Thailand – Redefining Force Majeure Under The Social Security Act.

 

29 July 2020

 

 

Whilst employers who choose to temporarily cease operations are required to continue paying at least 75% of their employees’ wages; the Social Security Office (“SSO”) has put additional measures in place to protect those employees further who are unable to work during this time. On 17 April 2020, Thailand’s Ministry of Labour published two new regulations, the Force Majeure Regulation and the Economic Crisis Regulation respectively.
 

The Force Majeure Regulation

 

The SSO has redefined force majeure under the Social Security Act (“SSA”) to include hazards from the COVID-19 pandemic, which impact employers and/or employees severely enough that the employer cannot operate its business normally and the employee is unable to work. This amendment to the SSA allows the SSO to compensate employees who:
 

• are insured and eligible to receive unemployment benefits;
   

• have to stop working temporarily between March 1 and August 31 2020 (the “Relevant Period”);
   

• are not receiving wages from their employer during the temporary cessation; and
   

• whose employment has not been terminated.
   

Such eligible employees are only entitled to compensation from the SSO under the following circumstances:
 

• the employee has to cease working because they’re required to quarantine, or to comply with a COVID-19 preventive measure; or
   

• the employee has been asked by their employer to cease work because they must quarantine, or because the employer must comply with a COVID-19 preventive measure; or
   

• force majeure (in this case COVID-19) causes the employer to decide to temporarily cease normal business operations, partially or wholly, or to comply with an order relating to the communicable diseases or emergency public administration laws.
   

Under the Force Majeure Regulation, employees are entitled to a rate of compensation of 62% of their daily wages during the Relevant Period, up to a maximum of 90 days.
 

The Economic Crisis Regulation
 

Employees who are insured under the SSA are entitled to receive benefits during periods of unemployment between 1 March 2020 and 28 February 2022 caused by the economic crisis, as follows:
 

• 70% of their daily wages, up to 200 days per termination where employment is terminated by their employer; or
   

• 45% of their daily wages, up to a maximum of 90 days per unemployment period where they resign or where their fixed-term employment contract expires and is not renewed.
   

In order to qualify under this regulation, the employee must be registered with the SSO and have contributed to the Social Security Fund for at least six months in the 15 months prior to the start date of the relevant unemployment period. From March until the end May 2020, employers and employees have also been taking advantage of the reduced rates of contribution to the Social Security Fund. For the purposes of calculating SSO compensation under both regulations, the maximum daily wage is capped at THB 15,000 per month.
 

Comment
 

In addition to the benefits available under the SSA as a result of COVID-19, many employers have also been negotiating terms separately with their employees to find ways of dealing with the impact of the pandemic.
 

 

For further information, please contact:

 

Chusert Supasitthumrong, Partner, Tilleke & Gibbins

suebsiri.t@tilleke.com