Navigating Thai labour laws during a global restructure

All employees working in Thailand, regardless of nationality, are governed by Thai labour laws, and employers must ensure compliance with the minimum legal requirements to avoid potential civil and criminal repercussions.

Employers involved in a global restructuring must therefore consider laws relating to statutory holidays and leave, working hours, overtime and holiday work, notice periods, and termination procedures and payments.

Restructuring often leads to the employers’ need to change the positions, roles, or responsibilities of employees to better suit the change to their business needs and requirements. Under Thai law, employers cannot unilaterally change their employees’ conditions of employment unless such changes are more favourable to the employees, or the employees expressly agree and consent to them.

Generally, conditions of employment include working conditions, working days, working hours, wages, roles and responsibilities, work location, employment benefits and welfare, termination of employment, and other benefits of employees concerning employment or work. Therefore, almost any change to the terms of employment requires the consent of the affected employees. The exception would be where the change to the conditions of employment is clearly more beneficial to the employees.

As the employees’ consent is required to implement unfavourable changes to employment terms and conditions, this becomes a matter of negotiation between the employees and the employers. If the employees are reluctant to consent to the change, the employers can consider offering incentives to encourage their employees to agree to accept such change.

Restructuring can introduce the need to redeploy and transfer employees across various locations. Under Thai law, an employer can only transfer its employees to a new employer, along with the current employer’s rights as an employer, with the employees’ consent. 

Additionally, the transfer must be on the condition that the new employer honours the existing rights, wages and salaries, benefits and welfare, and years of service, of the transferred employees. In practice, the current employer and the new employer typically provide the affected employees with a letter of consent for the transfer of employment. In these circumstances, no severance pay is required as there is no termination of employment, but instead, it is a transfer of employment.

If any employees refuse to be transferred, the employee will remain employed by the current employer, however, if the current employer no longer requires the services of these employees, who did not consent to the transfer, the current employer will have to terminate their employment, and severance pay, and other obligations will arise.

Restructuring also often leads to layoffs of employees across various locations. Under Thai law, termination due to redundancy is regarded as termination without cause, and in such circumstances, employers are obligated to provide advance notice of termination or payment in lieu of notice, pay statutory severance, make payment in lieu of any unused annual leave days, make all payments due under the applicable terms of employment, and issue a certificate of employment. Additionally, terminated employees also have a right to pursue unfair termination claims. 

Employers which are involved in a global restructuring that includes Thailand must consider the potential financial and legal implications when terminating employees, as well as ensure that terminations are carried out in accordance with Thai laws, to avoid potential civil and criminal penalties.

Co-written by Dusita Khanijou and Pimvimol Vipamaneerut of Tilleke & Gibbins.

Read more about global restructuring in the APAC region:

• Significant changes to Singaporean laws will impact global restructures
• Global restructuring presents both challenges and opportunities for Australian employers