The COVID-19 crisis has the entire world on edge. No more so than here in Thailand, where employers and employees worry about their respective companies and jobs as the days unfold. GPS Legal would like to follow up our interview with BrandNow Asia by outlining some of the rights and obligations that employers and employees have during these uncertain times.
As of this article (April 9, 2020), the government has ordered certain businesses closed, while other businesses are implementing work-at-home or other arrangements to comply with the government’s announcements on social distancing, quarantines, and curfews.
Thailand follows “no work, no pay” principles
This sounds simple and harsh, but it is true. If a business has been directly shut down by the government, that business does not have to pay its employees until the government allows it to reopen. Alternatively, if an employee is placed under mandatory quarantine by the government, the law is currently silent, and there aren’t any court rulings yet on whether the employee can invoke “force majeure” to escape the no work-no pay policy (in other words, continue to be paid). They may, however, consider using statutory sick leave, followed by available annual leave before they will be subject to unpaid leave.
Employees have some protections
While employees may not receive wages for quarantines or government-ordered business closures, they do have certain protections. By law, all employees are allowed 30 days of sick leave. So, if an employee succumbs to COVID-19 or must self-quarantine out of an abundance of caution, their job will not be in jeopardy if they have sick leave. Additionally, most employers will allow unpaid leave if an illness goes beyond those 30 days and the employee has used up all their annual leave allotment. However, at that point, the employer could choose to terminate without cause and pay severance with notice or payment in lieu of notice.
It is worthwhile noting that employees are still required to follow company policy and the labor law regarding notifying their employer and providing medical certificates. If an employee fails to show up to work for three consecutive workdays, having not notified their employer, then they can be terminated with cause and will forfeit any notice period or severance payments. Failure to provide medical certificates as mandated by company policy could subject them to unpaid leave.
In addition to statutory sick leave, all legally employed fulltime staff who are registered with Social Security, Thai and expat alike, have access to free medical care and unemployment benefits through Thailand’s Social Security Fund, whether they are covered by employer-provided private health insurance or not.
Salaries can be cut, but employees must be paid
If an employer expects an employee to work, whether remotely or on site (complying with government announcements), wages and salaries must be paid. However, Section 75 of the Labor Protection Act states:
“When it is necessary for an Employer, for whatever cause other than a force majeure [event], which affects his/her business and causes the Employer [to be] incapable [of] operating his or her business as normal so as to temporarily suspend the business in whole or in part, the Employer shall pay wages to an employee in [an] amount not less than seventy-five per cent of wages of working days received by the employee before the suspension of business for the entire period which the Employer does not require the employee to work. The Employer shall give written notice to the employee and the Labor Inspector in advance prior to the date of suspension of business under paragraph one [of] not less than three working days.”
This means that if a business cannot function normally, either completely or partially, it can reduce wages by up to 25% until normal operations can resume. These cuts must be across the board for all employees, and the employer must notify employees and the Labor Department at least three working days before implementation.
Because the law is silent on what “cause” means beyond not being a force majeure event, businesses should err on the side of caution and consult with legal counsel and the Labor Department to ensure compliance.
Furloughs, layoffs, and pay cuts
Some companies may choose to furlough or even lay off staff. What is the difference? Furloughs are temporary suspensions of work, either in whole or in part, allowing workers to return to their jobs later, whereas layoffs are usually permanent.
The previously mentioned Section 75 can be applied to furloughs, outside of which requires the employer to seek individual consent from the employees affected.
For layoffs, employers must still give proper notice and pay severance. This is standard procedure, and the current global crisis does not change that.
Another option would be a voluntary pay cut. This would apply if the company did not want to pursue Section 75 relief or wanted to cut wages selectively or by more than 25%. In this case, employers would need consent from each employee. If the employee does not agree, the employer can choose to terminate (with notice and severance as provided by law).
Isn’t COVID-19 a force majeure event?
Section 8 of the Thai Civil and Commercial Code defines force majeure as:
“…any event the happening or pernicious result of which could not be prevented even though a person against whom it happened or threatened to happen were to take such appropriate care as might be expected from him in his situation and in such condition.”
So, is COVID-19 considered a force majeure event? It depends.
While COVID-19 may or may not be a force majeure event when it comes to Thai labor laws, business contracts with force majeure clauses are also subject to interpretation depending on what the clause says. Some clauses may already specify pandemics or global health crises as a force majeure event, and Thai law allows for a party to be relieved from their contractual obligations if they can prove an impossible obstacle beyond their control. It is advisable to check your force majeure clauses or have your legal counsel review them before activating them so that you don’t instead find yourself in default.
GPS Legal is here to help you
COVID-19 has caused stress on many different levels, not least of which is everyone’s health, safety, and uncertainty this has brought upon us. We understand the situation is changing from day to day, and we will continue to proactively monitor the situation in the days and weeks ahead. If you have any questions regarding your rights and obligations as a result of the COVID-19 crisis, please contact GPS Legal today.
Important note: It is essential to emphasize that this article must not be considered legal advice. These are unprecedented times, and many of the laws discussed here are subject to interpretation. If you have questions, believe you have cause for legal action, or are unsure of your rights or obligations, please contact your lawyer or GPS Legal for assistance.