Publications

Overview

To be successful abroad, companies must understand the local culture and customs. Additionally, human resource executives must understand the legal framework and the workplace issues that are most important to the local people. In Thailand, the following points are most important:

• Human resources are critical to sustaining growth in Thailand's rapidly advancing economy. Raising the skill levels of Thailand's labor force -- particularly in the fields of science and engineering -- will be a key factor for Thailand's modernization.
• Thai culture focuses on respect. Thais acknowledge paternalistic hierarchy and are typically hesitant to challenge those in a position of authority. Rather, they feel most comfortable when others are patient and willing to compromise. Thais value the "team" and are generally loyal to those who treat them fairly.
• The recent surge of business investment, coupled with the lack of skilled workers, creates a highly competitive market for employees. Companies strive to provide both a satisfactory salary plan and a comfortable work environment in order to maintain satisfied employees, and thus discourage the prevalent trend of job-hopping.
• In order to reduce its reliance on foreign technical assistance, the Thai government has initiated a campaign to encourage Thais abroad to return home and share their newly acquired skills. Furthermore, Thailand is seeking to improve its general level of education and is encouraging universities to target key areas of need -- science and engineering -- by offering relevant courses and degrees. Companies have encouraged the development of science programs by offering scholarships and developing in-house training.
• Thai labor laws are designed to protect workers and preserve their rights. These laws dictate the minimum standards for salary and benefits and the maximum amount of work hours and days. The labor law provides a reasonable work environment and protects against labor exploitation.
• Minimum wage laws are structured to encourage investment outside the metropolitan area of Bangkok. The Thai government allows businesses to utilize inexpensive labor in other provinces in an effort to abate traffic, pollution, and infrastructure bottlenecks in the urban areas.
• Health care coverage is a main concern for many Thais. The Thai government recently made great improvements to its labor laws, granting better benefit plans and reducing the financial burden on the employee in case of illness or accident.

• Although unions are not generally viewed in a favorable light, they do play an important role in negotiating private sector employment contracts. In contrast, the public sector is only permitted "associations" which function more like social clubs than unions. In the past year, worker discontent has led to more strikes than in the previous five years.
• Termination procedures have been developed to protect both the employer and employee. Regulations are fair, requiring notification of termination as well as severance pay for an otherwise loyal employee. Although qualified employees are permitted recourse against unjustified termination, the company has no obligation to a negligent or malevolent worker.

Thailand s Economy Leaps Forward

Located amidst a booming region, Thailand boasts one of the fastest growing economies in Southeast Asia. Known as the " Land of Smiles," Thailand has enjoyed an abundance of good fortune as both domestic and foreign businesses rush to invest. From 1988 to 1994, Thailand's Gross Domestic Product (GDP) grew at an average rate of 10%, and Thailand hopes to maintain a similar level of growth into the twenty-first century. Thailand has transformed from a traditionally agrarian economy to one focused on capital-intensive manufacturing, with an emphasis on promotion of advanced technology.

As it strives to transform its economic base, Thailand confronts numerous human resources issues, and has acknowledged that the government must improve upon the conditions of its labor source. As such, Thailand's labor laws have changed to meet the needs of both employers and employees, and science programs have been developed to promote a stronger educational base. These improvements in turn are expected to attract even more investment. In order to establish a successful business in Thailand, a business must understand the cultural perspective, the labor laws, and the practices of the evolving labor system. The determination of such human resource issues as working relationships, salary and benefits, negotiation procedures, and termination concerns will facilitate the process of staffing an operation in the fast-paced economy of Thailand.

How Working Relationships are Formed in Thailand

Interpersonal relations revolve around respect in Thailand, and personal and business relationships are formed over time. As a Buddhist nation, Thailand values moderation and kindness in both personal and business relationships. Thais prefer to be treated gently, with acknowledgment of the paternalistic hierarchy where age commands respect at all times. If admonished or rebuked in an aggressive manner, they will harbor hurt feelings throughout the day; they are generally not emotionally resilient and therefore do not take harsh words lightly. In dealing with Thais, one must be compromising, respectful and patient. In general, Thais tend to shun any outward display of expression, finding the use of any pronounced emotional gesture to be strange. Thais tend to adopt an appearance of serene indifference, so it may be difficult to read their emotions. If treated with respect, however, Thais are generally hardworking and loyal.

