Changing employment conditions during the COVID-19 situation

Changing employment conditions during the COVID-19 situation

The COVID-19 crisis continues to have a serious impact on global economic conditions, and many employers are feeling the severe economic effects here in Thailand. In light of this situation, employers are making efforts to ensure that their businesses survive the crisis, often looking to cost reduction measures such as reducing employees’ wages and benefits in accordance with labour laws. In general, Thai labour laws permit employers to reduce employee wages and benefits either by negotiating with employees and receiving their consent for the reductions, or by carrying out the labour relations processes described below.

Under Thailand’s Labour Relations Act (LRA), the definition of “employment conditions” includes general working conditions, working days and times, wages, welfare, conditions for termination of employment, and other benefits received by employers or employees relating to their employment or work. Any employer who would like to change these employment conditions, such as by reducing wages or benefits, must comply with the LRA.

In accordance with the LRA, employers are entitled to submit a written labour demand to employees (or a labour union, if applicable) in order to change an employment condition. Similarly, employees are entitled to submit a written demand to their employer to change an employment condition if the demand is submitted jointly by at least 15 percent of the total number of employees, or if the demand is submitted by a labour union that has a membership of at least one-fifth of the total number of employees.

After the demand has been submitted by either the employer or the employees, the parties must begin negotiations within three days.

It is important for employers to note that, once formal labour demands have been made to the other party, the employer is temporarily barred from terminating or transferring the employees, employee representatives, committee members, members of the labour union, or members of the labour federation committee. The only exceptions that allow termination of one or more of those parties are when they commit one of the following acts:

  • Acting dishonestly or intentionally committing a criminal offence against the employer;
  • Intentionally causing damage to the employer;
  • Violating the employer’s work rules, regulations or lawful orders, after the employer has already given a written warning to the employee (for matters not deemed serious); or
  • Neglecting their duties for a period of three consecutive workdays without reasonable cause.

This prohibition remains in force throughout the course of negotiations and settlement, or arbitration of the labour dispute should one arise.

If the parties are able to settle, they must enter into a written agreement signed by their representatives. Within three days from signing the agreement, the employer must display the agreement at the workplace for a period of at least 30 days. The employer must also register the agreement with the Ministry of Labour within 15 days from the date of signing.

If the parties do not settle after negotiations, or if they fail to negotiate at all, the labour demand is designated a “labour dispute.” In this situation, the party who submitted the labour demand must give written notice to a mediator within 24 hours after the lapse of the three-day period or the failure of the negotiations. The mediator is then obliged to resolve the dispute within five days. If a settlement is reached, the employer must proceed with the same notice requirements as stated above. If the parties are unable to reach a settlement, the labour dispute becomes an “unsettled labour dispute.”

The parties then have the legal right to either appoint one or more labour arbitrators to resolve the dispute by binding arbitration (if agreed upon by both parties), the employer can order an employee lockout, or the employees can go on formal strike. If the employees plan to proceed with a strike, they must give written notice to the labour dispute mediator, and to the employer, at least 24 hours prior to the strike commencing. In the present situation, parties should note that if the government issues any relevant regulations under the Emergency Decree on Public Administration in Emergency Situation to prevent the COVID-19 outbreak, both parties must also comply with those measures.

If the employees follow all legal procedures prior to executing a strike, they will be protected under Thai labour law. For example, if the employer then terminates the employees for submitting the labour demand, the employees can lodge a complaint to the Labour Relation Committee (LRC). The complaint will allege that the employer committed an unfair labour practice and will ask the LRC to order the employer to reinstate the employees at the same position, wages, and benefits that they had before termination. If the LRC agrees that the employer committed an unfair labour practice, the court may order the reinstatement. If the employer disagrees with the LRC’s order, they are entitled to challenge the order by submitting a petition to the Central Labour Court to revoke the LRC’s order. If the employer fails to comply with the LRC’s order by the deadline, and fails to submit a petition to the labour court in order to revoke the LRC’s order, the employer and its directors will face criminal penalties, such as imprisonment for up to six months, a fine of up to THB 10,000, or both.

Although this process gives the employer one method of changing employment conditions, this article shows that it is not always a simple process. If negotiations go well and consent is forthcoming, labour demands can be an effective way of mitigating the effects of the COVID-19 crisis on some businesses. However, if the demand becomes a dispute, employers can find themselves in difficulty, and must be aware of the risk of criminal penalties if they fail to comply with any legal requirements or take disciplinary action against the employees during the dispute period.


Relief Measures for Affected Workers

Workers who face unemployment due to the impact of the COVID-19 crisis are offered some relief under two recent notifications issued on April 17, 2020, by the Ministry of Labour.

The first notification addresses temporary cessations of employment by revising the definition of force majeure under the Social Security Act to include hazards from the COVID-19 pandemic. This change allows the Social Security Office (SSO) to compensate eligible employees who have to stop working temporarily between March 1 and August 31 and do not receive wages from their employer during the cessation. This only applies under certain circumstances—essentially, when the cessation is in response to an employee’s quarantine or other necessary preventive measure, or when force majeure (i.e., the COVID-19 pandemic in this case) causes the employer to temporarily cease operations. The rate of compensation from the SSO during the cessation is 62% of the employee’s daily wages, up to a maximum of 90 days.

The second notification addresses termination of employment due to the effects of the economic crisis between March 1, 2020, and February 28, 2022. If employment is terminated by the employer during this period, the Social Security Office will compensate the former employee at the rate of 70% of the employee’s daily wages, up to a maximum of 200 days per termination. For an employee who resigns, or whose fixed-term employment contract expires and is not renewed, the rate of compensation will be 45% of the employee’s daily wages, up to 90 days per unemployment period. To qualify for compensation under this regulation, the employee must have paid contributions to the Social Security Fund for at least six of the 15 months prior to the date of unemployment; must have registered with the SSO; and must comply with regulations provided by the SSO officer.

These two regulations provide general criteria for employees to receive benefits from the Social Security Fund. However, they do not grant employers broad discretion to cease operations without paying wages to employees, temporarily or permanently, and employers must consider the facts on a case-by-case basis to determine whether they owe compensation and how much is due. It is therefore recommended that any employer planning to temporarily or permanently cease operations consider seeking legal advice before taking action.


About the author: Chusert Supasitthumrong, a partner at Tilleke & Gibbins, is a trial and appellate lawyer specialising in labour and employment law. Chusert also handles commercial disputes related to product liability, customs, maritime, international trade, company reorganizations, tax, and white-collar crime. He is a regular speaker on these topics, presenting at regional legal conferences, for corporate clients at in-house seminars, and on televised programs. He is also a frequent contributor to the Bangkok Post and other leading periodicals. Chusert was Thailand’s winner of the International Law Office Client Choice Award 2019 for Employment and Labour. Please send any comments or questions about the content of this article to Zac Robinson at zac.r@tilleke.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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