The Thai Cabinet has endorsed a proposal to amend the Labour Protection Act, setting a statutory retirement age for the first time and entitling retirees to statutory severance pay. Previously, the law was silent on the issue and employers had discretion to set their own retirement policy. Changes to the rules regarding submission of work regulations have also been approved.
Retirement
Under the current law, if a retirement age is set by the employer in its employment contracts, work regulations and other internal policies, then the retirement is considered to be a case of termination of employment due to old age and the retiree is eligible for the same entitlements normally granted under the law (e.g. severance pay, termination pay, etc.). If no retirement age is set, then the employee is required to continue working for as long as possible until submitting their resignation, upon which they are not entitled to any benefits.
The amended Act stipulates that retirement is a case of termination and that retirees are entitled to severance pay and the other benefits provided under the law. It also sets a statutory retirement age of sixty (60), in case no retirement age is set by the employer.
Liabilities for employers have also been included, such as if an employer fails to pay severance to a retiree, then the employer is subject to a maximum term of imprisonment of six (6) months and/or a maximum fine of THB 100,000 (One Hundred Thousand Thai Baht).
Submission of Work Regulations
The provision that requires employers of ten (10) persons or more to submit work regulations to the Department of Labour Protection & Welfare has also been revoked. Currently, employers are required to submit their work regulations for approval and revisions thereto may be ordered by a competent official. Under the amended Act, instead of submitting the work regulations for approval, a copy need only be prepared and announced to staff and posted at all times in the workplace.
Consequently, employers should start to prepare and announce work regulations in accordance with the amended Act. A company's work regulations are often used to support the employer in labour disputes. As such, care should be taken to ensure that they do not contain any illegal provisions before they are announced.
The impact of the changes made to the rules regarding retirement—i.e. that retirement shall be considered as termination of employment, that a statutory retirement age of 60 has been set, and that there are now penalties for employers who fail to pay severance to retirees—on employers' work regulations (and its other agreements!) should also be assessed, in order to ensure that the company is fully compliant with Thai labour law.
The amended Act is expected to be legislated in mid-2017.
First published in March 2017
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