Thais value social harmony and attempt to avoid conflict when possible. They are reluctant to criticize, confront, or challenge, and they quickly recognize authority. If Thais disagree, they will often remain silent and simply accept the decision of their boss. Thais enjoy making a definitive contribution to a group; they believe in the notion of the team, with each person providing an essential skill. They tend to be fast learners and are confident in their personal endeavors. When comfortable with their coworkers and their environment, Thai workers will wholeheartedly dedicate themselves to their responsibilities.

Modern Labor Laws

Labor laws establish the minimum standard for labor conditions within a specific area or country. In Thailand, the government has reevaluated its laws to provide better protection for its labor force. Thailand has four main labor laws: the Labor Protection Law of 1972, the Labor Relations Act of 1975, the Social Security Act of 1990, and the State Enterprise Labor Relations Act of 1991 (SELRA).

The Labor Protection Law of 1972, also known as N.E.C. Announcement No. 103, provides the minimum standard for private sector occupational working terms. These terms do not apply to agricultural, domestic, or non-profit organization workers. The Labor Protection Law sets the requirements for the minimum and maximum number of working hours, holidays, sick leave, maternity leave, military leave, and business leave for an employee. It also sets the standard for minimum wage, overtime, and severance pay. The law provides guidelines for working conditions, female and child labor, and the factors for terminating employment. This law is analogous to the US Fair Labor Standards Act (FLSA), the so-called wage and hours law.

The Labor Relations Act of 1975 authorizes the establishment of unions and employer associations for Thai nationals and provides guidelines for negotiating an employment contract. Two or more of these unions and associations can form a labor federation or employer federation, respectively. The law requires contracts for the hiring of employee services; these contracts apply only to firms that have 20 or more workers. Labor contracts cover employment conditions, benefits, salary complaint procedures, and amendment procedures. Contracts are subject to annual review unless the parties have agreed otherwise. Should disputes arise from these contracts, negotiations typically occur between the labor group and the employers. If these negotiations are not successful, they are referred to the Labor Dispute Mediation Office. The Labor Relations Committee handles disputes in critical public services industries such as railways, telecommunications, and waterworks.

A separate law, SELRA, has been designed to cover agricultural workers and public employees (i.e. civil servants and state employees). Although SELRA is considered more restrictive than the Labor Relations Act, most SELRA regulations are generally similar to the regulations listed above. For example, SELRA expressly prohibits the formation of unions, but allows employee "associations" that are governed by a prescribed set of specific regulations. For example, these employee associations cannot engage in work stoppages, and can only hold meetings on weekends and holidays. With the US government recommendation that worker rights under this law were being overlooked, the Thai government decided to revise SELRA in 1993. As of 1996, the review was still pending. Proposed amendments would provide a number of rights to public workers.

Although it is still evolving, the Social Security Act passed in 1990 provides benefits to employees or family members of employees who have suffered from illness, disability, pregnancy, or death. Until enactment of this law, it was each individual companys prerogative to cover these circumstances. Now, firms with 10 or more workers are required to register with the Social Security Fund and the Department of Labor Protection and Social Welfare. The law grants support to Thai nationals in the private sector, excluding agricultural workers. Public employees are more comprehensively covered under a separate agreement that mandates health-related coverage for the employee, spouse and children, as well as the employees parents.

