Under the Labor Protection Act (Act), wages refer to the remuneration agreed upon between an employer and an employee under an employment contract. This compensation is paid for regular working hours on an hourly, daily, weekly, or monthly basis, or calculated based on the employee’s output during regular working hours. Wages also include payments made by the employer to the employee on public holidays and leave days during which the Employee does not work but is entitled to the money under the Act. However, it is important to note that allowances, bonuses, or any other forms of remuneration provided to employees as incentives or motivation for improved performance and company profits are not included. If such remunerations are paid on a regular basis, these will be considered part of the employee’s salary for purposes of calculating severance payments. On a related note, employee benefits must be included in the company policy to qualify for corporate tax deductions.
Employees are entitled to receive wages not lower than the minimum wage. If no specific minimum wage is set for a particular area, the basic minimum wage will apply as the minimum wage for that area. Each province has different rates. The newest regulation on the minimum wage takes effect from January 1, 2025. Notably, four-star hotels with at least 50 employees in the following 10 designated areas must pay a minimum wage of 400 THB per day:
- Bangkok (Pathumwan and Watthana districts only)
- Krabi (Ao Nang subdistrict only)
- Chonburi (Pattaya City only)
- Chiang Mai (Chiang Mai Municipality only)
- Prachuap Khiri Khan (Hua Hin Municipality only)
- Phang Nga (Khok Kloi Municipality only)
- Phuket (entire province)
- Rayong (Phe subdistrict only)
- Songkhla (Hat Yai Municipality only)
- Surat Thani (Ko Samui Municipality only.
If the number of employees is below 50, the minimum wage will follow the officially announced rate for each province.
The wage increase primarily impacts small and medium-sized enterprises (SMEs), leading to higher labor costs. Some small businesses may shut down, and workers might shift from small enterprises to larger companies, as the larger companies have already covered the minimum wages for their corporate employees.
However, it is important to note that the increase in minimum wages will be beneficial to local employees who do not have much bargaining power against companies. This will help them lead a more sustainable life amidst increasing inflation.
