For companies that employ a workforce in Thailand, Labor Disputes can pose significant challenges. HR, Compliance and Sustainability professionals need to understand the local employment law in order to avoid potential liabilities.
Labour disputes are handled by the Central Labor Court, which separates cases and issues surrounding employment from regular civil courts. There are several things that can lead to a labor dispute.
Misclassification of Employees
The wrong classification of workers can lead to major legal troubles for employers in Thailand. When an employer fails to properly classify a worker, the company could risk paying hefty fines or even six months in prison for violating labour laws. Employers must carefully examine both the contract agreement and working relationship to avoid misclassification.
For instance, a company that hires an employee with an open-ended or indefinite employment contract and terminates the contract without a valid reason could face wrongful dismissal penalties of up to 100,000 THB per worker. Additionally, the company may be liable for failing to pay statutory benefits like minimum wage, working hours, annual leave, and sick leave. Companies can reduce the risks associated with hiring international contractors by partnering with a global contractor management platform that helps companies determine if their workers are truly employees. This can help prevent costly mistakes and legal pitfalls in Thailand and other countries around the world.
Unlawful Changes in Conditions of Employment
Firing employees is a difficult business decision, and firing employees in Thailand can be particularly complicated. Under Thai law, employers can only terminate an employee for just cause such as gross misconduct or incompetence and must pay the employee severance if they are fired.
In addition, employers must register employees with the workmen’s compensation fund and social security fund as well as pay contributions ranging from two to 15 percent of an employee’s monthly salary. These provisions, along with strict labor regulations, give workers significant protection and benefits.
However, migrant workers may face discrimination in their workplaces and in some cases can be the subject of a criminal case if they are involved in illegal employment. This is especially true in the case of alleged fraud, which will elevate a dispute to a criminal lawsuit. Consequently, obtaining professional legal advice before entering the workplace can prevent a lot of disputes down the road. Moreover, ensuring that an employment contract meets all the requirements of Thai law will significantly reduce the risk of labor disputes in Thailand.
Disputes Over Wages
The law allows workers to form labor unions, and these can negotiate with employers for better working conditions and wages. Labor disputes that cannot be settled through negotiation and mediation may be brought to the Labor Court, which is a judicial body that adjudicates cases related to unfair labor practices, termination disputes, and other labor-related matters.
In Thailand, a worker who is unfairly terminated can ask the court to force the employer to reinstate them (with the same wages and responsibilities they had before their dismissal) or, more commonly, request monetary compensation from the employer (on top of statutory severance pay). The court has broad discretion in determining whether an employee’s termination was unfair on a case-by-case basis.
Labor disputes are a common aspect of workplace relationships, and they can have serious implications for both employees and employers. Maintaining open communication and adherence to labor laws can help prevent these disputes from arising in the first place, but when they do occur, knowing what to expect can make a difference in resolving them quickly and fairly.
Disputes Over Benefits
Regardless of whether written contracts are present, an employee’s rights are defined in the labour law, and it is important to have an understanding of them. The laws enumerate employees’ basic rights such as working hours, wages, workmen securities, and fringe benefits.
In the event of a dispute with an employer, workers can file a complaint to the Department of Labour Protection and Welfare or the Labor Relations Committee. They can also choose to go to the labour courts, which are specialised tribunals. An employee can request that the tribunal order their employer to reinstate them with their previous conditions of employment or pay them monetary compensation (on top of the statutory severance pay) if they feel that they have been unfairly terminated. In many cases, these disputes are caused by misunderstandings or resentment, and it is crucial that employers take the necessary measures to prevent them from happening. By upholding high moral standards and treating their employees fairly, they can ensure that all parties are satisfied.