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Considerations in Increasing the Minimum Wage Rate

Considerations in Increasing the Minimum Wage Rate

In determining the minimum wage that employers are obligated to pay employees, reference must be made to the Labour Protection Act B.E. 2541 (1998) as amended B.E. 2551 (2008) (the “Act”). As stated in the Act, the “Remuneration Committee” is the body with the power to determine the minimum wage rate.

Remuneration Committee

According to Section 78 of the Act, members of the Remuneration Committee who are appointed by the Cabinet shall consist of:

  1. the Permanent Secretary of the Ministry of Labour as Chairman;
  2. four representatives of the government;
  3. five representatives of employers; and
  4. five representatives of employees.

Additionally, there must also be an official from the Ministry of Labour appointed as Secretary by the Minister of Labour and Social Welfare. The criteria and procedures in selecting representatives of employers and employees must be in accordance to the regulations set out by the Minister. The relevant ministerial regulations in this case is the Ministry of Labour and Social Welfare Regulations on the Criteria and Procedures in Selecting Representatives of Employers and Employees for the Remuneration Committee as Required by the Labour Protection Act B.E. 2541 (1998).

Powers of the Remuneration Committee

The Remuneration Committee has the power to set the minimum wage rate. In determining the minimum wage rate, the Remuneration Committee must investigate and consider other relevant facts including the actual wage rates employees receive, the cost of living, the inflation rate, the standard of living, prices of goods and services, the productivity improvement, the gross domestic product and the current state of the domestic economy and society. The Remuneration Committee may consider setting the minimum wage for any specific business, work or profession, to any extent and for any specific area.

Remuneration Committee Meetings

In each Remuneration Committee meeting at least half of the Remuneration Committee directors, and at least one director from the representatives of the employers and of the employees must be present to constitute a quorum. However, in a meeting where the determination of the minimum wage rate is being considered, the law requires at least two-thirds of the directors and at least two directors from the representatives of the employers and of the employees to be present to constitute a quorum.

The determination of the minimum wage rate in such meeting requires at least two-thirds of the votes of the attending directors.

If in the meeting where the determination of the minimum wage rate or the determination of wage according to skill standards is being considered and there is an insufficient number of directors attending to constitute a quorum, another meeting must be held within fifteen days from the original date of the meeting. Even if there are no representative directors of the employers or of the employees attending the second meeting but at least two-thirds of the directors are attending, it shall be deemed that a quorum is constituted. The required vote at such meeting shall be the vote of at least two-thirds of the directors attending.

In the event that all directors attend the meeting and the change in the minimum wage rate – a matter which requires the directors to vote – is being considered, the Chairman would usually refrain from voting with the effect that even if the representatives of employers do not agree with the increase of the minimum wage rate when all the representatives of the employees and the representatives of the government are in agreement, the required vote of two-thirds of the directors will not be reached and the increase of the minimum wage cannot be affected.

However, if the Chairman of the meeting is in favor of the increase of the minimum wage and casts a vote, in such event, even if the representatives of the employers do not agree with the increase of the minimum wage rate when all the representatives of the employees and the representatives of the government are in agreement, the increase of the minimum wage can be affected because the required vote of two-thirds of the attending directors has been reached. In practice, the directors representing the three groups usually negotiate to gain approval of the increase of minimum wage from all directors.

Enforceability of the Notice

The minimum wage rate that the Remuneration Committee has determined is not immediately enforceable. The proposal of the minimum wage rate must be submitted to the Cabinet for the Cabinet to issue a Notice in the Government Gazette.

After the Notice is published determining the minimum wage rate, the minimum wage rate will be enforceable to all employers and employees equally. Moreover, the law prohibits any employment to be below the minimum wage rate. Employers must post the Notice in an open area for the employee’s information at the employee’s workplace for the entire duration the Notice is enforceable.

By Rawat Chomsri, Partner and Natchar Leedae, Lawyer © October 2011
Khun Rawat can be reached at rawat@siampremier.co.th
Khun Natchar can be reached at natchar@siampremier.co.th