COVID-19: What Are Its Implications on Employers and Employees in Thailand?

As of 5 March 2020, the novel coronavirus (COVID-19) outbreak has affected approximately 92,000 people in at least 50 countries around the world, causing not only an international public health crisis but also major disruptions in economic activity as a result of disruptions in the global supply chain and labor market. The epidemic has caused significant challenges to companies globally, particularly with regard to the legal implications on employer and employee rights amid the spread of the virus.

Examining the legal implications of COVID-19 on employment in Thailand requires an analysis of three relevant legislations, namely the Communicable Diseases Act (2015), the Civil and Commercial Code of Thailand, and the Labor Protection Act (1998). This also requires an examination of how Thai Law defines force majeure and whether it is relevant to the context of COVID-19.

According to the Civil and Commercial Code of Thailand, force majeure is defined as an event that occurs as a result of circumstances that cannot be prevented even if the person to whom it happened were to take appropriate care as might be expected from them in that particular situation.[1] The definition given by the code, however, does not explicitly state what circumstances constitute as force majeure, and will thus be subject to interpretation by relevant legal practitioners. Force majeure is also highlighted in the Labor Protection Act which states that “when it is necessary for an employer, for whatever cause other than force majeure, causes them to become incapable of operating their business as normal,” they will be required to pay their employees’ 75% of their wages when making changes to the company’s business operations.[2]

Is force majeure relevant?

This raises the question of whether this scenario can be applied in the event that a company or employer is required to reduce or suspend its business operations as a result of COVID-19. Force majeure is oftentimes interpreted as an event that is beyond the control of any relevant stakeholders that directly prevents any possibilities of conducting business operations as is the case during natural disasters or political upheavals where workers and employers alike are unable to conduct their duties. If this interpretation were to be used, disruptions caused by COVID-19, under status quo, cannot be attributed to force majeure as it does not directly disrupt a company’s business activities or profitability. Instead, the current inability of businesses to perform their commercial activities can be credited to major shifts in market demand as a result of the ensuing uneasiness caused by the spread of the disease.

Having said this, if a business were to reduce the number of operating hours or temporarily suspend business operations, they would be subject to Section 75 of the Labor Protection Act, meaning they would need to pay at least 75% of their employees’ wages. However, the Labor Department states that making changes in working conditions is illegal unless the firm provides valid reasons for doing so and can provide evidence of its necessity for the continuity of their business. Due to ambiguities surrounding what constitutes as a valid reason for conducting the abovementioned, decisions should be made with approval from the local Labor Office which will look at such matters on a case-by-case basis based on the justifications provided by the company such as having insufficient funds to fully operate the business.

If a company is indeed permitted to reduce its work hours or suspend its operations, they are not required to obtain individual consent from each employee if they choose to execute the aforementioned given that Thai law permits such actions. However, they must issue a written notice to their employees at least three working days prior to making the changes in working hours or suspending operations altogether.

However, it is worth noting that if the outbreak were to escalate and force the government to issue travel restrictions within the country, it is possible to interpret this scenario as force majeure given that this would act as a direct hindrance to conducting business operations. In this particular scenario, employers would be absolved of any liabilities under Section 75 of the Labor Protection Act and will therefore not be required to pay 75% of employee wages as a result of disruptions to their business operations.

Nonetheless, there is currently no definite legal basis that would deem the COVID-19 outbreak as force majeure, meaning matters related to the outbreak would be treated by authorities on a case-by-case basis. Whether legislative changes will take place to consider dire responses to COVID-19 as force majeure will be contingent on decisions made by the Labor Department, the Ministry of Public Health, as well as other relevant government agencies.

Corporate policies to combat COVID-19

While no specific legislation has required companies to implement stringent policies to mitigate the risk of spreading COVID-19, many have nonetheless enacted guidelines to prevent instances of infection in the workplace. A notable feature many of these policies have is how they discourage non-essential travel to countries or territories that have been placed on high alert as a result of the virus and may require employees to obtain management approval if they insist on going. If a company chooses to implement such policies, they must issue a written announcement to their employees notifying them of these procedures. According to the Labor Department, a company that chooses to uphold such a policy may be free to do so, however they currently do not have a legal basis to confirm whether this will constitute as an unfair labor treatment.

In the event that an employee happens to have become infected by the virus or displays symptoms of infection, they will required to undergo medical examination and may be quarantined as a safety precaution as indicated in the Communicable Diseases Act.[3] According to the Labor Protection Act, an infected employee who must undergo the aforementioned procedures will be entitled to at least 30 days of sick leave, though they may have to produce a certificate from an accredited physician or medical establishment.[4] If the infected employee exhausts the sick leaves they are entitled to, they have the option of using personal leave which the Labor Protection Act prescribes as no less than six working days for those who have worked for uninterrupted period of one year.[5] Only after these leaves have been used up can employees issue leave without pay.

In terms of dismissals, employers must take note that termination without severance pay may be possible if an employee violates company policies that aim to combat the spread of COVID-19 which must be taken up with the labor department and the Labor Court ruling.  If an employer feels the need to terminate employees in order to cope with the economic effects of the outbreak, or if they have determined that an infected employee can no longer fulfil their duties to the company, they must adhere to the provisions of the Labor Protection Act, namely in the realm of providing severance payment and other relevant compensations[6] on top of prescribed procedures such as giving the employee a 30-day notice prior to termination.

However, if an employee fails to appear at work for three consecutive days without notifying or receiving approval from their employer, regardless of whether they have been infected with COVID-19, the latter will have a legal basis for terminating the said employee without severance pay.

Closing remarks

The gravity of the situation posed by COVID-19 has caused considerable hysteria among employers and employees who not only need to consider the health and economic impacts of the outbreak, but also its legal implications on employment. While it may be convenient consider the outbreak of the virus as force majeure to offset legal liabilities, there is no definite legal basis in Thailand that categorizes COVID-19 as an unforeseeable circumstance that is beyond the control of stakeholders.

It should also be noted that legal issues pertaining to COVID-19 are still being discussed among Thai authorities. It should therefore be expected that specific regulatory approaches to the outbreak are still in development and may change at any time. Thus, matters pertaining to employment amid the COVID-19 outbreak must be treated on a case-by-case basis and will be subject to the opinion of relevant authorities. In the meantime, it would be prudent to seek legal counsel over these matters to clarify what can and cannot be done in these circumstances.

For more information about how you can proceed amid the coronavirus outbreak, feel free to contact us at info@silklegal.com.

[1] Civil and Commercial Code of Thailand

[2] Section 75, Labor Protection Act as amended by the Labour Protection Act (No. 7) B.E.2562 (2019)

[3] Section 34, Communicable Diseases Act (2015)

[4] Section 32, Labor Protection Act

[5] Section 30, Labor Protection Act

[6] Section 118, Labor Protection Act

As discussed, we cannot confirm that this case would be able to terminate without severance pay it is depending on the lawful of the company’s rule [SA1]

Without notifying or a decent approval from the employer [SA2]