Minimum wage revision, social insurance premium reduction measures
Minimum wage revisions came into force in October 2022. A temporary reduction in social insurance contributions has also been notified. Companies that have not yet taken action are advised to do so as soon as possible.
Summary of minimum wage revision and adjustments
On the 13th of September 2022, the Cabinet resolved to approve an increase in the minimum wage throughout Thailand with effect from 1 October 2022. The said increase is in accordance with a resolution of the Ministry of Labour Wage Board meeting held in August of the same year to assist workers from the economic impact of rising prices and coronavirus pandemic.
The minimum wage varies according to GDP and prices in each province and the increases are as follows.
| Chonburi, Rayong and Phuket provinces | 354 baht per day |
|---|---|
| Bangkok Metropolitan Administration, Nonthaburi Province, Pathum Thani Province, Nakhon Pathom Province, Samut Prakan Province, Samut Sakhon Province | 353 baht per day |
| Chachoengsao Province | 345 baht per day |
| Ayutthaya Province | 343 baht per day |
| Krabi, Khon Kaen, Chiang Mai, Trat, Nakhon Ratchasima, Prachinburi, Phang Nga, Lopburi, Songkhla, Saraburi, Suphanburi, Surat Thani, Nong Khai, Ubon Ratchathani provinces | 340 baht per day |
| Kalasin, Chanthaburi, Nakhon Nayok, Mukdahan, Sakon Nakhon, Samut Songkhram provinces | 338 baht per day |
| Kanchanaburi, Chinat, Nakhon Phanom, Nakhon Sawan, Buncarn, Buriram, Prachuap Kilikan, Phayao, Patthalung, Phetchaburi, Pisanulok, Phetchaboon, Yasothong, Loeet, Looi Sakheu, Surin, An Thong, Utharadit provinces | 335 baht per day |
| Kamphaengphet, Chaiyaphum, Chumporn, Chiang Rai, Trang, Thak, Nakhon Si Thammarat, Pichit, Phrae, Mahasarakham, Mae Hong Son, Ranong, Ratchaburi, Lampang, Si Saket, Satun Sukhothai, Nong Bua Lamphu, Amnat Charoeng and Uthai Thani provinces | 332 baht per day |
| Narathiwat, Naan, Pattani, Yala and Udon Thani provinces | 328 baht per day |
One day in the minimum wage means eight hours of normal working hours or seven hours in the case of work that poses a risk to health and safety.
Violation of the minimum wage
If, after the minimum wage has been published in the Official Gazette, it is discovered during an investigation by the labour standards inspector and the employer is warned, but fails to comply, the employer is liable to imprisonment for up to six months or a fine of up to 100,000 baht, or both, in accordance with Article 144 and Article 90(1) of the Labour Protection Act 2541 (1998). or a fine of up to 100,000 baht, or both. Practically, if an employer receives a written warning from a labour standards inspector to comply with the law and regulations on increasing the minimum wage and the employer does not comply, the labour standards inspector may report the employer’s arrest to the police. However, if the employer and the worker agree to postpone the minimum wage increase to another month but to pay the increase back to October when the minimum wage increase applies, the employer can do so without incurring penalties.
For wages that fall short of the minimum wage, workers can appeal to either a labour inspector or a labour court. It should be noted that Article 8, paragraph 2 of the Law on the Establishment of the Labour Court stipulates that if there is a provision granting the right to appeal to the officer in charge under the Labour Protection Act or other laws, the appeal can only be filed with the labour court after such appeal or other procedures have been completed, according to Supreme Court Case No 5601-2564/2563. According to Supreme Court Case No. 5601-2564/2563, workers are granted the right to selectively sue either the labour inspector or the labour court. Therefore, please note that you may suddenly receive a complaint from the labour court.
5 tactics for minimum wage adjustments
Here are five tactics to help employers smoothly adjust workers’ wages when the minimum wage is increased.
- Equal increases for every employee (22 baht increase at once): this method has the advantage of giving employers clear control over wages and also motivates employees to work.
- Adjustment in proportion to education (22 baht increase for high school graduates and below, 24 baht increase for vocational training school and junior college graduates, 27 baht increase for university graduates): this method is easy to understand and clear, as well as establishing standards for wage management in the organisation.
- Adjustment in proportion to length of service: for instance, 22 THB increase for one year, 23 THB increase for two years, etc. This will motivate employees with longer service periods to work and establish an incentive system for employees.
- Adjusted proportionally to work performance: for instance, 25 baht increase for A, 23 baht increase for B, 21 baht increase for C, 18 baht increase for D, 15 baht increase for E, 12 baht increase for F, etc. This method is fair to the organisation, motivates employees with good work performance, and establishes standards for wage management in the organisation.
Please note that it is illegal to reduce working hours in order to pay below the minimum wage. This is because, according to the Wage Board Circular, the ‘day’ on which the minimum wage is based means one working day during normal working hours, so even if the working day is less than eight hours, the minimum wage must still be paid for the whole day.
Measures to reduce social insurance contributions
The Official Gazette website has published a ministerial decree providing for a reduction in social insurance contributions as of 30 September 2022. The measure is to reduce the employer and social insurance insured person’s contribution to social insurance premiums from 5% to 3% for wages from October 2022 to December 2022, in order to contribute to strengthening the financial mobility of employers and workers affected by the increase in the minimum wage and the coronavirus pandemic throughout Thailand. The social insurance contributions are as follows.
| 2022 | Insured person contribution rate | Insured person maximum contribution | Employer contribution rate | Employer maximum contribution |
|---|---|---|---|---|
| Normal amount | 5% | ฿750 | 5% | ฿750 |
| January | 5% | ฿750 | 5% | ฿750 |
| February | 5% | ฿750 | 5% | ฿750 |
| March | 5% | ฿750 | 5% | ฿750 |
| April | 5% | ฿750 | 5% | ฿750 |
| May | 1% | ฿150 | 1% | ฿150 |
| June | 1% | ฿150 | 1% | ฿150 |
| July | 1% | ฿150 | 1% | ฿150 |
| August | 5% | ฿750 | 5% | ฿750 |
| September | 5% | ฿750 | 5% | ฿750 |
| October | 3% | ฿450 | 3% | ฿450 |
| November | 3% | ฿450 | 3% | ฿450 |
| December | 3% | ฿450 | 3% | ฿450 |
| Total | ฿6,300 | ฿6,300 |
This reduction in social insurance contributions reduces the total amount payable during the year and therefore the maximum deduction for social insurance contributions is reduced to ฿6,300 in the individual income tax return for the year 2022. (Normally 750 x 12 = 9,000 baht.)