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Thailand: Changes to Labor Protection Act will increase maximum severance and more

Health and Benefits|Wellbeing

January 11, 2019

Thailand’s approved amendments to the Labor Protection Act will enhance maternity and business (personal) leave and increase the maximum severance benefit for some.

Employer action code: monitor

Parliament has approved amendments to the Labor Protection Act (LPA) that will enhance maternity and business (personal) leave, require employee consent to a change of employer under a transfer of undertaking, and increase the maximum severance benefit for workers with 20 or more years of service. Severance would continue to be payable upon termination without cause, including upon retirement. The amendments to the LPA will become effective 30 days after promulgation, expected sometime in early 2019.

Key details

Changes to the LPA include:

  • A higher level of severance payable (400 days’ pay) for employees with 20 or more years of service: Currently the maximum payment is 300 days’ pay for employees with 10 or more years of service. There is no change in the severance formula for employees with fewer than 20 years of service (e.g., employees with 10 or more years of service, but fewer than 20, will still be entitled to 300 days’ pay).
  • A requirement that employers provide at least 30 days’ advance notice of the intent to move operations or employees to a new location: Employees who decline to move are entitled to additional severance pay equal to 30 days’ pay in lieu of notice if they did not receive advanced notification.
  • Expanded maternity leave from 90 to 98 days, including prenatal doctor visits and any public holidays falling during the leave period: The amendments are unclear on which party (employers or social security) will be responsible for providing pay replacement benefits for the extra eight days or whether the additional leave will be unpaid. The law currently requires employers to pay the first 45 days of leave at 100% of average salary, with social security covering the remaining 45 days.
  • Employee consent required in the event of a transfer of undertaking to transfer employees to a new employer: This must assume the rights and obligations of the old employer.
  • A change to the existing entitlement of three days’ unpaid business leave (to attend to personal matters): This is amended to an employer-paid leave entitlement at 100% of regular wages.

Employer implications

Employers should note the new rules ahead of their forthcoming implementation date and amend their benefits and leave policies accordingly. Companies should consider, and might want to consult with their auditors regarding, when to reflect the defined benefit past service liability increase resulting from the new severance entitlement.

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