Tag Archive: thailand

  1. Dismissal of Employees in Thailand

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    The Thai Labor Protection Act

    In Thailand, all employers, and employees, except for the government administration and state enterprises, are governed by the Thai Labor Protection Act of 1998 (“LPA”) (amended 2019). This act regulates the basic rights of both employees and employers by defining the working hours, welfare funding, holidays, sick leave, educational leave, maternal leave, overtime, and work safety. It also contains rules on how to legally end an employment contract, and the procedures to follow in case of wrongful dismissal.

    In Thailand, an employer is entitled to terminate the employment of employees at his/her discretion and is not required by law to specify a reason for dismissal. However, if the grounds for dismissal are not specified, an employer is obligated to make payment of statutory severance pay at the rate set out by the LPA, to an employee whose employment was terminated without reason or for reasons other than those stipulated in Section 119 of the LPA.

    Dismissal without cause

    Section 118 of the Labor Protection Act states that employees who have worked for 120 days or more are entitled to receive severance pay if they are dismissed without cause. Employees who have worked for less than 120 days can be dismissed without cause and are not entitled to receive severance pay.

    Notice period

    The minimum notice period for the dismissal of employees must equal to at least 1 payment period but does not need to be longer than 3 months. However, if the employment contract provides a notice period of over 3 months, the employer must comply with such specific notice period.

    Please note that a notice of dismissal is not required if an employee is being dismissed due to the reasons stipulated in section 119 of the LPA.

    Severance pays

    Severance pay must be paid to the employee when he/she is dismissed without cause and is based on the duration of the employment:

    LENGTH OF SERVICESEVERANCE PAY RATE
    120 DAYS ~ < 1 YEAR30 DAYS
    1 YEAR ~ < 3 YEARS90 DAYS
    3 YEARS ~ < 6 YEARS180 DAYS
    6 YEARS ~ < 10 YEARS240 DAYS
    10 YEARS ~ < 20 YEARS300 DAYS
    > 20 YEARS400 DAYS

    Dismissal with a cause

    Section 119 of the LPA states that an employee will not be entitled to severance pay if his/her employment is terminated on the following grounds:

    • The employee performs his/her duty dishonestly or intentionally committed a criminal offence against the employer.
    • The employee willfully caused damage to the employer.
    • The employee committed negligent acts which caused serious damage to the employer.
    • The employee violated work rules, regulations or orders of the employer which are 
    • The employee was absent from duty without justifiable reason for three consecutive working days regardless of whether there is a holiday in between.
    • The employee was sentenced to imprisonment by a final court judgment. If the imprisonment is for offences committed by negligence or a petty offense, it shall be an offense that causes damage to the employer.

    Wrongful dismissal

    Wrongful dismissal refers to a situation where an employer has terminated or laid off an employee in a manner that violates the employee’s rights under the LPA. Violation of the LPA may result in the employer receiving a fine of between 5,000 and 200,000 THB and/or imprisonment of up to one year.

    Section 49 of the Labor Court Establishment and Dispute Procedure Act B.E. 2522 (1979) states that in the dismissal case, if the Labor Court thinks the dismissal is unfair, it shall order the employer to reinstate the employee at the same level of wage at the time of dismissal. However, if the labor court thinks that such employee and employer cannot work together, it shall fix the amount of compensation to be paid by the employer which the Labor Court shall take into consideration the age of the employee, the working period of the employee, the employee’s hardship when dismissed, the cause of dismissal and the compensation the employee is entitled to receive. Cases of wrongful dismissal include:

    • Immediate dismissal without a clear and full explanation of the reason or the termination of the agreement without serious cause nor severance pay.
    • The termination of the agreement without payment of the unused annual leave.
    • The termination of the agreement based on the (claimed) violation of the work regulations by the employee without any prior warning.

    Due to the fact that section 49 of the Labor Court Establishment and Dispute Procedure Act B.E. 2522 does not provide a clear definition, or conditions for wrongful dismissal, it is the discretion of the Court to decide whether or not such dismissal is a lawful, and the amount of compensation to be awarded to the employee in case of a wrongful dismissal.  

