Lightening the Rules! Thailand Reduces Procedural Requirements for Company Work Rules to Encourage Foreign Investment
International employers with operations in Asia often must undergo the cumbersome task of drafting “work rules” (essentially, a handbook) and filing them with local labor authorities—as is the practice in Taiwan, Japan, and Korea—but as of this year, employers can cull Thailand from the list.
In April of 2017, Thailand’s National Council for Peace and Order (NCPO) issued Order No. 21/2560 to amend specific laws to facilitate foreign companies doing business in Thailand. The stated catalyst for the order is that Thailand ranked 46th on the World Bank Group’s Ease of Doing Business rankings out of 190 countries. In order to continue to move up in the rankings, the NCPO felt that changing certain onerous or burdensome requirements was necessary to increase Thailand’s competitiveness with the ultimate goal that Thailand will become an effective investment hub, and that such status will contribute to the reform and the economic security of the country.
Employment-wise, the key takeaway is the order’s repeal and replacement of Sections 108 and 110 of the Labour Protection Act B.E. (LPA), which required companies with 10 or more employees to prepare and submit work rules to the Director General of the Department of Labour Welfare and Protection for review, comments, and possibly required revisions. Pursuant to the order, Section 108 no longer requires employers to submit work rules to the department and abolishes the department’s ability to require employers to amend noncompliant sections of their work rules at the department’s request. However, Section 108 still requires employers to prepare and post their work rules within 15 days after their total workforce includes 10 or more employees.
Section 110 pertains to the amendment of work rules, and, like it does for Section 108, the order abolishes the requirement to submit amended work rules to the department for review.
These changes are significant for employers because they (1) allow companies to issue and/or amend work rules without government oversight or involvement, and (2) concomitantly reduce the risk of government audit of employment practices unless and until a complaint by an employee or group of employees is filed. In contrast, under the prior law that required submission of work rules for government review, the department had the ability to require amendments to the work rules, and submission of work rules that did not strictly comply with the LPA could trigger increased scrutiny from the department.
While compliance with the LPA should be the overarching goal when employing workers in Thailand—especially local nationals—these changes in the law clearly allow for greater creativity and flexibility to structure employment policies that help companies reach business objectives while also creating a healthy and compliant work environments.
Does Thailand’s move signal a regional shift? There are no concrete indications of that. The United States’ withdrawal from the Trans-Pacific Partnership has given rise to rumblings of multilateral trade deals within the region and a common desire for inbound investment—so perhaps more good news is on the way.