Minimizing the Legal Exposures of Submitting the Mandatory Annual Working Conditions Form

By Florian Maier, Managing Director and Phi Ploenbannakit, Director ,Antares Advisory, part of Antares Group

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As employers are aware, under the Labor Protection Act (“LPA”), the annual working conditions report (Form KorRor. 11) must be submitted to the local labor office that has jurisdiction over the workplace. This mandatory reporting obligation is required if the number of employees is ten or higher. The due date is the end of January and any changes thereof must be reported during the following month. Failure will subject the employer to the fine of up to THB 20,000 should the employer neglect to comply within 15 days upon receiving the warning letter from the labor office. According to the latest amendment of the LPA in effect since May 2019, the mandatory reporting obligation has become stricter. Employers with ten employees or more must submit Form KorRor. 11 by the end of January starting from 2020, regardless of whether a warning letter has been received from the labor office or not. A fine of up to THB 20,000 shall be imposed for the violation. As such, employers are not entitled to enjoy a loophole by claiming that they have not received the warning letter. The Form KorRor 11 has been initiated in accordance with the minimum legal requirements regarding the workplace environment, wages, and welfare, which are adjusted by the government from time to time. In other words, it is by default an annual compliance audit by the labour office through a compulsory declaration by employers. Any non-compliance or violation of the minimum legal requirements disclosed on the form exposes employers, including their management, to various sanctions under specific statutes (e.g. business suspension, fines, and/or imprisonment). Misrepresentation or false input on the form is also considered a felony under the Penal Code. Given the above implications, employers are strongly encouraged to conduct an internal legal compliance review on the minimum requirements to ensure justifiable input and submit correct information on the form. In order to minimize legal exposures, according to our high-level analysis of common mistakes, employers should be cautious of the following required information when completing the form.

Section 1: General Information

1.1 Workplace DetailsThe type of business organization and promoted business is required in addition to the basic corporate information and registration number. This can lead inquiries into the foreign business license and investment promotional certificate required to operate the business and the conditions attached thereto. Discrepancies between declared business activities on the form and permitted activities on such license may be found in violation of foreign business laws.1.2 Number of EmployeesThe employers must have at least ten employees on board to submit this form. The nationality of employees is required on the form and is implicitly connected to the minimum Thai national to foreigner employment ratio to maintain work permit and business visa status. The employment of three nationals labour (i.e. Myanmar, Cambodia and Laos) must be in accordance with specific regulations. The age and gender of employees is related to the likelihood of women and child labour exploitation in Section 3.1.3 Handicapped EmploymentThe employers must hire at least one handicapped person for any position in the workplace to one hundred ordinary employees on board. The fraction of fifty ordinary employees shall be rounded up to additional handicapped hiring. The contribution to the handicapped development fund is required in lieu of such employment and is payable by the end of January. A surcharge and penalty shall apply upon default.1.4 ContractorThe contractor or sub-contractor, specifically individuals, if any, may be considered as de facto employees, unless there is a written contract describing the clear-cut scope of work and responsibility as an independent contractor. The liability to the organization is greater for sub-contract work with a number of workers or a group of contract workers in case being considered as de facto co-employers.

 Section 2: Working Conditions

2.1 Working Days, Working Hours, Breaks, and Nature of WorkThe maximum limits vary according to the nature of work. Different rules apply to employees in the office, production line, transportation, construction, shifts, dangerous work, etc., under the same organization’s roof. Exemptions are always for safety purposes. The maximum working hours for cargo drivers or mechanics working in an airtight space is of course less than the standard office hours. Longer working hours may be flexible should the nature of work requires extreme continuity and urgency to keep business operations going.2.2 Weekends and HolidaysDifferent rules and exemptions apply according to the differing nature of work, as stipulated in the above paragraph. However, the minimum public holidays number under the law is 13 days per calendar year, as announced by the Cabinet. Employees are entitled to enjoy weekends and public holidays with full pay. The “no work no pay strategy” does not always apply in all cases.2.3 LeavesThere are paid and unpaid leave days. The maximum legal paid leave days vary according to leave type. Sick leave does not have leave day limits as long as actual medical treatment time is required, but the employee will only be paid up to 30 days. Maternity leave day limits are 98 days per pregnancy with maximum 45 days’ pay. Personal leave days with pay are 3 days per calendar year and 6 days for annual leave, although procedures may be agreed between employer and employee.2.4 Guaranty The monetary or personal employment guaranty is subjected to legal restrictions. Employers are allowed to request security from the employees only when the job descriptions and scope of responsibility are involved directly with the employer’s money or property (e.g. accountant, cashier, warehouse custodian, etc.). The maximum security deposit, forfeiture, and refund conditions are specified by law.2.5 Wages PaymentThe minimum daily wage rate in different provinces is constantly adjusted and increased by the government from time to time. Employers are required to comply with the new daily pay rate regardless of the daily, weekly, or monthly payment terms. The wage payment based on achievement target may be adjusted as long as the accumulated payment meets the minimum daily pay rate.2.6 Overtime Payment Under the law, overtime is considered work performed on the weekdays (over and above ordinary work hours), weekends, and holidays. The method of calculation varies according to each type of overtime and is respectively greater (after hours weekday, weekend, holiday). The average of base salary per ordinary working hours per day, multiplied by the fixed rate time as specified by law and amount of overtime hours is the basic formula.2.7 Records and Work RulesThe employer with ten employees or more is required to publish work rules and make them available for the employees’ review in the workplace. The time stamp and employee registry including the wages payment receipt must be kept in the office. The document must be made available for inspection by the government at all times.

 Section 3: Women and Child Labor

Dangerous and/or hazardous work as prescribed by the list in the form is prohibited for women and young workers under the age of 18, regardless of gender. Overtime work and late-night work are also prohibited for them.

 Section 4: Welfare

There is both a compulsory and voluntary welfare to be provided by employers in the ordinary course of work. Employers are required by law to provide drinking water, toilets, and first aid. Greater safety requirements vary according to the nature of work. Voluntary welfare, such as, meals, shelter, and transportation from home, etc., can be permanent and deemed as agreed working conditions, if included in the contract or routinely provided. An unfavorable change requires consent from the employee. Even though, there are not any precedents on enforcement of the law, employers are strongly urged to submit the form with genuine, correct, and compliant information by end of January of each year. In case of late submission, the employer should seek immediate advice from the local labor office in order to mitigate any penalty.Caution & DisclaimerThis publication is intended to highlight an overview of key issues for ease of understanding, and not for the provision of legal advice. Please note that this publication might be subject to further amendment without notice. We highly advise you to read this publication in conjunction with appropriate advice from your legal counsel to determine the legal implications this might have on your business and how to mitigate exposures as much as possible. If you have any questions about this publication, please do not hesitate to contact us.