    Conclusion

    In conclusion, the LPA regulates the basic rights and duties of employees and employers in Thailand. All employers and employees, except for the government administration and state enterprises, are governed by the LPA. Violation of the LPA either by wrongful dismissal or any other violations may result in the employer having to compensate the employee, receiving a fine of between 5,000 and 200,000 THB and/or imprisonment of up to one year.

    If an employee has worked for an uninterrupted period of over 120 days, and he/she was dismissed without cause, he/she is entitled to statutory severance pay of from 30 days’ wages to 400 days’ wages. If the employee was dismissed due to causes specified under section 119 of the LPA, the employer is not required to provide advance notice of dismissal, and he/she is not entitled to receive severance pay.

    The notice period for the dismissal of an employee is at least 1 payment period but does not need to be longer than 3 months unless otherwise stated in the employment contract.

    If an employee feels that he/she was a wrongfully dismissed, he/she may file a case with the Labor Court, but according to section 49 of the Labor Court Establishment and Dispute Procedure Act B.E. 2522, whether or not the dismissal was unlawful, and the amount of compensation the employee is entitled to depends on the sole discretion of the Court.

    If you have any questions regarding these Dismissal of Employees in Thailand, feel free to contact us at [email protected], or call us at +66 (0)2 117 9131-2.

  2. Bank of Thailand relaxes rules on Foreign Exchange Transactions

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    As the Thai Baht is under pressure due to imbalanced capital flows, thus unusually strong in comparison to foreign currencies, the Ministry of Finance (MOF) and the Bank of Thailand (BOT) decided to loosen rules to facilitate capital outflows. MOF and BOT expect these measures will lessen pressure on the Thai Baht. These regulations are effective since November 8th, 2019 and include facilitations on:

    • Repatriation of export proceeds;
    • Investment in foreign securities;
    • Outward transfers, and
    • Settlement of gold trading in foreign currency.

    From a practical perspective it is particularly interesting that the threshold, based on which additional verification and documentation need to be provided to commercial banks when outward transfers are conducted, has been increased. This threshold was increased from 50.000 USD to now 200.000 USD. This relaxation of the regulation is aiming to facilitate foreign exchange transactions by reducing the burden of providing documentation. As a consequence, outward transfers – especially for companies and businessmen – will now be swifter and easier to handle.

    If you have any questions regarding this topic, feel free to ask at [email protected].

  3. How to Import a Boat to Thailand

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    When importing a boat from oversea to Thailand – even if it is solely for personal use and not for running a business – it is necessary to register the boat at the Marine Department in charge. Which department is in charge is determined by the mooring of the boat. To complete the registration process, the following documents are required:

    1. Boat sale agreement;
    2. Receipt of paying import taxes at the Customs Department;
    3. Supporting documentation to certify domicile in Thailand by going to the immigration office that is in the province that the boat is located (certification of the Thai visa at the Immigration Office); and
    4. Translations of all documents in English into Thai.

    In case a pre-owned boat is imported, additional documents are required as follows:

    1. Boat registration document from abroad;
    2. Certificate of the cancellation of the boat registration abroad.

    If the boat is neither registered as a Thai boat nor is operated under the Thai flag, the boat can remain in Thailand only for a limited time. The boat has to be brought out of Thailand after the permitted time has expired, thus if the boat shall be operated in Thailand without time restriction, it must be registered as a Thai boat.

    There is no limitation regarding the number of boats which can be registered under the same person. However, the applicant for the boat registration must be the same person as the importer and the person on the purchase agreement. If the names differ, the registration cannot be done. Therefore, it is recommendable to complete the registration at the Marine Department under the buyer’s name as a first step, after the boat is imported. After the registration is completed, the transfer of the boat should go smoothly.

