In a groundbreaking shift, Thailand’s Labor Protection Act B.E. 2541 (1998) (“LPA”) will undergo transformative updates in 2025 that impact security deposits and employee welfare. These changes empower employees and place new obligations on employers, signaling a departure from long-standing regulations.
Security Deposits Under Current Labor Law
✓ Section 10: Employers are generally prohibited from requiring a security deposit from employees for work or potential damages. However, an exception exists when the nature of the job makes the employee responsible for the employer’s property or finances that could be damaged. If a security deposit is permitted, its terms—including the amount, type of collection, and storage—must comply with the rules set by the Notification of the Minister.
✓ Section 51: For young employees (children under 15 years old), employers are prohibited from demanding security deposits or paying their wages to any other party. Any benefits or payments provided to the young worker, their parent, or guardian before or during employment, or before the scheduled wage payment, are not considered part of their wages. Employers cannot deduct these payments or benefits from the young employees’ wages when due.
Updates for 2025: 3 Key Legislative Changes
Driven by socio-economic challenges, Thailand’s Ministry of Labor has approved the draft of three pivotal pieces of legislation aimed at supporting employees’ financial security upon termination or death. These include:
1. A Royal Decree specifying the period for starting the collection of savings and contributions for the employee welfare fund.
2. A Ministerial Regulation specifying the rate of savings and contributions that must be made to the employee welfare fund.
3. Draft Ministerial Regulations specifying the criteria and procedures for employers to provide assistance to employees in the event of their leaving work or death.
On 5 November 2024, the Cabinet approved the draft of these three legislations proposed by the Ministry of Labor. The timeline is as follows:
Figure 1. Legislative Timeline.
Overview of the New Legislation
Figure 2. Summary of Legislation.
Breaking Down the New Requirements
The Ministerial Regulation specifying the rate of savings and contributions to the employee welfare fund sets tiered rates based on salary to ensure a steady accumulation for the benefit of employees. This structured approach aims to safeguard employees’ financial futures by mandating a minimum level of savings for unforeseen events.
Figure 3. Savings and Contribution Rates.
Looking Ahead
While these legislative changes offer substantial benefits for employees, they also present a complex set of responsibilities for employers. Calculations, record-keeping, and compliance will become essential, requiring businesses to adapt swiftly to the evolving labor landscape. As these changes unfold, proactive engagement with legal updates will be key for a smooth transition into this new era of Thai labor law.