Employing caution

31-Mar-2020 Intellasia | BangkokPost | 6:02 AM Print This Post

Businesses, from multinational corporations to small-scale startups, are grappling with being in a lockdown as the country fights tooth and nail to contain coronavirus infections on a daily basis.

With the emergency decree taking effect on March 26, Bangkok and several other provinces have already ordered all shopping malls, entertainment and sporting venues to close, while food stalls and restaurants can open only for take-out and delivery.

As the lockdown continues for an unknown period, the recent Bank of Thailand economic forecast is for a contraction of 5.3 percent this year.

In an attempt to shield businesses and consumers from the worst of the impact, the government rolled out a slew of measures amid criticism they may be too little, too late to ease the imminent pain.

Tour agencies have been battered by the outbreak, with cancellations mounting since the end of January when the coronavirus spread to major tourist destinations globally.

Many tourism operators were forced to offer leave without pay during the pandemic the past two months. Layoffs have been avoided for the most part as businesses survive by using profits from previous months, but operators may soon have no choice, said Chotechuang Soorangura, associate managing director of NS Travel and Tours.

“In April, operators will be short on cash flow and real consequences will start from that point,” he said.

For example, his company has fixed wage costs of about 3 million baht per month. Even if executives take no salary, it doesn’t cover the shortfall of revenue, Chotechuang said.

Normally the hospitality business would consider layoffs a last resort, as Thailand annually faces a skilled labour shortage in this field. But this unpredictable event may trigger a lot larger unemployment rolls, he said.

FORCE MAJ euro E

Workers from a wide range of sectors are facing pay cuts as companies scramble to respond to the snowballing Covid-19 crisis and quarantine, but the legality of such cuts remains in question.

One employee of a firm providing design work to hotels, who requested anonymity for this article, said she and her spouse were asked to take a 20 percent pay cut to both their salaries for the next three months. Her spouse works at a separate company in the luxury travel sector.

“In other times we might have both quit, but we like our jobs and we are happy here,” she said. “We both want the companies to get out of this mess and know the loss of money is real. We have seen million-baht projects and million-dollar clients stop, get put on hold, be postponed or have events cancelled.”

Another worker at a tech startup with an office in Bangkok said his office instituted a 30 percent pay cut for management and a mandatory three unpaid leave days per month, effectively a pay cut of over 10%.

“I have worked for startups in the past but never experienced a pay cut,” he said. “Usually staff have just been cut outright when money starts to dry up.”

One teacher at an international school said that while the school is shut down, he will be earning 75 percent pay this month and 50 percent pay in April.

“50 percent won’t even cover my outgoings really, as I have hospital debts to pay,” the teacher said. “Private work is proving difficult too, making it a stressful time.”

A pilot who works for a SET-listed low-cost carrier said his airline required pilots to take leave without pay for five days a month until September.

The measure for pilots should be revised again in June, when the airline expects to resume some international flights, the pilot said.

“I hope people still need to travel and the airline industry will rebound right after the battle against this headwind ends,” he said.

Because of the pandemic, the number of flight hours per month for a pilot dropped to 38 in March from 43 hours in February.

Pilots normally fly 70-80 hours a month under normal circumstances.

Emirates, one of the world’s largest airlines, is encouraging employees to take paid or unpaid leave and plans a temporary reduction of basic salary for employees for three months, ranging from 25 percent to 50%.

According to the International Air Transport Association, aviation supports 4.27 million jobs and contributes 15.5 percent of GDP in Thailand, far more than the 1.42 million jobs in Japan or 1.16 million jobs in the Philippines.

According to Chusert Supasitthumrong, a partner at Tilleke & Gibbins specialising in labour and employment law, in most cases companies are not allowed to directly cut employees’ pay upon facing financial trouble, but he could not comment on specific cases without more details.

Under Thai labour law, when a company must temporarily suspend part or all of its business operations in the face of financial hardship (like the Covid-19 pandemic), it must pay employees 75 percent of usual daily wages during this period. In this situation, employees would not be working as they are paid partial wages.

“If, for instance, a company receives reduced process orders from its customers and needs to produce less, or if restaurants are empty because people aren’t coming in due to the virus, these businesses can cease operations,” Chusert said.

However, in the current lockdown where many businesses have been forced to close by the government, employers would not have to continue to pay employees full or partial wages during this period, as it falls under “force majeure”, a legal concept absolving the employer of fault for the temporary shutdown.

“The situation is very fluid if there is a government lockdown,” Chusert said. “For example, employees at nightclubs and massage parlours where they have to go to the site to work will not be owed pay in this situation.”

In other cases, Thai law adheres to a “no work, no pay” basis, he said, meaning employees subject to a 14-day quarantine are not entitled to pay.

LEAVE WITHOUT PAY

The Covid-19 pandemic is taking a heavy toll on businesses, forcing many of them to enact measures to ease losses during this difficult time.

Some ordered their workers to take leave without pay for an uncertain period.

Suriyong Tungsuwan, a legal expert for labour and employment at law firm Baker & McKenzie, said ordering workers to take unpaid leave is tantamount to changing employment conditions to those that are unfavourable for workers.

