2017 Labour Protection Act Amendments: Statutory Retirement Age and Retiree Entitlements

2017 Labour Protetion Act Amendments: Statutory Retirement Age and Retiree Entitlements

Recent proposed amendments to the Thailand’s Labour Protection Act (1998) (LPA) aim to set a statutory retirement age of 60 years for workers in Thailand and also provide retirees with a statutory entitlement to severance pay. The amended Act is currently being reviewed by the Office of the Council of State. It is expected that the amended Act will enter into force within 2017.

Current situation regarding Retirement under Thailand’s Labour Protection Act

Section 118 of the LPA requires employers to pay severance pay to employees where it is deemed that they have been terminated without legal cause. If an employer’s Work Rules or employment contract specify a retirement age for employees then an employee will be deemed to have been terminated upon reaching the specified retirement age and are therefore entitled to receive severance pay.

However, in the past, the LPA did not specify a statutory retirement age for employees, and so if an Employer’s Work Rules or employee employment contract did not fix a retirement age for employees, then upon an employee resigning when they were too old to continue working they were not entitled to severance pay because they will have been considered to have voluntarily resigned and not officially retired.

Rationale for setting a default retirement age

The Thai Government have acknowledged that due to the aging nature of Thailand’s society and the likely resulting increase of older employees in the workforce, stronger laws are needed to protect the rights of senior citizens. These proposed amendments to the LPA ensure that all Thai workers can access severance payments upon retirement by providing a default retirement age of 60 years.

Statutory Amendment to Retirement Age

In order to address the problem of aging workers not being able to access severance pay upon finishing employment, the Thai government proposes to amend the LPA to include a default retirement age of 60 to apply in situations where Employer Work Rules or employment contracts do not include a specified retirement age for employees. However, it should be noted that (according to the proposed amendment), the creation of a default statutory retirement age of 60 will not prevent individual Employer Work Rules or employment contracts from stipulating higher or lower retirement age. The inclusion of a default retirement age will give those employees whose right to retirement severance pay is not protected by their Work Rules or employment contract, the right to retire with severance pay upon reaching 60 years of age.

Working Beyond Retirement

These planned changes to the LPA will not prevent an employer from rehiring an employee who retires upon reaching the default retirement age. Another possible approach is for the employer and the employee to extend the retirement age by mutual agreement, to safeguard each parties’ interests such agreement should be made in writing.

Penalties for non–compliance

The amendments also outline employer liability and provide penalties for non-compliance in regard to providing severance payments to employees who retire upon reaching the statutory default retirement age. Section 144 of the LPA is planned to be changed to provide that where an employer fails to comply with their obligations to pay severance pay to an employee who retires then the employer may be subject to criminal sanctions including, a term of imprisonment of not more than 6 months or a fine not exceeding 100,000 Baht.

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