    Please note: a boat registration for a foreign individual is possible, but a foreign company is not permitted to register a boat under its name. If a company wants to register a boat under its name, at least 70% of the shares have to be held by Thai nationals.

    If there are any questions regarding the import of a boat to Thailand, feel free to contact us at [email protected].

  4. Can foundations own land in Thailand?

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    As many foundations operate schools, or orphanages the possibility to own land is one of the key questions for them.

    Under certain circumstances, a foundation may own property in Thailand. However, if a foundation has objectives that focus particularly or mainly on the benefit of foreigners, it may be deemed to be a foreign entity and may not own land in Thailand, referring to the Land Code, section 94 (4).

    Can foundations own land in Thailand?

     

    When reviewing the application for a transfer of ownership of land from a third party to a foundation, the Land Office will check the objectives and articles of association of the foundation, as well as interview the board of directors of the foundation. If it is found that the objectives are for foreigners, children that do not have Thai nationality, or have the purpose specifically for the benefits of foreigners, the transfer of ownership will not be allowed to the foundation.

     Furthermore, the foundation should be established, especially for public charity, religious, art, scientific, educational, or another purpose for the public benefit and not for sharing profit. The property of a foundation must be managed to serve the objectives of the foundation, and not for the benefit of a third person.

     

    If there are any questions regarding this matter, feel free to ask at [email protected].

  5. The Sap-Ing-Sith – Is Thailand’s New Property Right a Game Changer?

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    The Thai Land Code stipulates that – apart from a few exemptions – foreigners are not permitted to own land in Thailand. Many foreigners seeking to buy immovable property in Thailand, therefore, chose legal structures like leasehold, usufruct, or ownership of the property by a Thai company, to mitigate the restrictions. However, these legal structures have weaknesses and, if not set up properly, may even involve legal risks. To encourage foreigners to invest in property in Thailand, the Thai National Legislative Assembly on February 8th, 2019, passed the Sap-Ing-Sith Act. The Sap-Ing-Sith Act was published in the Royal Gazette on April 26th, 2019 and will come into effect on October 27th, 2019. The new law is aiming to encourage foreigners to invest in immovable property to boost the economy in Thailand. Requirements, as well as the rights and obligations of the Sap-Ing-Sith, are as follows:

    Definition of Sap-Ing-Sith

    The Sap-Ing-Sith grants its holder the right to use an immovable property and can be established on land with a valid Chanote (Land title deed), buildings placed on land plots held under a valid Chanote and condominium units as defined in the Condominium Act. It is possible to register a Sap-Ing-Sith for a period of up to 30 years. The Sap-Ing-Sith has to be made in writing and registered at the competent land office.

    Registration of a Sap-Ing-Sith

    After the parties reached an agreement, the registration of the Sap-Ing-Sith at the Land Department takes place in two stages; first, the Property-Owner has to register a Sap-Ing-Sith for the property. After registration of the Sap-Ing-Sith, the transfer to the other party has to be registered. The registration fee is 20,000 THB. If the land plot where Sap-Ing-Sith should be registered is subject to a mortgage, consent from the mortgage holder is required. After registration, the Sap-Ing-Sith holder will receive a certificate of the Sap-Ing-Sith from the Land Office, which he can use to prove his right. The Land Office will also keep a copy of this certificate.

    Rights and duties in relation to the Sap-Ing-Sith

    There are several rights and obligations in relation to the Sap-Ing-Sith, which are surpassing the rights of a standard leasehold. The most significant rights and duties are shown as follows:

    Rights of the Sap-Ing-Sith holder:

    • Use the property as shown on the details of the certificate issued by the land office;
    • Transfer the Sap-Ing-Sith to a third party without the owner’s consent;
    • Use the Sap-Ing-Sith as security for a mortgage (not registered);
    • The Sap-Ing-Sith is inheritable under statutory inheritance law; and
    • Make alterations/additions to the property without the owner’s consent.

