Thai Labour Law Amendments On Retiree Compensation, Statutory Age Expected In Effect Mid Year

The amended Act will see employers be required to pay statutory severance pay to retiring employees. It also sets the statutory retirement age at 60, in the case an employer does not state a retirement age in their internal rules and policies. Kobsak Phutrakun, deputy minister attached to the Prime Minister’s Office, was quoted in Thai media as saying the amended Act deemed retirement as job termination and therefore required a retiree to be compensated. The amendments aim to address the issue of retirement and its compensation. Until now it has been up to the discretion of the employer to prescribe their own retirement policy, such as whether they do have a retirement age and if so what is this age and when does it take effect. For employers who have prescribed a retirement age, the Thai labour court has typically seen retirement as a case of employee termination due to old age, and thus the retiree is entitled to severance pay and other termination payments under Thai labour law similar as to what would be granted in normal termination cases. But if the employer has not prescribed a retirement age then there would be no retirement policy in place. An employee who continued to work until he or she could not work any longer and thus resigned of their own accord, would not be legally entitled to any payment. “The amended Act would specifically state that retirement is a case of termination, and so entitling the retiree to severance pay and other termination payments”, says a spokesperson for BSA Law, a leading international law firm in Thailand. According to the amended Act, the compensation rate upon retirement would be 10 months salary for an employee who has been with a company for 10 years, eight months salary for those having worked there for six to 10 years and six months salary for those employed there up to three years. Also approved by the cabinet was the proposed revocation of the provision that requires employers who have 10 or more employees to submit their work regulations to the Department of Labour Protection and Welfare. Such employers will now only have to prepare, announce and keep at their workplace/s a copy of the work regulations which need to be available for inspection by labour officials upon request. “The revocation of this provision will mean employers will not have to submit their work regulations for government review and approval’, suggests BSA Law. Another amendment to the Labour Protection Act includes liabilities of employers who fail to pay severance pay to retirees, which would be up to six months imprisonment and/or a fine up to a maximum Bt100,000. Established over 30 years ago, Bangkok-based BSA Law provides legal and financial services to the Thai and foreign communities in Thailand. Thai labour law is one of the company’s areas of expertise, along with Thai law in general, corporate law, contracts, property, intellectual property, insurance, investment, tax consulting, accounting and auditing services, how to go about starting a business in Thailand and Thailand work permit and visa matters.