Newest Judgement and Ruling : (Labour and Taxation issue) Labour issues: Wage reduction agreement and severance pay, Authority to manage personnel management as appropriate or necessary: transfer employees to work in Cambodia is it appropriate ? Non-renewal of a fixed-term employment contract constitutes a termination that requires severance pay., The employee refused to sign the warning letter, Effect of non-compete agreements with the employer after termination of employment. , Use the excuse of willfully causing damage to the employer as the reason for termination.
Wage reduction agreement and severance pay
(Court of Appeal for Specialized Cases, Judgment No. 487/66).
The plaintiff and the defendant made an agreement attach to the employment contract, agree to reduce the salary by 50%, effective until the employment contract resumed. This implies that the plaintiff and defendant intended to temporarily change the salary rate until the original contract was reinstated. Even though the plaintiff agrees to the reduce amount, it is deemed that the plaintiff only temporarily agree to the term. therefore, the salary as per the original contract must be used, making it the final salary rate to be used as the basis for calculating severance pay and compensation in advance of notice
Authority to manage personnel management as appropriate or necessary: transfer employees to work in Cambodia is it appropriate ?
(Court of Appeal for specialized cases, case no. 46/63)
The employee has to manage personnel management as appropriate and necessary. Transfer employees to work in Cambodia is not appropriate. Since the agreement stated that the employee was hired to work as an engineer in Bang Pu project, and neither the agreement nor work regulation mention that the defendant can transfer the plaintiff to work abroad. To work in Cambodia considered to be too much burden for the plaintiff and his family. Even though the plaintiff got promote and increased in salary and benefit, the transferring is unlawful. Therefore, the plaintiff’s refusal to go is not considerate a serious offense against company regulation or the employer’s order.
Non-renewal of a fixed-term employment contract constitutes a termination that requires severance pay.
(Supreme Court Judgment No. 6767-6769/42)
Even though the employer made a employment contracts with a fixed term agreement and terminated the employment according to the term period. If the contract stipulates a condition allowing the employer and the employee to renegotiate before the contract ends, such a condition implies that the plaintiff and the defendant intended to continue the employment. The employment shall be deemed as indefinite period and upon termination of the contract, the defendant shall pay severance pay for the plaintiff.
The employee refused to sign the warning letter
(Supreme Court Judgment No. 6251/34)
According to the notification of the Ministry of Interior regarding Labour protection, it does not stipulate that when an employer issues a warning letter to an employee, the employer must notify the employee by having the employee sign to acknowledge it or inform the employee through any specific method. Therefore, when the defendant issued a warning letter and informed the plaintiff, even if the plaintiff did not sign to acknowledge the warning letter, it is considered that the plaintiff has been notified, and the warning letter is effective.
Effect of non-compete agreements with the employer after termination of employment.
(Judgement of The Court of Appeal for Specialized Cases No. 2548/2565)
The clause that prohibits the defendant from conducting a business or working in any other company that competes commercially with the plaintiff for 3 years since the termination date. It cause burden to the defendant beyond what could reasonably be expected. It is an agreement that unfairly advantages the employer over the employee. Therefore, the Labour court shall has authority to enforce it to the extent that fair and reasonable for the case, according to section 5 of Unfair Contract Terms Act B.E. 2540 and section 14/1 of the Labour Protection Act B.E. 2541. After considerate all lawful interests of both the plaintiff and the defendant, the Labour Court has ordered that the enforceable period shall be only 1 year from the termination date of the defendant’s employment.
From the fact that only 8 days after the termination date which was still in the prohibit period. the defendant engaged in business or worked in another establishment that competes commercially with the plaintiff, this constitutes a breach of employment contract. Therefore, the defendant is liable to compensate the plaintiff for damages.
Use the excuse of willfully causing damage to the employer as the reason for termination.
(Judgement of The Court of Appeal for Specialized Cases No. 4047/2546)
When the employee willfully causing damage to the employer whether the damage occurred as intended or not, it’s considered as the conditions according to section 119 (2) of The Labour protection Act B.E. 2541.
The 7 plaintiffs gathered at the defendant’s company without lawful notification. Additionally, they did not go to work from 14th June B.E. 2543 to 17th June B.E. 2543. The neglect of their duty by the 7 plaintiffs had a negative effect on the defendant’s business resulting in the loss of income for the defendant. In conclusion, it is deemed that the 7 plaintiffs willfully cause damage to the defendant.
Business vehicle welfare payments
(Supreme court case No. 8211/2550)
The defendant provided a company car to the employee who worked as the Region Manager. Later, the defendant canceled the company car after it had been in use for over 5 years, as per company policy. After that, the defendant paid the plaintiff a monthly rate of 20,000 baht starting from May 30, B.E. 2545, which was after retrieving the company car. This payment was intended for the plaintiff to purchase or rent a replacement vehicle instead of the company car. The defendant will only provide company cars to employees in department manager level and above.
Question
- Is the provision of “Positional Car Allowance” by the employer considered as wages under the Labor Protection Act? If so, what tax provision would apply to employee who receive such positional car allowances?
- Is the positional car received by employees exempt from personal income tax?
Answer
- The positional car allowance provided by the employer to employees in such positions, when the employer recalls the positional car and instead pays a monthly salary of 20,000 baht to the employees to purchase or lease a car for replacement, constitutes a payment for welfare benefit. Even though this payment is a fixed amount each month, it is not considered compensation that should be calculated.
- Such money is assessed income under Section 40(1). Employees must calculate and deduct income tax accordingly.