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Legal Insight / Labor Management / Legal Issues on Annual Leaves (Translated in English)

This is the translation of “ปัญหาทางกฎหมายเกี่ยวกับวันหยุดพักผ่อนประจำปี” posted on 2020.05.10

 

An employee may take a break and relax away from work by taking their annual holidays or the so-called “holiday”. In this column, we will refer as “annual leave” or “annual vacation” in line with the Labour Protection Act, B.E. 2541 (1998), and talk about the legal issues concerning annual leave entitlement on the view of an employer.

 

First of all, we should first take a close look to the provisions concerning annual leave which is covered by Labour Act, B.E. 2541 as follows,

 

Section 30

An employee who has worked continuously for one full year shall be entitled to an annual vacation of not less than six working days which shall be fixed in advance by the employer or set out in an agreement made between the employer and the employee.

In subsequent years, the employer may fix the annual vacation for more than six working days for an employee.

An employer and employee may agree in advance that the annual vacation be cumulative and that the unused annual vacation of that year be postponed and be taken together with that of the following years.

For an employee who has worked for less than one year, the employer may fix and grant the employee an annual vacation on a pro rata basis.

 

Section 56

An employer shall pay an employee his/her wage equal to a working day’s wage for the following holidays:

(1) …

(2) …

(3) Annual vacation.

 

Section 62

Where an employer requires an employee to work on a holiday specified in Section 28, Section 29 or Section 30, the employer shall pay the employee holiday pay at the following rates:

(1) For an employee who is entitled to receive wages for work on holidays: an additional amount of not less than one time of the amount of the hourly wage rate earned per hour on a normal working day, for the hours working overtime, or not less than one time of the rate of wage per unit of work output earned per unit on a normal working day for work done by an employee who is paid on the basis of work output;

(2) For an employee who is not entitled to receive wages for work on holidays: an amount of not less than two times of the hourly wage rate earned per hour on a normal working day, for the hours working overtime, or not less than two times of the rate of wage per unit of work output earned per unit on a normal working day for work done by an employee who is paid on the basis of work output.

 

Section 64

Where an employer fails to provide an employee with holidays or provides him/her with holidays less than as specified in Section 28, Section 29 and Section 30, the employer shall pay holiday pay and holiday overtime pay to the employee at the rates prescribed in Section 62 and Section 63 as if the employer had required the employee to work on holiday.

 

Section 67

Where an employer terminates the employment which is not the case under Section 119, the employer shall pay the employee the wages for his/her annual vacation for the year in which the employment was terminated, in proportion to the number of days of annual vacation to which the employee is entitled pursuant to Section 30.

Where an employee is a party to terminate a contract of employment or the Employer is a party to terminate an employment regardless of any condition under Section119, the Employer shall pay wages to the employee for accumulated annual vacation to which the employee is entitled under Section 30.

 

Form the provisions mentioned above, we will talk about most concerns and questions of an employer regarding to annual leaves under the Labour Protection Act as follows,

 

  1. Is it an employer’s duty to set annual vacations for an employee?

 

An employer is obliged to arrange an annual vacation of not less than 6 working days per year for the employee who has worked for an uninterrupted period of 1 year. This is to comply with Section 30 that it is an employer’s duty to set annual vacations of 6 working days or more for his employees who, by then, have continually worked for the employer for 1 full year. The annual vacation may be set by only the employer or by a mutual agreement with the employee. Generally, the employer would specify only the number of annual vacations and the employee can freely choose by himself whenever he wishes to take such an annual vacation at his convenience.

 

Meanwhile, this provision also brings up the question of when will an employee be able to take such an annual leave. That is, the employee will be entitled to take an annual leave once he/she has completed the first year of working, despite a seasonal job or fixed-term written contract. The annual leave will be taken in after the start of the second year. Then, the employee can take an annual leave whenever he wishes without completing the whole second year. Alternatively, an employer may arrange 12 annual vacations in total for the employee to take in the second year of working. The annual vacation of not less than 6 working days is the basic entitlement the employee shall get after completing the first working year. So, if the employee has just completed the first year and takes the annual in the second year, it is deemed as he is using the annual vacations of the first year. In the following years, the employee can take annual vacations whenever he wants before completing the whole year according to the judgment of the Supreme Court no. 3629/2529. For example, an employee starts working on 1 July 2020. So, he will complete the first working year on 30 June 2021, and will receive annual vacation entitlement of not less than 6 working days. When the new calendar year begins on 1 January 2021, the employee shall get another 6 working days, or more, of the annual vacation. In this case, the employee will get the annual vacation for 12 working days in total, but he will be able to take such leaves only after 1 July 2021 which is the due date of first working year completion.

 

Additionally, the last paragraph of Section 30 says, “For the Employee who has not completed one year of service, the Employer may set annual vacations for the Employee on a pro rata basis”. In other words, an employer may arrange the number of annual vacations proportionately based on calculable factors for the employee who has not completed the first working year yet. For instance, the employee who has worked from 1 July 2020 to 31 December 2020 may get 3 annual vacations in the first calendar year. When the next calendar year starts, from 1 January 2021, the employee shall get another 6 annual vacations.  From 2021 onwards, the employee does not have to complete the whole year before taking such annual leaves, and the employer has to arrange the annual vacations of not less than 6 working days.

