(a) No, there is no specific legislation covering all types of contingent workers.
However, certain types of contingent workers may be considered employees or receive certain protections in the following circumstances:
- Outsourced workers —If an operator engages with another person/company to provide its employees to perform any work within the operator's normal business operations, the said operator is also legally deemed to be an employer of the outsourced workers in addition to the providing company (which is their direct employer). Moreover, if the hirer also directly hires its own employees who perform the same job as the outsourced workers, the hirer must provide the same benefits and welfare to the outsourced workers as it provides to its directly hired employees who perform the same job.
- Home workers — Although not defined as an employee under the law, a home worker hired by an industrial business to produce or assemble something outside the business establishment of the hirer will still receive certain protections under the Home Worker Protection Act, some of which are similar to employment protections.
(b) No.
(c) No, as there is no mandatory pension requirement apart from the pension entitlement under the Social Security Act.
(a) No.
(b) No.
(c) No.
In the past, a draft bill called "Promotion of Development of Quality of Life and Protection of Informal Labor Act" was introduced and considered, which aimed to afford certain protections to workers' information. However, it was entirely replaced by a new draft legislation, the "Promotion and Protection of Independent Workers Act."
The new draft bill intends to provide broader coverage and protection for all independent workers, especially "semi-independent workers," which is defined to include platform workers. Under the draft bill, independent workers are entitled to, among other things, form a collective group or organization. The draft bill will also set up a new fund aimed at helping independent workers, e.g., providing them with certain accident and health assistance, and loans.
The draft bill is still being deliberated by the government. Thus, there could be further revisions to the draft bill and it could take quite some time before it is finalized and enters into force.
With the rise in digital platform services, we are seeing an increasing global trend in case law and legislation aimed at protecting platform workers' labor rights. For more insight on these developments, along with other employment law updates, click here.
The hirer faces a misclassification risk and employment-related obligations if the workers are legally considered employees, e.g., holiday and leave entitlements, minimum daily wages, providing a termination notice in advance or payments in lieu thereof, severance pay, and other statutory payments upon termination.
It depends on the specific non-compliance. For example, if gig workers are legally considered to be the hirer's employees and the hirer fails to pay severance pay upon their contract termination, the hirer would be subject to imprisonment not exceeding six months and/or a fine not exceeding THB 100,000.
Moreover, the hirer will also be liable to pay 15% interest per annum on any unpaid severance pay until it has fully paid it.
Risk for hirers
Hirers may face an income misclassification risk (i.e., employment income or services income), which may result in the following:
- Incorrect filing of withholding tax return form (Phor. Ngor. Dor. 3 or Phor. Ngor. Dor. 1)
- Missing filing of annual payroll withholding tax return (Phor. Ngor. Dor. 1 Gor)
- Incorrect withholding tax rate (i.e., the employment income under Section 40(1) of the Revenue Code and general services income under Section 40(2) of the Revenue Code are subject to withholding tax at progressive rates of 5%-35%, while other services income under Section 40(8) are subject to withholding tax at 3%) and withholding tax shortfall
Penalties for hirers
- Withholding tax shortfall (if any)
- Surcharge at 1.5% of the withholding tax shortfall per month, capped at the amount of withholding tax shortfall
- Fine not exceeding THB 2,000 for failure to file the withholding tax return or incorrectly file the withholding tax return form
If the contingent workers are legally considered as the hirer's employees, the hirer could be held liable for failing to register them and make contributions to the Social Security Fund and Workmen Compensation Fund.
- An employer intentionally not registering any employee with the Social Security Office within 30 days from the date of employment will be liable for imprisonment not exceeding six months and/or a fine not exceeding THB 20,000.
- An employer that does not timely submit the form for a monthly contribution to the Social Security Fund will be liable for imprisonment not exceeding six months and/or fine not exceeding THB 20,000.
- An employer failing to make contributions will be liable to pay all outstanding contributions retroactively.
Moreover, the employer will also be liable to pay the penalty of 2% of outstanding contributions per month from the date of default of each contribution, i.e., after every 15th of the month following the month of the payment made to the employee.
There is no separate mandatory pension scheme apart from the pension entitlements under the Social Security Act.
In the event that a taxpayer: (i) intentionally reports false information, gives a false statement or shows false evidence to evade taxes or to obtain tax refund; or (ii) acts in a fraudulent manner or with artifice to evade or attempt to evade tax, the taxpayer may be charged with a tax evasion offense under Section 37 of the Revenue Code, the criminal sentence of which includes imprisonment from three months to seven years and a fine of THB 2,000 to THB 200,000.
In general, if the company is charged with a tax evasion offense, the director or the CFO of the company would not be automatically subject to a criminal sentence jointly with the company, unless it is established that the director or the CFO of the company intentionally or negligently acted as a principal or a supporter of the company in committing this tax evasion offense.
However, the arrangement whereby an individual person is hired as a services provider (instead of an employee) is not uncommon and is not automatically regarded as tax evasion or tax avoidance.
Nevertheless, if the parties intend to enter into an agreement to establish an employment relationship between them, the hire-of-work agreement may be inconsistent with the concealed intention of the parties. In this case, the Revenue Department may reclassify the hire-of-work agreement as an employment agreement. In our experience, the Revenue Department tends to only impose tax, applicable penalties and surcharges (i.e., criminal liabilities are unlikely to be charged in this case).
The risk of criminal offenses relating to labor and social security laws associated with the misclassification risk as mentioned would apply when the hirer intentionally fails to comply with the laws. Hence, if the hirer believes in good faith that they are hiring an independent contractor, not an employee, the hirer should be able to raise a defense that it should not be held criminally liable for failing to comply with the legal requirements as an employer.
However, most of the criminal offenses relating to employment and social security laws are compoundable offenses. In other words, if the conditions for compounding the offenses are met and the competent official believes the employer has committed such offenses, but the imprisonment should not be imposed, the official may instead choose to compound the offense by specifying the fine or penalty to be paid by the offender within a specified period. To compound the offense, the offender must admit guilt and pay such fine within the specified period. The criminal case shall then be deemed final.
