Relocation of establishment under the Labour Protection Act – Legal requirements and employee rights

Overview

This provision is significant as it seeks to balance the employer’s managerial prerogative to reorganise its business with the protection of employees whose working and living conditions may be materially affected by such relocation. It establishes procedural safeguards, most notably the requirement of advance notice, and provides employees with statutory rights, including the right to refuse relocation under certain circumstances and to receive special severance pay. Compliance with Section 120 is therefore critical to ensuring that the relocation process is conducted lawfully and that potential disputes are minimised.

Key consideration

1. Advance notice requirement

According to Section 120 of the LPA, if the employer relocates an establishment by closing the original establishment and commencing operations at a new location, the employer must provide advance notice to employees.

The notice must:

• be posted in a conspicuous place at the original establishment where employees can clearly see it; and
• remain posted continuous period of at least 30 days before the relocation date.

Example:

If the employer intends to relocate the establishment on 1 May 2026, the notice must be posted no later than 31 March 2026.

The notice must contain clear and sufficient information for the employees to understand:

• which employees will be relocated;
• the new workplace location; and
• the effective date of the relocation.

2. Continuation of employment terms

Once the employer has fully complied with the procedural requirements under Section 120 of the LPA, the employer is not legally required to enter into new employment contracts after the relocation.

Existing employment relationships, including all rights, duties, and obligations, will continue without interruption.

3. Consequences of failing to provide advance notice

If the employer fails to comply with the advance notice requirement, for example by not posting the notice or posting it late, the employer must pay “special severance pay in lieu of advance notice” to any employee who does not wish to work at the new establishment. This amount is equal to the employee’s last 30 days’ wage.

4. Employee’s right to refuse relocation

An employee has the right to refuse relocation if they reasonably believe that the relocation will have a significant affect their own or their family’s normal way of living.

To exercise this right:

• the employee must notify the employer in writing within 30 days from the date the notice was posted.
• if the employer failed to post a notice, the employee must notify the employer within 30 days from the relocation date.

The assessment of whether a significant impact is caused by the relocation must be determined for each employee and their family, not based on the workforce as a whole or on the majority opinion.

Labour court precedents on “significant impact” from relocation

Labour court precedents provide guidance on how authorities assess whether a workplace relocation has a significant impact on an employee’s ordinary way of living. Key considerations include distance, travel time, cost, and whether the employer provides reasonable compensation.

Example 1: No significant impact

Where the relocation distance is not substantially far, and the employer takes reasonable steps to mitigate the impact on employees, the relocation may not be considered to have a significant impact on employees’ ordinary way of living.

For example, if the employer fairly compensates employees for increased travel time and expenses, such as by calculating and covering the additional commuting costs in a reasonable and employee-favourable manner, and the increase in costs remains non-significant (in some precedents, not exceeding 30%), the courts have found that the relocation does not materially affect employees’ way of living.

Example 2: Significant impact

A relocation may be deemed to have a significant impact where employees incur substantially higher commuting burdens. This includes situations where employees are required to travel more than 50 kilometres and spending additional hours per day commuting round-trip.

Case by case assessment

Whether a relocation constitutes a significant impact is determined on a case by case basis, subject to the discretion of the Labour Welfare Committee and, if challenged, the Labour Court.

Effect of employee’s written notice

Once the employee has submitted written notice within the specified period, the employment is deemed terminated on the date the employer relocates the establishment. The employee is entitled to special severance pay from the employer, equal to the rate of severance pay under Section 118 of the LPA. The employer must pay the special severance pay in lieu of advance notice or the special severance pay within 7 days from the termination date.

Consequences of failing to notify the employer

If an employee fails to notify the employer in writing within the 30-day period, the employment is not considered terminated, even if the employee does not report to the new workplace. In this case, the employee is not entitled to special severance pay.

Employer’s right to dispute the employee’s claim

If the employer disagrees with the employee’s reasons in their written notification, the employer has the right to file a petition with the Labour Welfare Committee (the “Committee”) within 30 days of receiving the employee’s written notification.

Committee’s review and orders

If the Committee determines that the employee is entitled to special severance pay in lieu of advance notice and/or special severance pay, they will issue an order to the employer to make payment within 30 days from the date the employer is notified. Failure to comply the Employer may result in criminally liable under Section 144(2) of the LPA.

If the Committee finds that the employee is not entitled to special severance pay, the Committee will notify both parties.

The Committee must conclude its consideration and issue an order within 60 days of receiving the petition and notify both parties within 15 days from the date of the order.

Appeal to the Labour Court

The Committee’s order is final unless either party files an appeal with the Labour Court within 30 days of notification.

If the employer files the appeal, the employer must deposit a security with the court equal to the amount payable under the Committee’s order. The employer may only file the lawsuit after posting this security.

If the employer appeals within the specified period and subsequently complies with the court’s judgment or order, any related criminal proceedings shall be dismissed.

Reference (in Thai)

• The Thai Labour Protection Act B.E. 2541 (1998). Retrieved from the Office of the Council of State.