The Social Security Fund is financed through monthly payments by employees, employers, and the government, which each contribute 1.5% of the employees monthly wage. Employers must withhold the amount from the employees paycheck and submit it to the Fund within 15 days of the following month, or a 2% surcharge is added. An employee is eligible for benefits if they have contributed to the Fund for at least three months for sickness and disability, seven months for childbirth, and one month for death. Workers must apply to qualify for this benefit within one year of entitlement and must receive remuneration within two years of notice. A 1994 amendment offers an improved benefit package and provides a more generous amount for disabled persons, pregnant mothers, and widowed spouses. Beginning in 1995, the Social Security Fund extended the coverage to include family allowances and unemployment compensation, and also increased wage contribution to 3% for all parties.

Recruiting the Best Employees for your Business

Thailand faces a pronounced shortage of skilled labor, with too few skilled candidates for the many existing job openings. Suitable candidates are difficult to acquire, making each skilled employee a valuable asset. With the competition for qualified candidates so high in Thailand, companies are utilizing a variety of measures to recruit employees. Large firms typically promote from within when management vacancies appear. However, this option is not always available to small businesses. Other options include using university alumni associations that sponsor job placement programs, poaching from other firms, hiring Western-educated Thais, or employing expatriates. To find candidates, companies advertise in both local and campus newspapers, and hire local headhunters or overseas agents based in college towns. While smaller companies tend to search for employees independently, there is a growing trend in hiring executive-search companies; the shortage of managerial talent renders it difficult for a small company to find a qualified match independently. Attendance at job fairs is another method of recruitment, where representatives from various international and Thai companies set up booths to provide information about their company and conduct on-site interviews with attendees.

In order to find a staff that is both qualified and trained, most businesses will look to similar firms within the industry. In order to lure employees away from their current employers, the new company will need to offer higher pay and greater benefits. Unlike Japanese employees who have a reputation for loyalty to their companies, Thai loyalties have traditionally been directed toward the person who hired them. Even personal loyalty does not always ensure a positive outcome in todays market, as workers can be persuaded by the most attractive offer.

Private enterprises can afford to offer higher wages and attractive benefits, and therefore have the ability to attract employees away from the public sector. To alleviate depletion of its talent, the government requests the private sector to cooperate on measures such as moderating salary levels for highly specialized personnel. Allowing private sector employees to perform temporary projects for the government and vice versa has served as another technique for retaining key talent. Moreover, despite the monetary gains of private enterprise employment, workers who value long-term stability and a better health care plan may prefer to stay in the public sector.

While recruiting nationals from another firm may provide an educated, qualified candidate with related experience, it does have its drawbacks. Poaching leads to a high employee turnover rate, additional need for foreign workers, and rapid wage increases. For example, the finance, banking, telecommunications, and electronic industries reportedly have 20-30% turnover rates per year. The information technology business estimates that there will be up to 15,000 openings by the year 2000. In addition, frequent job hoppers may never stay at one job long enough to develop and solidify critical skills.

Returnees, or Western-educated Thais, can be another potential employee resource. These Thais, who have studied in Australia, Japan, Europe or North America and are willing to return to Thailand, can be a valuable asset. Many returnees, still proficient in Thai, speak English well and are knowledgeable of Western business practices. Foreign firms find that they experience fewer cultural conflicts with these employees. Hiring returnees who have Western-based knowledge and expertise also reduces the problems associated with finding housing and obtaining work permits/visas for expatriates.

In order to attract Western-educated Thai talent, the government instituted the Reverse Brain Drain Project." This project, developed by the Ministry of Science, Technology, and Environment, seeks to encourage Thai citizens in Japan, North American and Europe to return to Thailand. The project targets scientists, engineers, and doctors that are willing to return home and share their technologically advanced skills with their home country. One goal of the project is to have individuals return as lecturers in the universities; unfortunately, the starting salary of a lecturer with a doctorate at a public university is only around US $4500 per year. Incentives, however, may include import tax exemption for possessions and the right to hold dual citizenship. Currently, the private sector concentrates much more heavily on recruitment of finance, banking and marketing personnel from abroad.

