29 November, 2018
When an employee causes damage to a company, Thai employers often resort to deducting wages, holiday pay, or overtime payments as a penalty or restitution. Before doing so, the employer should know when it is permissible to do so under Thai law, and the risks they are taking by making improper deductions.
Many employers in Thailand mistakenly think that they are entitled to deduct money from employees’ wages, overtime payments, and payment for working on public holidays (whether regular wages or overtime payment), as a disciplinary measure for poor behavior or as restitution for damage. What’s more, some employers even think that they are entitled to deduct money from payments to employees without any limits or conditions whatsoever.
However, the Labor Protection Act (LPA) contains many conditions and limitations on an employer’s ability to make deductions from payments to employees, and in fact generally prohibits them with the exception of a few specific types of payment. Violation of the LPA in this respect can even result in criminal sanctions. If an employer makes a deduction in violation of the LPA they can even face criminal penalties, including imprisonment for up to six months and a fine of up to THB 100,000.
Clearly then, this mistaken belief poses a major risk to employers, and an understanding of the true legal position can save them a great deal of trouble down the line.
This story was originally published in the Bangkok Post. The full story can be viewed here on the Bangkok Post website.
For further information, please contact:
Chusert Supasitthumrong, Partner, Tilleke & Gibbins
suebsiri.t@tilleke.com