    Duties of the Sap-Ing-Sith holder:

    • Has to return the property in an “as is” condition at the end of the period unless otherwise agreed; and
    • Liable for the property like an owner. Exception: the right to follow and recover the property from a third party that is not entitled to possess the land, and the right to prevent unlawful interferences from the property.

    Rights of the Property-owner:

    • To transfer the ownership;
    • Use the property as security for a mortgage; and
    • Use the property security according to the Business Collateral Act B.E. 2558.

    The execution of all rights mentioned above requires written consent by the Sap-Ing-Sith holder.

    Obligations of the Property-owner:

    • Can’t create other rights on a property with a Sap-Ing-Sith without consent from the Sap-Ing-Sith Holder;
    • Can’t terminate the Sap-Ing-Sith before the expiration period if a right of a third party is affected. 

    Summary:

    As foreigners will be permitted to hold a Sap-Ing-Sith, it might become an interesting alternative to other legal structures that allow foreigners to possess land in Thailand. Also, when keeping in mind the advantages of the Sap-Ing-Sith, like the possibility to mortgage it, and the right to sell the Sap-Ing-Sith without consent of the owner, there are many scenarios where a Sap-Ing-Sith can be very useful. The Sap-Ing-Sith is not a game-changer, as the maximum period is still 30 years and thus the same duration as a normal leasehold. And most other rights that the Sap-Ing-Sith grants could also be granted with a standard leasehold agreement. But still, the Sap-Ing-Sith Act shows the ongoing liberalization of the Thai property market, which will certainly be welcomed by foreign investors. We expect that most foreign property buyers will likely prefer the new Sap-Ing-Sith over the traditional registered lease.

    We will monitor the impact of the Sap-Ing-Sith on the Thai property market when it comes into effect and will keep you updated. If you have any questions regarding this matter, feel free to contact us at [email protected].

  6. Specialized Appeal Court in Thailand

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    In 2015, the Court of Appeal for Specialized Cases was authorized by the Establishment of the Court of Appeal for Specialized Cases Act B.E. 2558 to try and decide cases appealed from specialized courts. The adjudication process involves a forum of judges with specific knowledge and expertise in each area and will create uniformity in the appellate adjudication.

    It must be noted that cases in which a judgment was rendered before shall follow the appeal procedure of the previously applicable law. On the contrary, cases where the appeal has been submitted, shall proceed in trial and adjudication. Regarding dispute over jurisdiction, the President of the Court of Appeal for Specialized Cases shall issue a ruling and it is considered final.

    The Court of Appeal for Specialized Cases has five divisions: Intellectual Property and International Case Division, Tax Case Division, Labor Case Division, Bankruptcy Case Division, and Juvenile and Family Case Division.

    Intellectual Property and International Case Division

    This division has the purpose of adjudicating cases that are submitted for an appellate review of a judgment rendered by the Central Intellectual Property and International Trade Court under the adjudication of judges with specific knowledge and insight in the field. Additionally, this division is empowered to decide civil and criminal cases regarding intellectual property and international trade. The types of cases include civil and criminal cases concerning trademarks, copyrights, and patents.

    Tax Case Division

    The Tax Case division is mostly about disputes between the public and private sector regarding the assessment or collection of tax and revenue by public officers. The forum of judges then consists of those that have specific knowledge and insight on tax problems. The types of cases that are filed to the Court are appeals against any decision of any competent officer, claims by the state over tax and revenue debt, or tax refunds.

    Labor Case Division

    Cases in this division are about disputes between employers and employees, for example regarding employment agreements, or rights of employers and employees under the labor protection law and labor relations law. This also includes an appeal against a decision of the competent official under the law of labor protection and cases arising from wrongful acts between employers and employees. Therefore, this division is authorized to decide over the appeal of cases on labor law.

    Bankruptcy Case Division

    The Bankruptcy Case division is authorized to adjudicate bankruptcy cases according to the law on bankruptcy. This division can also decide over appeals of civil cases and criminal cases under the bankruptcy law.

