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Seconded Employees – Generous Benefits under Thai Labour Law

  • March 13, 2011
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Prior to Enactment of LPA

  • In 1980, the Thai Supreme Court held that seconded employees were not considered employees of a host employer and were not entitled to severance or other benefits under Thai labour law, unless such employees entered into an employment agreement with the host employer (Supreme Court (Dikka 2922/2523).
  • At the time of the Supreme Court’s decision, the LPA was not yet enacted and Thai labour law was mainly set out in decrees from the National Executive Council (NEC).
  • After the Supreme Court ruling, the LPA was enacted in 1998 and retained various elements of the NEC’s definition of “employer”. The LPA definition recognized three categories of employer, with the third including a host employer which allowed another party (excluding employment agencies) to provide employees (“outsourced employees”) as part of the host employer’s manufacturing process or the business under the responsibility of the host employer.
  • Under this third category, the host employer was deemed to be the employer of such “outsourced employees” regardless of whether the party providing such employees was in control of the work process for such employees.
  • This definition of employer focused primarily on subcontractors and outsourced employees such that a host employer would be deemed their employer under the LPA.

LPA as Recently Amended

  • The 2008 amendments to the LPA give special prominence to the treatment of “outsourced employees” by removing the above-referenced third category from the original definition of “employer” and inserting it (in amended form) into its own separate provision in the first paragraph of new Section 11/1 of the LPA.
  • The 2008 amendments give further prominence to the treatment of “outsourced employees”, however, with the addition of the second paragraph to Section 11/1 of the LPA, which provides that host employers must arrange for those outsourced employees “whose work is of the same nature as that of an employee under a direct employment contract, to receive the equitable rights, benefits and welfare without discrimination”.
  • This new focus on the treatment of “outsourced employees” in Section 11/1 of the amended LPA provides compelling reasons to conclude that seconded employees involved in the same work as regular employees of a host company should be entitled to receive basic financial entitlements and welfare available to other employees of a host employer.
  • There is considerable agreement among Thai legal scholars with this interpretation of this new Section 11/1 as well.
  • But, there is not yet a Supreme Court ruling addressing the interpretation of new Section 11/1, such as the meaning and scope of “equitable rights, benefits and welfare” available to an “outsourced employee”.