Hiring returnees also has a significant number of drawbacks. Returnees may experience frustration with the red tape and bureaucracy involved in a government position, or with using technologically obsolete equipment. In addition, care for the dependents of returnees can be costly for their new employers. For example, the children of returnees are often accustomed to a Western educational system and may need to be placed into a more expensive international school. In addition, these children experience difficulty in adjusting to the cultural differences of relocating. According to the Bangkok Post, many more Thai professionals would consider returning if the government offered such incentives as housing loans or subsidies, a competitive salary, tax subsidies for research equipment or relocation compensation.

In contrast, hiring an expatriate can be a complex procedure. By law, a firm can only hire an expatriate when no qualified Thai national is available. Furthermore, foreign firms are limited to hiring only a specific number of expatriates. This law seeks to reduce the number of expatriates and encourage organizations to educate, train, and employ as many Thai nationals as possible. Currently, however, an abundance of job openings exists in Thailand, which lacks sufficiently qualified Thai nationals to fill them, necessitating the use of expatriates. Thai co-workers generally view expatriates with high regard and treat them well, and expatriates often take more initiative that many Thai managers. However, relocating an employee from abroad can be very expensive and time consuming.

If considering an expatriate, an employer must keep in mind visa/passport stipulations. Work permits can only be obtained after the employee has entered the country and require an employers letter of accreditation. The Thai government grants work permits for periods of up to one year and the permits are valid for the length of an expatriates visa; they are renewed as visa extensions are granted. When foreign personnel are brought into Thailand for special projects, they can be granted a five-year renewable work permit.

In order to retain workers, companies need to meet the demands of their employees. In surveys of Thai workers, many employees say that they seek competitive compensation and benefits, a friendly work environment, fair management, and a pension plan that offers security after retirement. Employees give numerous reasons for being dissatisfied with a firm, such as long working hours, a poor supervisor, and general disorganization. As noted, good interpersonal relations and respect are vital to the retention of employees. In todays fiercely competitive market, companies must find the right combination of both financial and social appeasement.

Improving the Quality of Education and Training

In order to upgrade Thai workers and bolster the economy for the future, the Thai government must develop the education and training of the labor force. The private business sector is growing at 7% per annum, but the labor force is only growing at 2% annually. In order to develop the labor force, the Thai government has developed a number of programs to stimulate the national educational system. In 1995, it launched a seven-year program to improve the skills of Thai nationals. Under the Skill Development Plan, Thailand will spend US$415 million to train 1.9 million workers and 24,390 instructors, as well as to construct labor development centers nationwide. Thailand has also eased restrictions on the establishment of private high schools and universities. In fact, the only requirements for such private schools are that 80% of the students are Thai nationals and that English is a mandatory subject. More recently, the Thai government emphasized the importance of higher education by lengthening compulsory education from six to nine years. Furthermore, the Thai government encourages knowledge of advanced technology by offering funds and scholarships to students pursuing Masters Degrees as well as 800 doctoral fellowships for those studying abroad in scientific fields. Local universities have responded by offering more technology-oriented courses and degrees in natural resources, engineering, and computer-related technology such as telecommunications.

Although businesses have adopted a variety of measures in response to the shortage of skilled workers, in-house training remains virtually mandatory for the Thai business industry. In 1994, the government enacted the Occupational Training Promotion Act, a program that offers tax incentives to firms with training programs. Currently, however, companies confront the frustrating issue of spending time and money to fully train a staff that is then lured away by competitors. Many newer companies have not developed their own training programs and therefore fully depend on recruiting skilled workers away from those companies that possess strong internal training programs. According to a 1995 report from the American Embassy in Bangkok, one large bank executive stated: We at one time or another have trained most of the leading financial people in Thailand. This is a disconcerting but necessary process; if firms give up their training programs, they will never have the properly trained staff that they need. Universities are addressing this issue by offering scholarships that are jointly established between the university itself and private companies. Upon graduation, the sponsored student would be committed to that specific firm for a certain number of years.