“Labour law stipulates that any employers who would like to change employment conditions deemed unfavourable for their employees must receive consent from the workers,” Suriyong said. “Otherwise, the employers’ order would not be legally binding and employees need not comply with it.”

Employees could still come to work and their employers must pay them in line with their time working, he said.

Many employers are trying to explain to their employees the company’s difficult position in the face of the outbreak. Firms may consider reducing work hours for some employees and cutting wages.

“In this situation, employers must talk to their employees to build their understanding, then receive their consent,” Suriyong said.

Tanit Sorat, vice-chair of the Employers’ Confederation of Thai Trade and Industry, said that if an employer or employee is affected by the outbreak of Covid-19, under Articles 33 and 39 of the Social Security Act, where the employer places employees on temporarily leave, the affected employees are to receive compensation of 50 percent of their monthly salaries, or no higher than 15,000 baht.

In this case, employees will receive 7,500 baht for a period of six months as compensation.

The Social Security Act also considers the type of business affected by the Covid-19 outbreak. Businesses that are directly affected by the virus outbreak are covered, such as tourism-related firms and the services sector.

But certain businesses are not covered because they don’t fall directly in the scope of sectors affected, even if the outbreak has affected sales.

For instance, “leave without pay” benefits do not cover businesses where the number of books sold is reduced because of Covid-19, Tanit said. Employees are not insured by the Social Security Act, and there is no law for unpaid leave, he said.

In cases where an employer has to temporarily cease business because of the outbreak, under Section 75 of the Labour Protection Act the company must pay its workers 75 percent of their salary during the cessation of operations.

There are exceptions such as when the employer, the company and the employee agree to the unpaid leave policy, Tanit said.

Still, he said some employees are in a position to sue their employer for unfair employment contracts, as many companies have used indirect methods to force employees to sign contracts, which is illegal.

The term “leave without pay” has not been mentioned in the law, only the terms “to resign” and “forced to resign unfairly”. Employees can file a lawsuit with the Labour Court, and in the past some of the sued companies went into bankruptcy, Tanit said. ‘LIKE WORLD WAR III’

As the head of a company operating a chain of restaurants and cafes, Nadim Xavier Salhani, chief executive of Mudman Plc, the operator of Dunkin’, Au Bon Pain, Greyhound Cafe and Baskin-Robbins, feels it’s his mission to ensure the safety of employees and give them a “second home”.

“We have to communicate with everyone so they understand what is going on,” he said. “It’s very important to make sure they understand. So far we have announced a salary cut for the next 3-6 months, depending on how long the crisis lasts.”

The company has worked with its franchisors, suppliers and landlords, and so far everyone has been very cooperative, Salhani said.

Mudman’s support centre works from home, which saves them transport money, and they are given a WiFi allowance.

“This is a very unusual situation,” he said. “It’s like World War III and many people do not understand how to deal with it. Employees have to adapt and support the company to survive together. There is only one choice and one enemy here.”

In a move to ease the suffering of Thailand’s 3 million informal workers, the government is set to hand them 5,000 baht a month in cash. This is part of a 200 billion-baht stimulus measure approved by the cabinet last Thursday to try and mitigate the impact of the Covid-19 outbreak.

The 5,000-baht handout, expected to begin on April 1, is intended for the 3 million or so temporary employees, contract employees and self-employed individuals who aren’t covered by the social security system.

But the government’s latest relief measures are insufficient to provide relief for the ongoing Covid-19 outbreak, said Nipon Puapongsakorn, a distinguished fellow at the Thailand Development Research Institute.

The government could better restore public confidence by introducing more effective measures to demonstrate it can tackle the contagion, Nipon said.

He urged the state to think about allocating hundreds of billions of baht more to handle the economic impact.

“The government should impose an emergency decree to secure loans worth several hundreds of billions of baht by calling a parliamentary meeting to consult how to tackle this crisis and approve the borrowing proposals,” Nipon said.

Loans should be earmarked largely for public health, formal workers who are in the Social Security Fund and face a layoff or pay cut, and informal workers, not merely the 3 million people targeted by the government.

“The informal or self-employed sector for which the government announced it’s spending 96 billion baht to cover 3 million people is identical to the emergency budget the government planned in advance for fiscal 2020,” said the veteran academic. “This amount is insignificant compared with the massive damage caused by the current crisis. This shows the government remains thoughtless in the way it works in handling this critical situation.”

Ghanyapad Tantipipatpong, chairwoman of the Thai National Shippers’ Council, said industries affected by the Covid-19 outbreak should use the leave-without-pay scheme for their employees. These are largely the tourism, hotel and shopping mall segments, she said.

Use of this scheme could possibly extend into the export sector in the coming period, Ms Ghanyapad said.

“The government’s relief measure via the Social Security Fund, increasing the unemployment benefit for laid-off workers from 50 percent to 80 percent of salary, is insufficient,” she said.

“The benefit rate should be increased to 100 percent during this crisis. This measure should also be extended past its current three months. Furthermore, the government should waive personal income tax this year and return withholding tax paid last year for workers [in the Social Security System]. This will effectively boost their spending power.”

https://www.bangkokpost.com/business/1889140/employing-caution

 


Category: Thailand

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