 

  1. Can an employer and employee agree in advance that the annual vacation be cumulative with that of the following year?

 

If an employee does not take the annual leaves of any year, he can make an agreement with an employer in advance to accumulate or postpone the holidays of that year with that of the following year according to Section 30, paragraph 3. Meanwhile, we recommend an employer to also set up the regulation encouraging employees to use up their annual vacations before a calendar year ends; or, the employee may be allowed to accumulate the annual vacation with that of the following year as long as the total amount of accumulated annual vacations not exceeding 12 working days. This is to ease off the holiday pay calculation of each year, and to prevent the excessive annual leaves to take in a row, which is able to cause business difficulties.

 

  1. Can an employer set up annual leave regulation?

An employer can set up annual leave regulation or make mutual agreement with an employee on leave procedure in order to fix the standard for everyone in the organization. For example, the employee is required to submit a request form for annual leaves 7 days prior to taking leave.

 

  1. Does an employee have to pay for unused annual vacation of an employee?

In the case that an employee does not take the annual leaves, an employer is still obliged to pay wage for the employee as prescribed in Section 64 that “…the Employer shall pay Holiday Pay and Holiday Overtime Pay to the Employee according to the rates prescribed under Section 62 and Section 63 as if the employer is assigned to work on the Holiday.” Section 56 also states “An Employer shall pay Wages to an Employee equivalent to Wages of a Working Day…”.

Even though an employee neglects to take such an annual leave, it is the employer’s duty in accordance with Section 30 to provide them the annual vacations. If an employer fails to arrange the annual vacations or arrange the less amount than that prescribed in the law, he is liable for paying the wage for working on holiday equivalent to that of a working day.

Similar to the case that when an employee is required to work on a holiday, an employer has to pay wages at the rate prescribed in Section 62 and 63. It can be summarized that, when an employer is required to work on a holiday, he shall get paid at the rate that is at least equal to the hourly wage rate of a working day for the employee who is entitled to Wages on Holidays. The employee who is not entitled to Wages on Holidays shall receive not less than 2 times of the hourly wage rate of a working day. Speaking of Section 63, if an employee is required to work overtime on a holiday, the employee shall receive holiday overtime pay at the rate of not less than 3 times of the hourly wage rate of a working day for the number of hours of work done.

 

On the contrary, if an employee is negligent to use the provided annual vacations and voluntarily and comes to work on such holidays without the employer’s requirement. Despite the fact that the employer has already objected to the employee not to work on the holidays. In this circumstance, the employer is deemed already provided the employee the annual vacations in compliance with Section 30. Therefore, the employee is entitled to only wage payment prescribed in Section 56, but not entitled to wage payment in Section 62 as the employer does not require the employee to work on annual vacations. (Consultation of Legal Affair Division, Ror. Ngor. 0504/4211, dated 4 May 2016)

 

By the judgement of the Supreme Court no. 8661/2547, the plaintiff is entitled to an annual vacation of 30 days in total per calendar year. The company’s policy prohibits carrying over or accumulating the annual vacations to the following year. There is no evidence that the defendant, an employer, arranges annual vacations for the plaintiff, an employee, in the year the plaintiff working for the defendant. This means the defendant fails to comply with Section 30 of Labour Protection Act, B.E. 2541 (1998), that the Employer (the defendant) is obliged to fix annual vacations in advance for the Employee (the plaintiff) or as agreed by the Employer and Employee. When the plaintiff does not take the annual leave to which the plaintiff  is entitled, the defendant has to make holiday pay for annual such vacation to the plaintiff at the rate described in Section 64.

 

  1. If an employee willingly resigns, or is terminated by an employer, is an employer required to pay for the employee’s unused annual vacations?

 

This question refers to Section 67 which brings 2 issues to consider as follows,

 

5.1 Where an Employer terminates the employment of an employee upon any condition other than provided in Section 119, the Employer shall pay wages to the employee for unused annual vacations for the year of termination in proportion to a number of annual leaves to which the employee is entitled and accumulative unused annual vacations calculating from the most recent wage rate received upon termination of employment.

 

5.2 In the case that an employee is a party who terminates an employment contract, an employer has to pay for only the unused annual vacations. The “accumulated annual vacations” means the annual leaves to which an employee is entitled, but the employee agrees with an employer to postpone and accumulate the unused annual vacations to that of the following year. If the employee has not taken the annual leaves before resignation or being terminated, the employee is entitled to get the wage for the all accumulated annual vacations regardless he quits willingly, or he is terminated. It is subject to paragraph 2 of  Section 67.

 

The judgment of the Supreme Court no. 7480/2560

According to Section 30 under Labour Protection Act, B. E. 2541, it states that “An Employee who has worked for an uninterrupted period of one year is entitled to annual leave of not less than six working days …”. This means the employee’s annual leave entitlement of the first year will be effective only when completing the first working year. If the employee has not completed the first year, an employer may arrange annual vacations on a pro rata basis in accordance with paragraph 4 of Section 30. In this case, even though the 2nd defendant terminated the plaintiff without the plaintiff’s fault, the plaintiff has not completed the first working year yet. Plus, the 2nd defendant has never made any agreement with the plaintiff providing annual vacations on a pro rata basis. Therefore, the plaintiff has no annual vacation entitlement under Section 30 to claim for wage payment from the 2nd defendant in accordance with Section 67.

 

These are some legal issues concerning annual holidays for better understanding and management of employee’s annual leave. for further information concerning Labour and other laws of Thailand, please find out more articles at https://gvathai.com/news Visit us our Facebook page: GVA Law Office – Thailand

Surinthorn Pamornchokprasop

Sunida Mahapiroon