The Director General of the Department of Employment in the Ministry of Labour (DOE) has issued a notification setting out revised criteria for labour officials to consider when issuing work permits under the Alien Work Permit Act B.E. 2551 (2008) (AWPA) in August of last year.
Background & Context
When issuing work permits to foreigners employed in Thailand, labour officials have been following criteria established under a notification from the Director General of the Department of Employment five years ago. This notification was intended to establish clear guidelines in determining the number of work permits permissible for a given enterprise, and focused primarily on the nature of the employer, such as the type of activity in which the employer was engaged, the scope of the employer’s business (based on revenues, capitalization, tax payments), and the benefits the employer provided to Thai nationals. In addition to applying these specific criteria, government officials were also instructed to consider the impact that awarding a work permit would have on general socioeconomic matters as well, namely the exposure of Thai nationals to new technologies or other undeveloped skills, the potential competition with Thai nationals, possible effects on foreign direct investment, as well as any political, religious, economic, internal security and humanitarian implications that might arise. Thus, even though an employer might satisfy the specific criteria set out in the notification, the government official could still deny issuing a work permit on the basis of these more general socioeconomic concerns.
Summary of Changes
A new notification from the Director General of the Department of Employment was issued in August 2009 and provides a revised set of criteria. All of the criteria under the prior notification are retained (with some variation as noted in the attached schedule), such that the main impact of the new notification is to introduce criteria for regional operating headquarters, private educational institutions and freelancing (no formal employer), which were not covered under the former notification. The notification also states that the number of work permits to be granted in particular situations will be “as necessary and appropriate” on a case-by-case basis (these areas are summarized in the attached schedule). Thus, the new notification may allow for any number of work permits (or, in theory, none at all) in certain situations. Finally, the same general socioeconomic issues listed in the previous notification have been included in the new notification as well, with the exception of humanitarian concerns.
Please note that these criteria are used in general circumstances where foreign investors are not obtaining other incentives related to their investment in Thailand. For instance, investors who receive promotional incentives from the Board of Investment or Industrial Estates of Thailand may, as part of their package of benefits, receive more generous work permit allowances.
In addition to issuing this notification, the Ministry of Labour has also been busy drafting a host of regulations concerning the AWPA, seven of which are currently before the Council of State, and it is anticipated that these regulations will become effective in early 2010. Of particular interest to employers of foreign staff is a ninth regulation which is still being drafted by the DOE (and thus is not yet before the Council of State). The concern with this regulation is that it may provide an exhaustive list of specific jobs or areas of employment in which foreigners may be employed, with the effect that any job or area of employment not provided on the list will be off limits to foreigners. This is a significant change in approach from current AWPA regulations, which list the specific jobs or occupations in which foreigners may not be employed. We will issue a further briefing update on this draft regulation as it becomes finalized.
Criteria Applicable Under Previous and Current Notifications
Capitalization requirement is reduced by 50% for aliens with lawfully registered cohabitating Thai spouse.
Once ten work permits have been issued in accordance with these capitalization/bank statement balance requirements, additional work permits may be issued if employer satisfies any of the following: (i) employer has paid at least THB 3 million in taxes in the preceding fiscal year, (ii) employer is an exporter which has generated at least THB 30 million in export revenues in the preceding fiscal year, (iii) employer is juristic person operating a tourism business and bringing in at least 5,000 foreign tourists over the preceding fiscal year, or (iv) employer is a Juristic person employing at least 100 Thai nationals.
Work permits may be issued if employer satisfies any of the four tests under footnote 2, provided employer’s level of fully paid up capital is at least THB 2 million.
Work permits may be issued if employer satisfies any of the four tests under footnote 2, provided employer’s level of fully paid up capital is at least THB 3 million.
Work permits may be issued if employer satisfies any of the four tests under footnote 2, provided employer’s bank statement balance is at least THB 3 million.