Thai Labour Law
Running a small business and beginning to contemplate the need to downsize? This may be the case for many of Thailand’s SMEs according to the Alliance for Supporting Industries Association, who claim the jobs of 40,000 of 200,000 staff employed in their member organisations are in danger. What steps do businesses need to take when cutting staff numbers is the only answer. Director asked Pimvimol Vipamaneerut from Tilleke & Gibbins to explain.
Retrenchment Strategies
The current economic crisis has forced many businesses to face the difficult task of having to cut costs. Among other measures, workforce downsizing can be an effective way to reduce overheads, and some employers are contemplating implementing policies which would involve termination of employees. Employers should take note, however, that terminating an employee for the purposes of cost reduction is regarded as termination without cause, and there are certain rules that must be complied with.
Termination of employment is primarily governed by the Civil and Commercial Code (CCC) and the Labour Protection Act (LPA). Under these laws, an employee can be terminated without cause with payment of severance, accrued annual leave calculated until the effective date of termination, and any other payments due under the employment agreement and the employer’s work rules and regulations (WRR). In addition, the employer is required to provide an advance notice of termination to the affected employee.
