White Collar Law – Thailand

Every year, employee fraud costs organizations US $4.7 trillion on a global basis, according to the Association of Certified Fraud Examiners Occupational Fraud 2022: A Report to the Nations. Background checks don’t reliably identify candidates with a history of fraud, and external auditing detects fraud only rarely.

The most effective action employers can take to detect fraud is establishing a hotline through which customers and clients can report fraud.

Employers can suspend suspected employees during fraud investigations only if the company work rules and terms of employment give the employer the right to do so. Otherwise, Thai labor law prohibits employers from suspending employees without full pay during investigations.  Companies with 10 or more employees must prepare work rules that address eight mandatory issues, and can include additional matters in the work rules.

Employers that terminate employees suspected of committing fraud are required to pay severance pay and to provide appropriate notice of termination unless they can show the employees’ acts fall within an exception to these legal requirements. Severance pay can be as high as 400 days’ wages, and white-collar notice periods are often between 30 and 90 days.

An employee’s breach of the company work rules is an exception to the foregoing requirements, and permits employers to terminate employees without notice, and without severance pay, if the company’s work rules contain policies governing employee conduct and if the employee’s conduct constitutes a serious breach (or repeated non-serious breach) of the relevant rules.

Employers without work rules that prohibit employee fraud will need to establish that the employee’s conduct falls within a different exception if they wish to avoid paying severance pay on termination; some of these exceptions include:

• Falling short of the faithful discharge of the employee’s duty; however, this does not always eliminate the obligation to pay severance pay – the company can terminate the employee immediately, but may still have to pay severance pay.
• Intentionally committing a criminal offence; however, fraud involving a misuse of influence in violation of a duty owed to the employer (e.g., bribery and conflicts of interest) is not always a criminal offence under Thai law, and this type of fraud accounts for 57% of fraud cases in the Asia Pacific region.   
• Dishonest performance of duty; however, bribery and conflicts of interest could occur in situations that do not involve “dishonesty,” as currently interpreted by Thai courts.
• Willfully causing damage, or negligently causing serious damage to the employer; however, bribery and conflicts of interest won’t always result in measurable damage to the company, and intent to cause damage to the company is difficult to prove, in practice.

To combat the prevalence of bribery and conflicts of interest in the Asia Pacific, and to address the challenges inherent in establishing whether an employer can terminate an employee without paying severance pay, employers should review their work rules and ensure the rules regulate bribery and conflicts of interest clearly and effectively. 

For more details, please click the link below:  

Occupational Fraud – the most costly form of financial crime in the world

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