Who needs a work permit? Making rules simpler creates complications

Who needs a work permit? Making rules simpler creates complications

Problems facing foreign managers and directors receiving work permit exemptions

The Foreigners' Working Management Emergency Decree Number 2, B.E. 2561 was issued in March 2018 and meant to clarify and simplify certain work permit practices and regulations. The intention was to make it easier and more attractive for foreigners to work in Thailand; unfortunately, the new Decree has created problems for the very foreigners supposed to gain advantages from the changes in the regulations.

The new Foreigners' Working Management Decree Number 2, B.E. 2561 significantly alters the previous Decree (Foreigners' Working Management Emergency Decree B.E. 2560) by adding to Section 4 of the previous decree, "(8) representative of foreign juristic persons obtaining a license to operate business under the Foreign Business Operation Law." According to the current interpretation of the Employment Department, Ministry of Labour, persons who are a representative of a foreign juristic person that has received a Foreign Business Operation License according to the Foreign Business Act are entitled to a special exemption.  In this case, a foreigner who is registered as a responsible person for the following entities with the Ministry of Commerce shall be exempted from obtaining a work permit provided that the following have received a Foreign Business Operation License: 1) Branch Office, 2) Representative Office, 3) Regional Office, and 4) Company Limited.

Any of these Managers and Directors can work anywhere in the country as long as it is under their role as a Manager of a Branch, Representative, or Regional office or a Director of a Company Limited.

Essential details of job titles

As of now, the Employment Department's interpretation of the new Decree includes a company limited with a majority share owned by foreigners / foreign national corporations and such company limited has received a Foreign Business Operation License.  This means the foreign national authorised Directors of such company limited will no longer need a work permit. The foreign national authorised Directors must be registered and their names must appear on the Company Affidavit which identifies them as an authorised Director who has the authority to sign binding the company.  However, this rule will apply only for company Directors whose job title is "Director" in their work permit.  For example, if the foreigner is a Director, but applies for a work permit in the job position of "Vice President Marketing," the interpretation of this rule will not be applicable, even if the foreigner is registered as a Member of the Board of Directors.  Therefore, if the actual position title is not Director, the foreigner will still be required to have a work permit in order to work. 

At this time, Managers of Branch, Representative, and Regional Offices and Directors of Companies Limited that have received a Foreign Business License will no longer be issued work permits. Additionally, for Managers and Directors of such entities holding a valid work permit, the Employment Department will allow them to continue holding their current work permit until it expires, but will not renew the work permit.  Branch, Representative, and Regional Offices and Companies Limited are obligated to cancel the work permits of their Managers and Directors within fifteen (15) days from the expiration date of their current work permit and return the work permit booklet to the Employment Department.

Board of Investment and Industrial Estate permits

In theory, this rule also applies to Industrial Estate Authority of Thailand (IEAT) and Thailand Board of Investment (BOI) Promotion companies.  This means that authorised Directors of IEAT and BOI Promotion companies that operate their businesses under a Foreign Business Operation License are no longer required to have a work permit. However, in current practice, if an IEAT / BOI company still wishes to file a request for a Director's work permit application with the IEAT or BOI offices, the IEAT and BOI will still accept the work permit application for the company's Directors.  With IEAT / BOI approval, the Employment Department will issue a work permit for such Directors even though they are not required to have one under the new Decree.  Nonetheless, we understand that there is a discrepancy in the actual practice among the different divisions of the Employment Department.  While the One Stop Service Center (OSSC) and the Central Employment Department in Bangkok will still issue the work permit booklet, the Employment Office in Sriracha, Chonburi Province will not and is of the strong opinion that Directors of IEAT / BOI Promotion companies are not eligible for a work permit according to the new Decree.

While there are many benefits for Managers of Branch, Representative, and Regional Offices, and Directors of Companies Limited to work in Thailand as soon as the Foreign Business License is in place, the new Decree exempting them from the need to obtain a work permit has the potential to cause serious problems for those who have received this privilege.

Headaches for non-permit privilege holders

The first potential problem may arise when a foreigner needs to apply for a Non-Immigrant "B" visa to come to work in Thailand.  The majority of Thai Embassies and Consulates around the world require a pre-work permit approval before they will issue the visa. However, for Managers of Branch, Representative, and Regional Offices and Directors of Companies Limited that have received a Foreign Business License, the Employment Department will not issue a pre-work permit approval because a work permit is not required by law.  From our experience, it is very possible that the staff working for the Ministry of Foreign Affairs in the Consular Section of these Embassies and Consulates will not be aware of this new privilege.  We do not know if the Ministry of Foreign Affairs has made any official announcement about this. So, foreigners could have problems when applying for a Non-Immigrant "B" visa without having a pre-work permit approval.

A similar situation could occur if a foreigner working in Thailand needs to apply for a visa to visit another country.  Many countries such as China require a foreigner to present a valid Thai work permit to obtain a visa. Without a work permit, the foreigner lacks proof of their right to work in Thailand.  Most foreign embassies are familiar with the rule that to work in Thailand a Non-Immigrant "B" visa is not enough; a work permit must also be obtained.

Another problem is now occurring when an eligible foreigner applies to open a bank account. They are immediately asked to provide their passport and work permit.  This is due to regulations issued by the Bank of Thailand.  As a result, over the past few months, eligible foreigners who no longer need work permits to work in Thailand have been told by various Thai banks that they are not entitled to open personal bank accounts. Our suggested solution is that the foreigner brings a copy of the Foreign Business License to the bank along with copies of the Foreigners' Working Management Decree B.E. 2060 highlighting Section 4 and the Foreigners' Working Management Decree Number 2 B.E. 2561 showing the other Section 4 that states that "a representative of a foreign juristic person obtaining a License to operate business under the law on foreign business operations" is included in the list of foreigners not required to obtain a work permit.  However, we cannot guarantee the effectiveness of this possible solution.

A work permit is also usually required when applying for a Thai driver's license, purchasing a car, or when leasing a condominium.  In all these cases, we doubt that the parties involved will be aware of the new regulation.  In addition, special reductions in prices and privileges are also offered by independent businesses to foreigners who can present their work permits.

A Pyrrhic victory for permit exemption beneficiaries?

The rationale behind the drafting of the new Decree to exempt work permits for the representatives of foreign juristic persons is due to how much effort companies make in terms of time, documentation, and information to be provided when applying for a Foreign Business Operation License with the Ministry of Commerce.  As such, the government wanted to extend the privilege of not requiring a work permit for the executives of these types of companies and allow them to work in Thailand once the company has a Foreign Business Operation License.

However, after encountering a number of the problems described above, one frustrated foreigner decided he would like to have a work permit, even if it is not required.  When we tried to request a work permit for this foreigner, the Employment Department turned down the application citing the new regulation.  We can only hope that if the Thai government receives enough complaints about this problem, a solution can be found. 

Author: Ms. Aim-on Larpisal, Senior Partner, Dej-Udom & Associates. For further information please contact aim-on@dejudom.com

Series Editor: Christopher F. Bruton, Executive Director, Dataconsult Ltd, chris@dataconsult.co.th. Dataconsult's Thailand Regional Forum provides seminars and extensive documentation to update business on future trends in Thailand and in the Mekong Region.

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