Wages are Attractive to International Companies

Every year, the Ministry of Labor evaluates and makes changes to the minimum wage. In 1996, the determination of the daily minimum wage per day divides Thailand into three separate zones, as is shown in the following chart:

ZONE	REGION	BAHT WAGE	US$ EQUIVALENT
Zone 1	Bangkok , Nakhon Pathom, Nonthaburi, Pathum Thani, Samut Prakan, Samut Sakhon, and Phuket	Baht 145	US$5.90
Zone 2	Chiang Mai, Makhon Ratchasima, Saraburi, Chon Buri, Rayong, Phangnga	Baht 128	US$5.90
Zone 3	Provincial Regions	Baht 126	US$5.13

As indicated by the chart above, wages are higher in Thai cities than in rural areas. In Bangkok, a blue-collar employee can typically earn up to Bt290 (US$ 10) per day, a higher wage that compensates for a greater urban cost of living. The government often uses wage differentials to entice firms to relocate outside of metropolitan areas, with the hope that doing so will alleviate the growing problem of traffic, infrastructure bottlenecks, and air pollution that plague Bangkok.

Aside from a low average education level, a high rate of emigration remains another reason for the lack of qualified employees (both blue and white collar). Many skilled Thais immigrate to neighboring countries such as Singapore seeking greater salaries and benefits. In trying to reverse this trend, Thai wages have steadily increased to become more competitive. At the same time, the annual 10-20% rise in wages may dissuade companies from investing in Thailand, as cheaper labor can be found in Indonesia, India, Vietnam, and China. Additionally, it is customary in Thailand that all employees receive end of the year bonuses of up the three months pay, dependent upon the performance of both the individual and the company.

In general, multinational companies offer skilled employees wages 20-30% higher than those offered by Thai companies. Additionally, Western-educated returnees in management positions can earn twice as much as locally educated managers. For example, a Pacific Bridge study showed that a Thai national with 11 years experience in the pharmaceutical sales industry is currently making approximately US$29,000 at an international company in Bangkok. After studying in the United States, a Thai returnee with a similar background and only seven years of experience in Thailand is expecting US$48,000 upon returning to Thailand.

In general, professional salaries in Thailand remain among the lowest of the East Asian nations. In Bangkok, an expatriate with five years experience as a general manager can earn from US$54,500 to US$120,000 annually. In contrast, general managers in the neighboring nations of Japan, Taiwan, and Korea, earn from US$140,000 to US$270,000 per year. One consideration, however, is that the cost of living in Thailand is generally significantly lower than that of the aforementioned countries.

The workweek for Thai nationals ranges from the typical 44 hours to 48 hours for a factory workweek and 54 hours per week for certain commercial employees. Retail employees work a maximum of nine hours per day, while those working with hazardous materials must stop after seven hours. Employers must permit a one-hour break for every five consecutive hours worked, and other breaks must be at least twenty minutes long by law. Workers cannot be forced to work overtime. If an employee chooses to work overtime, that individual may not work for more than four additional hours per day, and overtime may not occur for more than five consecutive days. Employers calculate overtime pay at 1.5 to 3 times the normal wage rate; multinational companies must pay even more. Management officials are not subject to overtime pay unless stated in the employer-employee contract.

Benefits: Ensuring Satisfied and Healthy Employees

Workers in Thailand are guaranteed certain amenities to ensure a healthy working environment. The Thai government has also enacted several laws to protect employees from exploitation that would overwork them to exhaustion. The Labor Protection Law of 1972 addresses several employee benefits including paid holidays, vacations, sick leave, maternity leave, and bonuses. All employees are entitled to 13 traditionally observed holidays per year and one day off per week (usually Sunday). An employee who has worked for up to one year is allowed six working days of paid vacation each year. Employees are also entitled to a maximum of 30 days of paid sick leave. However, if sick leave is taken in three consecutive days, a medical certificate is required. Maternity leave of 90 days is available for all pregnant women. The employer pays for 45 of these days, and the Social Security Fund compensates for the other 45 days. The employee is entitled to full pay for up to two pregnancies, regardless of marital status. For prenatal care, obstetrical fees and treatment of the infant, reimbursement is available for up to US$150 (Bt4000) per visit.

