Replacing Workers with Technology: Examining the Implications Under Thai Law
The rapid development of computer programs, algorithms, and artificial intelligence has given employers more options to meet the goals of their business activities. In fact, several operations that previously required human labor can now be automated in an efficient and cost-effective manner, boosting productivity and corporate profitability. This, however, is only one of many reasons why automation is pursued, and employers may have other reasons why they would wish to mechanize their production process or service, which includes being unable to afford to retain staff or not having the ability to effectively train existing staff.
Employers must give a 60-day notice prior to termination
If an employer decides they need to replace their employees with automated tools or machinery, they are required to notify labor inspection officials and provide information about the termination; notably the names of the employees who will be terminated, the prospective date of termination, and the reason for doing so. This notification must be made at least 60 days ahead of the termination, and failure to do so may mean up to 20,000 Baht in fines to the employer or any authorized person in the company.[1]
In addition, employees who are to be replaced with machinery or automated tools must be informed by their employer prior to the termination of their employment. According to Section 121 of Thailand’s Labor Protection Act, an employer who contemplates reducing the number of employees “as a result of the reorganization of an undertaking, production line, sale, or service due to the adoption of machinery,” must inform the affected employees no less than 60 days prior to the supposed date of termination.[2] Falling short of this requirement will mean that the employer must pay special severance pay equivalent to 60 days of wages at the employee’s last wage rate in addition to the prescribed severance pay.[3]
Severance and special severance payments must be taken into account
Employees who have been terminated, regardless of any reason other than for civil or criminal violations, are entitled to severance pay which is calculated based on the employee’s years of service. The payments are broken down accordingly:[4]
| Years of Service | Severance Pay (Daily Wage Rate) |
| Between 120 days and 1 year | 30 days |
| 1 year to 3 years | 90 days |
| 3 years to 6 years | 180 days |
| 6 years to 10 years | 240 days |
| 10 years to 20 years | 300 days |
| 20 years or more | 400 days |
Furthermore, employees who have been employed by their employer for six continuous years are entitled to special severance pay at a rate of 15 days of wages for each working year completed beyond their sixth year. Therefore, if an employee has worked with an employer for seven years, they must be provided with 15 days of special severance payments. However, the special severance rates are capped at 360 days.[5]
Employees can file claims for unfair termination
The Labor Protection Act also provides protection for employees who were terminated without sufficient or justifiable reasons, even if the employer commits to all payment obligations owed to employees upon termination. Thus, if an employee feels that they have been terminated on wrongful grounds, they can lodge a complaint with the labor court which will investigate the claim. If it has been found that the complaint is valid, the court may order the employer to either pay damages or re-hire the employee.[6]
Conclusion
Given what has been mentioned in this article, it is clear that the responsibilities laid out by Thai Labor Law on employers in this situation are stringent. It is therefore recommended that employers fully understand the legal implications of replacing existing employees with new technology to avoid unnecessary legal predicaments. Employers should also provide ample evidence to support the necessity of adopting new technologies into the production process or service on top of justifying why the employees being laid off can no longer be employed in the company. Conversely, employees should take note of their rights in the event that they are replaced by technology.
To find out more about labor law matters, you can contact Silk Legal. The firm can provide assistance to clients, both employers and employees, about the implications of termination as a result of technology.
[1] Section 146 “Labor Protection Act B.E. 2541,” (1998) (available at https://www.ilo.org/dyn/natlex/docs/ELECTRONIC/49727/125954/F-1924487677/THA49727%20Eng.pdf).
[2] Section 121 “Labor Protection Act B.E. 2541,” (1998) (available at https://www.ilo.org/dyn/natlex/docs/ELECTRONIC/49727/125954/F-1924487677/THA49727%20Eng.pdf).
[3] Ibid.
[4] Section 118 “Labor Protection Act B.E. 2541,” (1998) (available at https://www.ilo.org/dyn/natlex/docs/ELECTRONIC/49727/125954/F-1924487677/THA49727%20Eng.pdf).
[5] Section 122 “Labor Protection Act B.E. 2541,” (1998) (available at https://www.ilo.org/dyn/natlex/docs/ELECTRONIC/49727/125954/F-1924487677/THA49727%20Eng.pdf).
[6] Section 124 “Labor Protection Act B.E. 2541,” (1998) (available at https://www.ilo.org/dyn/natlex/docs/ELECTRONIC/49727/125954/F-1924487677/THA49727%20Eng.pdf).
