Disputes between employers and employees can arise from a variety of reasons. Specifically, issues with the terms and conditions of employment, such as standard working hours, wages and fringe benefits are common.

Employees can bring labour disputes to the department of labour protection and welfare where officials act as mediators. They have the legal authority to order the employer to rectify any circumstances that are at fault.

Employment Contracts

While Thai law does not require that employment contracts be written, it is highly advisable that they are so as to provide clarity and ensure compliance with strict labour regulations. Professional advice in drafting contracts can help avoid legal disputes with employees and ensure compliance with the law.

In addition to setting out the terms of employment, such contracts must clearly indicate whether a worker is employed on a fixed term basis or not. Contracts on fixed terms must also designate a predetermined employment period and specify that the employment may not be terminated before that termination date. In the event of a termination without cause, an employee must be paid severance pay.

Understanding the intricacies of Thailand’s labor laws is non-negotiable for any foreign company looking to operate in this country. A failure to comply with the rules can result in substantial statutory payments to terminated employees – compensation that can amount to more than 25 months of an employer’s highest wage rate.

Misclassification of Employees

Employees and contractors are categorized differently in Thailand. Employers need to be aware of the differences between the two, so they can avoid fines and penalties.

Misclassification can be accidental or intentional. It can happen when an employer doesn’t understand the laws of their country or when a company hires contractors to cut costs. In either case, it is harmful to workers and exposes employers to expensive penalties.

For example, misclassifying an employee as a contractor can result in a loss of benefits such as health insurance, severance pay, and payment in lieu of advance notice when they are dismissed. It can also deprive employees of worker’s compensation coverage and limit their rights to take sick or vacation days.

Contractors, on the other hand, can be paid for each project they complete rather than a fixed wage or salary, and they pay their own income taxes and social security contributions. This means that they are not entitled to the same benefits as full-time employees in Thailand.

Disputes Between Employers and Employees

The Labour Law allows for both verbal and written employment contracts, but the former is recommended for clarity. Contracts must align with the provisions of the labor law, which outlines minimum wage rates, working days and hours, as well as other relevant issues.

If either party is dissatisfied with the terms of their contract, they can submit a labor demand to the Labor Ministry. This triggers a three day period of statutory negotiation. If the parties fail to reach an agreement during this time, the labor dispute becomes a Labor Case.

Workers in Thailand have minimal protections against exploitation and abuse. This may be because of weak unions, a culture of anti-union discrimination supported by the state, and the fragmentation of Thai enterprises. However, the recent wave of protests has seen a growing mobilisation of worker groups. Labor NGOs can play an important role in connecting workers across industries and promoting worker-led demands for democracy.

Disputes Between Employers and Contractors

The terms and conditions of employment are covered by multiple labor laws in Thailand. For example, the Labor Protection Act protects employees’ rights with respect to working time per day and week, overtime payment, relocation of workplace, severance pay and termination clauses. Foreign companies operating in the banking, finance and technology sectors should ensure that their contracts with their Thai employees align with the local labor law.

It is critical to correctly classify whether workers are full-time employees, independent contractors or a combination of both. Failure to do so can lead to disputes and potential legal implications.

It is also important to understand the processes involved in a worker’s grievance and conciliation with their employer. Disputes may be resolved through mediation or litigation in court. It is highly recommended that companies in the real estate and construction industry include a structured dispute resolution clause in their contracts. This will provide greater clarity to both parties in the event of a labour dispute.

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