    Juvenile and Family Case Division

    This division is empowered to review the appeal of a judgment or order by the juvenile and family court by applying the provision of the Civil Procedure Code or the Criminal Procedure Code. However, appeals are prohibited when the judgment is concerning a child over ten years but not over fifteen years of age, or the change of criminal punishments into lenient punishments for minors.

    Cases that are filed to the division concerning criminal offences committed by a minor, cases that are transferred by the Court having jurisdiction over the case, family law, well-being protection cases, or cases that a minor shall be tried before a juvenile and family court.

    If you have any questions regarding this matter, feel free to contact us at [email protected]

  7. The Administrator of an Estate in Thailand

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    In previous posts, we have elaborated on the importance of preparing a will if you live in or own assets in Thailand.

    One of the essential parts of such a will is the appointment of an administrator of the estate who has to manage all matters regarding the estate. The administrator can be appointed by will or by Court order under Section 1711 of the Thai Civil and Commercial Code (“CCC”). The administrator is required to be a person of sui juris, which means a person with the age of 20 years or older, not of unsound mind or not adjudged quasi-incompetent, and not adjudged bankrupt by the court.

    Rights and duties of the administrator:

    The scope of rights and duties of the administrator includes two main elements:

    1. To fulfill all necessary acts as expressed or implied in the will and to administer and distribute the estate. The administrator has the right to do so without consent of the heirs being required, according to Section 1719 CCC. However, as the administrator is acting on behalf of the heirs, he is liable to them under the agency law of the CCC for any wrongdoing.

    2. To prepare an inventory of the estate within 15 days from the death of the testator, the appointment by the court, or from the date of his acceptance of his duties as administrator. The inventory of the estate must be done within one month; however, an extension may be granted by the court. The purpose of the inventory of the estate is to give the heirs the possibility to check the accuracy, as well as the good faith of the administrator.

    End of the duty of an administrator:

    1. The duty of an administrator can come to an end under the following circumstances:

    2. The resignation of the administrator. For this, an approval by court is required, according to Section 1727 of the CCC.
    The death of the administrator; his duty is deemed to be terminated, as the role of the administrator is not part of the heritage.

    3. The discharge of the administrator under section 1727 of the CCC. This provision states that the administrator may be discharged by court order for neglecting his duty or other causes by an application of any interested person before the completion of the distribution of the estate. It must be noted that the administrator will maintain his authority until the removal by the Court.

    Prescription period:

    After termination of the administratorship, there is – according to Section 1733 CCC – a five years prescription period in which the heir can claim compensation from the administrator.

    If you have any questions regarding this article, feel free to contact us at [email protected]

  8. Hotel Amnesty in Thailand

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    Thailand’s hotel industry is one of the major economic sectors in the Kingdom, with more than 38 Million Tourists visiting Thailand in 2019. But still, a vast number of these accommodations is operated without licenses, or in violation of the law.

    hotel amnesty thailand

    Temporary suspension

    On June 12th, 2019, Order No. 6/2562 was issued by the National Council for Peace and Order (NCPO). This order suspends the enforcement of town planning and building regulations from June 12th, 2019 to August 18th, 2021, on buildings meeting the following criteria:

    • Operated as a hotel; and
    • Does not include a meeting/function room; and
    • Built before August 16th, 2016.

     

    Amnesty

    Further, this order grants amnesty to operators of hotels who were acting without compliance with these regulations before June 12th, 2019, if they notify the authority in charge of any of the following breaches:

    • Not having hotel license as stipulated by the Hotel Act, B.E. 2547 (2004);
    • Using land in violation of the Town Planning Act, B.E. 2518 (1975);
    • Acting in breach of the Building Control Act, B.E. 2522 (1979) as follows:
      • modification of a building without a permit;
      • use of a controlled-use building without a certificate for building modification;
      • change of use for a building without a permit to change the building’s purpose.

    After notification, the local authorities will inspect the building within 30 days of the report and inform the hotel operator in writing after the building complies with the law, so he can continue business without being penalized for the violations of the law as mentioned above.

