonably be suspected to have contracted COVID-19, have to notify the health authorities immediately.
If an employee is ordered by the authorities to quarantine, employers are not obliged to pay salary under the legal principle of “no work, no pay”.
An employee who has contracted or can reasonably be suspected of having contracted COVID-19 is considered sick, and thus the usual regulations regarding “sick leave” apply. An employee is entitled to 30 days of paid sick leave.
After the paid sick leave, the employer may allow the employee to further take annual leave with normal pay. Employer and employee may agree on other appropriate measures as the case maybe.
If an employee falls sick with COVID-19, employers should order such employees to stay home to avoid endangering other employees. Employers immediately have to notify the authorities of the case.
Employers forced by the order to temporarily close down their businesses do not need to pay salary to their employees (force majeure).
Employers affected by the crisis may have to shut-down business operations wholly or partly for necessary business reasons (i.e. a drop in demand, etc.). In this case, the employer may decrease employees’ salary to 75 percent (sec. 75 of the Thai Labor Protection Act). The employer is obliged to inform the employees and the labour inspector at least three days in advance in writing of the reduction in salary.
However, sec. 75 of the Labour Protection Act does not cover the case of reduced working hours because the provision requires the partly or wholly cessation of business operations. Thus, sec. 75 should not be compared to the German concept of “short-time work” (Kurzarbeit). Thus, a reduction of salary together with a reduction of working hours requires the employee’s prior consent.
Some employers are switching to “work from home”. Note that “Home Office” is up to the employer’s discretion. In this case, sec. 75 of the LPA does not apply and wages have to be paid fully. Employers may, however, enter into agreements with employees to cut working hours and wages.
According to the Labour Protection Act, an employer has the right to fix the annual leave of employees. Thus, employers may request employees to take annual leave during the crisis time.
However, many employment agreements and company rules regulate that the employee has to apply for annual leave. Thus, companies should first check if they can set annual leave for employees under the existing rules and employment agreements.
In general, employers may terminate employment for business reasons.. However, employers are still required to make all payments due according to the law (for example: severance payment, payment in lieu of notice, payment for unused annual leave).
Please note that not all business reasons warrant a termination of employment. For example: reduced revenues or even a minor loss in profit may not warrant terminations. However, if the business as a whole is threatened, terminations may be justified. An evaluation should be made on a case by case basis.
Note that terminations for business reasons may be considered unfair, if the business reason does not warrant the termination. In this case, the employee may claim unfair termination damages from the employer.
Pursuant to the Cabinet Resolution on 24 March 2020, from March to May 2020, the social security contributions by employers have been decreased from 5 percent to 4 percent while the contributions by employees have been decreased from 5 percent to 1 percent. The salary assessment basis remains from THB 1,650 to THB 15,000.
The period of contribution submission for March – May 2020 has also been extended to enable a submission for another three months (15 July – 15 September) correspondingly.
Employees being out of work due to a 14-day quarantine without salary pay are entitled to a compensation by the social security fund of 62 percent of the last wage, whereby the maximum amount is THB 15,000. The compensation will be paid for a period not exceeding 90 days. The same applies to employees if the employer has to cease business operations under a shut-down order.
Employees being terminated due to the crisis, are entitled to a compensation at a rate of 70 percent of the last wage (max. THB 15,000), not exceeding 200 days. Employees resigning shall receive only 45 percent of the last wage (max. THB 15,000), not exceeding 90 days.
Small and medium companies (revenue less than THB 500 million and less than 200 employees) may deduct costs for salaries at 300 percent. However, eligible salaries may not exceed THB 15,000.
The withholding tax for services, hire of work, commission paid to juristic persons and professional fees have been reduced to 1.5 percent.
The Revenue Department has announced further tax relief measures which are not employment related.
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