New Labour Law
Retirement Age of Employees
THE CABINET approved on 4th January 2017 a draft amendment to the Labour Protection Act, which requires employers to provide compensation to retiring employees as well as setting the official retirement age as 60. The new legislation is expected to become effective in May 2017.
Thailand’s labour law has not previously set the retirement age of employees and employers have not been required to set an official employees’ retirement age as company policy. Once an employee turns 60 they will have two choices: resign or continue working until employment is terminated. If employees choose to continue working after 60 and later decide to resign, they will not be entitled to Severance Pay from their employers.
However, this amendment will establish a fixed retirement age for all employees at 60. Once the employee turns 60 they will be entitled to Severance Pay as under the new law retirement will be considered as a form of job termination, requiring employers to compensate retiring employees.
According to the amendment, the compensation rate would be as follows:
- 10 months of the last salary for employees who have been working for 10 years
- 8 months of the last salary for employees who have been working for more than 6 years but less than 10 years
- 6 months of the last salary for employees who have been working for more than 3 years but less than 6 years
After retirement, should an employer desire to continue hiring a ‘retired’ employee, a new employment contract could be made in a form of a fixed term employment contract or a contract under specific projects.
Criminal penalty of not more than 6-month imprisonment or a fine of not exceeding 100,000 Baht shall be applied to non-compliance employers.