At a glance
- A recent increase in the personal income tax exemption on statutory severance pay aligns with changes made in 2019 to the Labour Protection Act regarding severance pay.
- Proposed changes to the Labour Relations Act aim to enhance the protection of outsourced workers through a broader definition of employer.
- Proposals in relation to lock-outs and strikes means employers in certain sectors would need to prepare plans to ensure uninterrupted public services.
Overview
Thailand’s labour courts are known for their employee-friendly stance, often ruling in favour of employees in termination disputes. The labour laws are designed to provide employees with easy access to dispute resolution mechanisms. For instance, employees do not need to pay court fees when submitting a complaint, nor are they required to have legal representation during labour court proceedings.
Recent Updates
In 2019, significant amendments were made to the Labour Protection Act, one of Thailand’s primary labour laws. These changes included an increase in the statutory severance pay rate. Specifically, the maximum severance pay was adjusted to be equivalent to the employee’s wages for the last 400 days for those with 20 or more years of service. This change necessitated amendments to other labour-related laws to ensure consistency with the updated Labour Protection Act.
In July 2024, a new Ministerial Regulation was issued under the Revenue Code of Thailand concerning revenue tax exemption. This regulation, published in the Royal Gazette on 17 July 2024, aimed to increase the personal income tax exemption on statutory severance pay. The new exemption amount is set to the lower of the employee’s wages for the last 400 days or THB600,000. This adjustment aligns with the 2019 changes to the Labour Protection Act regarding severance pay. However, it is important to note that this new exemption does not apply to severance payments made upon retirement or the completion of a fixed-term employment contract. The exemption is applicable to assessable income received from 1 January 2023.
The new tax exemption is more generous than the previous one, which applied to the lower of the employee’s wages for the last 300 days or THB300,000. This previous rate was the maximum before the 2019 amendments to the Labour Protection Act.
Potential Changes
There are also proposed changes to the Labour Relations Act of Thailand. These changes aim to enhance the protection of outsourced workers through a broader definition of employer and introduce more stringent conditions for strikes and lockouts.
Under the current definition, an employer is someone who agrees to hire an employee in return for wages or someone entrusted by the employer to act on their behalf. If the employer is a legal entity, it includes representatives of that entity. The proposed definition expands this to include entrepreneurs who accept outsourced workers to work at their business premises under the Labour Protection Act, making them the employer of these outsourced workers.
Additionally, more conditions are proposed for lock-outs or strikes, especially for employers in sectors like electricity, water, telecommunications, aviation, transportation, logistics, and other public utilities. These employers would need to prepare a plan to ensure uninterrupted public service during such events.
Detailed Analysis
The 2019 amendments to the Labour Protection Act were a significant step towards improving employee rights in Thailand. By increasing the statutory severance pay, the government aimed to provide better financial security for long-serving employees. This change was particularly beneficial for employees with 20 or more years of service, who saw their severance pay increase to the equivalent of their wages for the last 400 days. This adjustment not only provided immediate financial relief but also set a precedent for future labour law reforms.
The 2024 Ministerial Regulation further builds on these improvements by addressing the tax implications of severance pay. By increasing the personal income tax exemption on statutory severance pay, the regulation aims to reduce the financial burden on terminated employees. This change is particularly significant given the economic challenges many employees face upon termination.
The proposed changes to the Labour Relations Act represent another step towards comprehensive labour law reform in Thailand. By expanding the definition of employer to include entrepreneurs who accept outsourced workers, the government aims to provide better protection for these workers. This change is particularly important in today’s economy, where outsourcing is becoming increasingly common.
The additional conditions for strikes and lockouts are also a crucial aspect of the proposed changes. By requiring employers and employees in essential sectors to prepare a plan for uninterrupted public service during such events, the government aims to balance the rights of employers and employees with the need to maintain essential services. This approach ensures that while exercising the right to strike or lockout, the public is not affected by disruptions in essential services.
In conclusion, the recent updates and potential changes to Thailand’s labour laws reflect a commitment to improving employee rights and ensuring a fair and balanced approach to labour relations.
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