New rules for foreign employees in Thailand

Background

In May 2007, the Cabinet approved certain changes to the Foreign Employment Act. These will now be forwarded to the Council of State (this is the body that scrutinises and drafts new legislation) for further consideration. In this article, we discuss the current law regarding foreign employees and work permits, and the changes that are proposed.

Current law

The Foreign Employment Act is the principal Act dealing with the employment of foreigners in Thailand. In general, any foreigner who wishes to undertake any form of work in Thailand, whether paid or unpaid, must hold a valid work permit authorizing that employment. There are exceptions to this general rule for foreign diplomatic staff and employees of the UN and certain other international agencies. A regulation issued under the Act contains a list of 39 occupations that are prohibited to foreigners, and thus a work permit cannot be obtained for any of those occupations.

Applications for a work permit for an occupation that is not prohibited, are dealt with by the Ministry of Labour. Generally, work may not be commenced until a work permit is issued. A large quantity of documents must be submitted with a work permit application, broadly speaking, these are documents concerning the applicant, including his c.v. and educational certificates, and documents from the sponsoring employer, including its corporate documents, tax registration and annual accounts. Conditions related to the paid up capital of the sponsoring company and the ratio of Thai staff to foreign employees must be observed.

If a work permit is granted, it will be for a period of 12 months backdated to the applicant’s date of entry into the country (24 months where the employer has Board of Investment privileges). The employee may only engage in the duties specifically referred to in the work permit, at the location specified. Permission to change employment duties or location must be applied for in advance. An application to extend a work permit must be made before its expiry. Special rules apply where a foreigner works in a representative office, regional operating headquarters or regional office of a foreign company.

New proposals

In May, the Cabinet approved a number of changes to the FEA, which are summarized below:

• The requirements regarding work location, the time period and prohibited work will be changed, by permitting foreigners to work only as specified by Ministerial Announcements.
• A person who wishes to employ foreigners must have a permit and pay a fee for this right.
• A person who hires foreigners must deposit a guarantee for the expenses of a return trip out of Thailand and maintain such guarantee.
• A work permit shall not last longer than two years and there will be a daily fine if it is renewed after its expiry date.
• The Minister may issue regulations stipulating the work permit criteria and method of foreign employment, in addition to Section 10 of the Act.
• There will be a Foreign Employment Appeal Committee, consisting of the Permanent Secretary of Labor Ministry or his delegate as Chairman, and eight other committee members. A representative from the Employment Department shall be a committee member and Secretary.

Comment

Unfortunately it has not been possible to obtain a full copy of the draft Bill, and thus we have been forced to rely on a summary. In general, the provisions may be seen as imposing additional requirements and placing obstacles in the way of companies that wish to employ foreigners. The reversal of the present rule that foreigners can engage in any employment except for 39 occupations that are presently prohibited, to one where the Minister may specify occupations that are open to foreigners, is unnecessarily restrictive, and represents a reversal of the current law.

We shall have to wait for publication of the full draft before making further comment.

© Stephen Frost, Bangkok International Associates 2007

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Bangkok International Associates is a general corporate and commercial law firm. For further information, please contact Stephen Frost by email at sfrost@bia.co.th or telephone (66) 2 231 6455.

These will now be considered in detail by the Council of State – the primary body that considers and drafts new legislation. If approved, it is likely that regulations will also have to be drafted, to flesh out the additional obligations.