Asia-Pacific employment law bulletin 2025

Thailand

Unincorporated joint venture’s liability for unpaid wages of outsourced workers in Thailand

Outsourcing labour through labour subcontractors remains a common employment practice in Thailand, particularly in industrial sectors reliant on manual labour. This employment model offers businesses a flexible and cost-effective solution to meet the demands of large-scale operations. Furthermore, it enables companies to access a readily available workforce while reducing the administrative complexities associated with direct employment. However, the multiple layers of subcontracting in large-scale projects may create issues regarding responsibility for wages and other labour protections, particularly when workers are not paid by the subcontractors by whom they are employed.

Legal framework and employer’s liability

Under Section 11/1 of the Labour Protection Act, a company that  obtains workers through outsourcing or subcontracting arrangements with a labour subcontractor may be deemed the ’employer’ of the workers provided by the labour subcontractor, if those workers perform work related to the manufacturing process or business operations of that company. This applies regardless of whether the labour subcontractor is the supervisor of or takes responsibility for paying the wages of the workers it provides to the company.

The key factors that determine whether the provisions of Section 11/1 apply are as follows:

• Labour subcontractors: the workers must be hired through a party or a labour subcontractor, which does not engage in ‘the business of employment services’. This provision excludes entities licensed by the Department of Employment (DOE) to operate a business under the Employment Arrangement and Jobseeker Protection Act B.E. 2528 (1985) (Employment Arrangement Act). As of 31 October 2024, there are approximately 348 entities licensed by the DOE under the Employment Arrangement Act.
• Work performed: the outsourced workers must perform work in ’any part of manufacturing process or business operation under the company’s responsibility’. This does not extend to workers performing tasks such as driving, security, or housekeeping, which are not related to the company’s core business operations.

Where these factors are met, the company obtaining workers from a labour subcontractor that is not licensed for this purpose by the DOE will be deemed to be the employer, regardless of the labour subcontractors’ obligations under the subcontracting agreement with the company and the direct employment relationship between the labour subcontractor and the workers it provides to the company.

Impact of the structure of the primary contractor

Where the primary contractor is an unincorporated joint venture or a consortium that does not itself have the status of a separate legal person, each member of the unincorporated joint venture or consortium will be jointly and severally liable for all obligations and liabilities of the unincorporated joint venture or consortium, including the responsibility for the unpaid wages of the outsourced workers.

Liability of authorised directors and representatives of the members

In addition to the joint and several liability of the members, the liability for unpaid wages extends to the authorised directors or representatives of each of the members of the unincorporated joint venture or consortium. These individuals are also considered to be employers under Section 5 of the Labour Protection Act. The term ‘employer’ under the Labour Protection Act also includes persons authorised to act on behalf of each of the legal persons comprising the unincorporated joint venture or consortium.

In conclusion, the legal principle that the main contractor or company would be considered as an employer pursuant to Section 11/1 of the Labour Protection Act and, as such, ultimately responsible for the wages of workers outsourced from labour subcontractors has significant implications for the main contractor in large-scale construction projects. While labour subcontractors may be the primary employers of these workers, the main contractor or company must ensure that rights of outsourced and subcontracted workers are respected and that they are paid fairly for their contributions to the project and in accordance with the Labour Protection Act.

Contributors: Stephen John Bennett, Thanyaporn Achariyawong, and Richard Savage - Hunton Andrews Kurth