In cases of illness, accident or death, the employee is assured of compensation so as not to be overwhelmed with the ensuing financial burdens. Under the Social Security Act, payment to the benefits fund is a total of 4.5% of the employees monthly wage, with the employer, the employee, and the government each contributing 1.5%. Compensation from the Social Security Fund is available to employees and their families for non-work related conditions. In the event of death, an employees survivor receives $700 plus 150% of the monthly wage if the employee worked from three to ten years. If the employee worked more than ten years, the survivor receives $700 plus 500% of the monthly wage. This plan also covers the medical expenses for diagnosis, treatment, pharmaceuticals, hospital stay, and ambulance services. The employee also receives 50% of their monthly wages for disability.

The Workmens Compensation Act provides for employees in cases of work-related illness, disability, or death. Unlike the Social Security Act, payments to this fund are made entirely by the employer, with the amount of the contribution varying between 0.2% and 2% of the employees monthly salary. In the event of death, the fund provides a grant of approximately US$700, as well as an amount equal to 60% of the employees monthly wages for a five-year period after death. For permanent illness or disability, employers will pay medical expenses of up to US$1,032 and provide compensation of half of the workers annual salary for life.

Employers are also required to maintain a clean and safe work environment. Employers must provide clean drinking water, bathrooms, toilets with sanitary paper and water, and approved first aid kits. Any firm with 200 or more employees must have immediate access to a full medical facility and a certified medical staff.

Health care coverage remains one of the major concerns of Thais who are interested in returning to Thailand. In fact, many potential returnees state that a good health care plan will attract them to a company regardless of size or industry. Many international companies and large Thai companies offer their own health care plans. A typical health package includes an annual medical examination paid for by the employer; hospital stays covered up to US$105; surgeries covered from US$350 to US$2,000, and other expenses are paid for from US$210 to US$1,050. Further, according to Watson Wyatt Data Services, one third of international companies in Thailand offer full maternity and dental plans.

International companies typically pay retirement benefits for Thais in a lump sum within one month of declaration. Employers can contribute up to 15% of the payroll as a tax-deductible expense, while employees contribute 3%. Other employment perks may include a car, driver, automobile insurance, gasoline stipend, mobile phone, entertainment account and incentive trips. International corporations usually offer their senior executives recreational facilities, social club memberships, maids and low interest loans. Housing provisions differ greatly according to the firm. For projects on the East Coast of Thailand, many companies will provide housing for the employee on site, while the individuals family will remain 4-5 hours away in Bangkok. Expatriates typically receive a larger list of benefits, including housing, utilities, servants, and an education stipend for their children.

At present, locating suitable housing for expatriates in Bangkok is generally not difficult. The strongest demand is for mid-range rental housing at a cost between US$16,000 and US$48,000 per annum. One property consultant cited the monthly rent of a two-bedroom house as US$1,830 and of a three-bedroom house as US$3,440 in 1995. An oversupply of housing, including houses, luxury apartments, and condominiums has resulted in price decreases. The price of a luxury condominium in Bangkok, at about US$950 per square meter, is one of the least expensive in East Asia. For the consumer, this is more attractive than a comparable unit that sells for approximately US$2,350 in Seoul, US$3,000 in Kuala Lumpur and US$4,000 in Singapore. Hong Kong and Tokyo remain the most expensive, showing sale prices of US$6,250 and US$8,400 per square meter respectively. The price of purchasing a typical two-bedroom apartment in Bangkok in 1995 was between US$168,000 unfurnished and US$208,000 fully furnished. The price of a three-bedroom apartment typically ranges from US$320,000 to US$420,000.

