Careful Selection For An Outsource Company

Under the current economic climate employers want to be really selective in hiring new people and current employees may have to take onboard more responsibilities. For the kind of work constituting a part of the goods manufacturing process or the rendering of services, employers prefer to outsource the performance of these works to an external company.

This begs the question: Are the employees of this external company ('Outsource Company') entitled to the same rights and benefits as the employees of the employer ('Employer')? If the answer is Yes! this would mean that the Employer is exposed to the risk of been claimed by the employees of the Outsource Company, if these employees are not provided with the same rights and benefits as the employees of the Employer.

For example: The Employer is a company that manufactures and sells sporting clothes. The Employer needs more people to help manufacture more sporting clothes so it outsourced some of its manufacturing work to the Outsource Company. The employees of the Outsource Company help to manufacture the sporting clothes of the Employer and they worked overtime during the manufacturing process.

The employees of the Outsource Company did not receive any overtime pay for their overtime work performed. However, the employees of the Employer received overtime pay equivalent to twice their normal wage. The employees of the Outsource Company then claim the Employer for their overtime pay.

The Employer may have to pay the same overtime pay to the employees of the Outsource Company as well. This is because the work performed by the Outsource Company's employees are work that "is part of the production process or business under the responsibility of" the Employer. Note that this is regardless of whether the Employer supervises the performance of the work or is responsible for payment of wages to the Outsource Company's employees. These are all expressly provided by the new Paragraph 1 of Section 11/1 of the Labour Protection Act B.E. 2541 (1998).

Tip

Given the provision of the new Paragraph 1 of Section 11/1, a company seeking to outsource its work should investigate and select an outsource company that can adhere to the rights and benefits of employees as provided by the labour law. Otherwise, the company may end up paying damages to employees of another company.

Written by David Tan. David is a Lecturer of Business Law at Asian University and author of the book "A Primer of Thai Business Law", available online at www.chulabook.com. In Bangkok the book is available at all Kinokuniya and Asiabooks bookstores. Any questions or comments to David should be sent to blas.inter at yahoo.com

David Tan Articles:

Does 90-year Lease Exist? - David Tan is a Lecturer of Business Law at Asian University. He has kindly provided us with a series of legal articles looking at property and employment law in Thailand. We start by clearing up the 90-year lease issue.

Foreign Ownership of Land? - David Tan continues his series of legal rights articles with an enlightening look at the thorny issue of foreigners owning land in Thailand.

Buying a Condo in Thailand - How to proceed with due diligence when buying a condo in Thailand.

Escrow Agents in Thailand - How to use escrow agents in Thailand when purchasing a property.

Property Purchase Deposits - If you pay a deposit or reservation fee to a property developer, does that mean you have a sale contract?

Lifetime Land Lease? - Is it possible for a foreigner to lease a plot of land for their own lifetime?

Employee Failing Probation - David Tan's series of legal articles move on to employment law. He starts with a look at the requirements for terminating employees who are on a probationary period.

Fixed Employment Contracts - Fixed period employment contracts are a technique employers can use to avoid having to pay severance and provide prior notice of employment termination to employees.

Sacking an Employee - What are the legal implications for an employer to sack an employee in Thailand?

Selecting Outsource Company - If you outsource in Thailand, what rights do the outsource company's employees have from your company?

Contract Protection for Buyers of Condos - How can you be sure your new condo will turn out like the pictures in the glossy brochure?