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ResourcesCorporate and Tax AdvisoryThailand Corporate LawThai Labor Law and How it Impacts Employer-Employee Relations

Thai Labor Law and How it Impacts Employer-Employee Relations

Transcript of the above video:

In this video, we're going to discuss employing Thais in the Kingdom of Thailand. Those who are looking to set up a small business or large enterprise for that matter are probably going to need hire local Thai employees and in fact, the Thai government has set very rather rigorous policies in order to, in essence, require hiring Thai nationals here in the Kingdom.

It should be noted that when hiring and maintaining employees in one's company or one's enterprise, something should be kept in mind with respect to those employees and that's the Thai Labor Code. Thailand is very much, in my opinion as far as jurisdiction goes, more labor friendly than most jurisdictions. In fact, there is an entire labor court here in Thailand and a Thai court system dedicated to adjudicating matters pertaining to the Labor Code here in Thailand.

The reason I bring this up, and I don't want to get into specifics on the jurisprudence of the Labor Code and the procedural issues associated with the courts themselves, it's just to provide a general overview for those who are looking to do business in Thailand. For those who are currently doing business in Thailand may not be aware that look, it's a different body of law than anything that one might be used to from say, the west, the United States or the U.K. or Australia for that matter. Thailand's Labor Code, it's a different cattle of fish entirely and one who's employing Thais may not be fully aware of the ramifications of their actions specifically things like hirings and firings with respect to the Labor Code. And if one isn't careful and acts sort of rebelliously with respect to hirings and firings, especially firing of Thai employees in the Kingdom, it can lead to rather serious consequences.

So it's not something to be dealt with lightly. In fact, I often advised clients that when hiring a Thai national, that is part of the process where one needs to be exceptionally circumspect and in essence, be much more stricter rather down the road. In a western context, we're sort of used to a situation where well, you hire somebody and if it doesn't work out, you just sort of fire her. If that individual has been around for a significant enough period of time, there may be statutorily required severance pay that may be due to that individual. And the timing of their dismissal may also result in more expense than one may think could be incurred. So for example, one fires somebody with certain amount of timing, the counter party could argue "Well, I worked most of that month, I should be entitled compensation for that." 

These are all hypotheticals but I'm simply stating that one needs to be aware that in the Kingdom of Thailand, the Thai Labor Code is a different cattle of fish when compared to dealing with labor laws in other countries. For example in Kansas where I came from, it's a so-called right to work state so effectively one can fire an employee with relatively little cause. Now there are certain federal regulations and things like that with respect to firing folks in the EOC and stuff like that but for the most part, as long as there's genuine reason with respect to workplace conduct, it's going to be possible to go ahead and fire the individual.

In Thailand, that's not necessarily the case and again, acting without caution with respect to these matters can result in significant wastage of resources and possibly the expense of time just in adjudicating and dealing with the Thai labor court. So it's often times a good idea to get professional help with understanding how the Labor Code's going to operate, drawing up a body of court rules and regulations that the employer can adhere to that also happens to adhere to the provisions of the Thai Labor Code in order to best situate one's self with respect to maintaining good management-labor relations.