    Please note: While the amnesty for violations of the fire safety regulations was limited to a period of 90 days after the amendment of this regulation, it is still possible to obtain amnesty for the breaches of the regulations mentioned herein.

    If you have any questions regarding the hotel amnesty, feel free to contact us at [email protected]

  9. Trademarks in Thailand

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    Trademarks are used to identify a particular product or service. Often companies invest a significant amount of money in introducing and establishing a trademark. To protect this investment, it is essential to grant the exclusive use of this trademark for the investor.

    In general, there are two different ways to protect a trademark in Thailand:

    1. Local trademark rights

    The local trademark registration follows the international standardized classification of the Nice System. Local trademark protection is ensured by the Trademark Act (No.3) B.E. 2559 (2016), where a trademark can be registered at the Department of Intellectual Property (DIP). The registration fee is 1000 THB for one to five items, and 9000 THB for more than five items. Registration is valid for 10 years and extendable for a further 10 years by paying a fee to the DIP. It is required that the owner of the trademark is a natural or juristic person located in Thailand. A natural person is required to be a Thai citizen. For juristic persons, it is possible to register a trademark in the name of a Thai affiliated company. Trademark protection under the Trademark Act only grants protection in Thailand; other ASEAN-Countries are not included.

    2. Madrid Protocol

    After the Kingdom of Thailand joined the Madrid Agreement Concerning the International Registration of Marks (Madrid Protocol) on August 7, 2017, which came into effect on November 7, 2017, it is now possible to ensure the protection of a trademark internationally. The preservation of the trademark is guaranteed in the majority of the ASEAN countries; the exceptions are Malaysia and Myanmar.

    The Madrid Protocol provides a system, which allows a trademark owner with an existing trademark registration – the so-called basic registration – in a member-state of the Madrid system, to extend the trademark to other member states by applying for a so-called international registration.

    This centrally administrable system allows its users to obtain multiple trademark registrations in separate jurisdictions. The certification under the Madrid Protocol creates a bundle of national rights that can be managed easily. The period of protection is also 10 years and can be extended by a further 10 years. The applicant should be aware, that a refusal, withdrawal or cancellation of the basic registration within five years after its registration will have the same consequence on the international registration.

    if you have any question with regarding to Trademarks in Thailand, Please feel free to contact us at [email protected] 

  10. Thailand 4.0 – BOI approves incentive scheme for “Smart City”

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    The Board of Investment Thailand (BOI) agreed to promote investment incentive schemes for “Smart City” to improve living standards. Smart City is an initiative for advanced IT systems and innovations; the incentives shall contribute to the promoted city’s development in six fields and enhance the people’s quality of life, especially in more remote areas. Smart City focuses on the improvement of:

    • Smart Mobility: efficient transportation and logistics management, car sharing, green mobility
    • Smart People: education for digital awareness, lifelong learning by providing village internet and digital learning centers
    • Smart Living: healthcare services, public safety, living comfort due to intelligent living facilities
    • Smart Economy: ease of doing business, business connectivity, innovation and transformation
    • Smart Governance: efficient public services, digitalization for more transparency
    • Smart Energy & Environment: green energy, clean and safe environment

    Investors who plan to develop Smart City infrastructure systems, especially with the focus on telecommunication infrastructure will benefit from the BOI incentives; provided that the project includes operations in one of the six aforementioned fields. Furthermore, IT system developers who support the Smart City project by creating, installing and providing solutions for one of the six fields will be promoted by these incentives. However, it is notable that the BOI grants a corporate income tax exemption of eight years for investors operating in the eligible fields plus a 50% reduction for another five years. By implementing its own solutions, Thailand strives for technological independence in the digital sector.

    Smart City is a step towards “Digital Thailand” and according to the Minister of Digital Economy and Society Dr. Pichet Durongkaveroj, “Digital Thailand” aims to reduce the disparity in the society and enhance the regional development. Therefore, digital education is seen as a key factor for Thailand’s technological development.

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