 

Negotiating an Agreement with Worker Organizations

Thais do not generally view unions favorably; while there are more than seven hundred trade unions in Thailand, only approximately 3% of the workforce are members. Thais see unions as prohibitive to their countrys development and Thai culture resists the idea of challenging authority. In general, Thais are willing to compromise and are amiable in their relations with their employers. Many Thais distrust unions because of past activities that stopped public utility services. In the 1980s, labor disruptions caused power blackouts and slowed telephone operations. Due to the subsequent confusion and the resulting unrest, the government dissolved the right to unionize state enterprises and made it more difficult for private enterprise unions to act. In spite of this, in the past year, there has been growing worker discontent and protest. There were comparable numbers of strikes, lockouts, and disputes in the first half of 1995 as in the preceding four years.

Private and public sector businesses are governed differently on labor relations issues. Unions are permitted in the private sector and are governed by the terms found in the Labor Relations Act of 1975. Labor Unions must have at least ten members, be registered with the Labor department, and obtain an operating license. All union members must be full-time employees and Thai nationals. Labor unions leaders are required to appeal to management for time off to attend to union business. Members cannot boycott, picket, block entrances, or do anything that inhibits non-union workers.

If either party wants to amend an employment agreement, a new proposal must be submitted to the other party in writing. This begins the bargaining process. The parties will negotiate until they either agree or deadlock. If the dispute cannot be settled, either an arbitrator will be appointed or lockouts and strikes are permitted. Workers may only strike if at least half of the union members of that company have agreed to it through secret ballot. The strike must be registered at least 24 hours in advance and approved by the Ministry of Labor; otherwise, employees can be dismissed for holding an unlawful strike. The recent joining of the Labor Congress of Thailand and the Thai Trade Union Congress is expected to give workers more bargaining power.

Public sector businesses follow the conditions in the State Enterprise Labor Relations Act. The public sector is entitled to establish employee associations which are more analogous to sports or social clubs. Although these associations must register with the Labor Department and require an operating license, the right to strike remains illegal. In spite of this, public employees are finding ways to circumvent the law. In the fall of 1995, for example, employees from the Forestry Industry Organization, Mass Communications Organization of Thailand, and the Bangkok Mass Transit Authority held unofficial stop-work rallies to protest appointees to their management board. Pilots of Thai Airways International also staged an unofficial strike to protest the employment of foreigners.

 

Termination Procedures

Termination procedures are stipulated in the Labor Protection Law of 1972. When a company terminates an employee, that individual must be given prior notification on or before the next salary payment date for the termination to take effect at the next payment date. As firms adopt more capital-intensive advanced technology, a laid-off worker must be given 60 days prior notice of their release. Employees who have worked for a firm for four months to one year are eligible for 30 days severance pay; for one to three years, 90 days severance pay, and for more than three years, 180 days severance pay.

Termination without severance pay or advance notice can be made for any of the following reasons:

• absence for three consecutive days without reasonable cause;
• dishonesty or negligence, causing damage to the employer;
• intentional damage or breach of regulations;
• temporary work for less than 120 consecutive days; or
• seasonal work.

Written warnings are usually given beforehand to build evidence in case of a dispute. The Labor Court must give employers approval before the employers may terminate an employee who is a member of the union/committee. Employees may not be terminated during collective bargaining sessions, for participation in union activities or for exercising their civil rights. After dismissal, an employer is required to give the employee an Employment Certificate that contains the length of the employment and the nature of the work performed.

 

Conclusion: Human Resource Management is Advancing

Thailand is in the midst of an economic boom that will continue well into the 21st century. Although it has faced political upheaval in the recent past, its economy has not faltered. The government has continually been future-oriented in helping to advance the economy and simultaneously improve its human resources. The Thai government and Board of Investment have welcomed foreign investment and promoted the private sector by offering such incentives as multiple tax breaks and import duty exemptions. The overall quality of human resources is improving and the conditions that govern them are becoming more sophisticated.

Go back to HR Issues & Recruiting Publications for Thailand

Go back to the Pacific Bridge Homepage