Employee Welfare under the FBA

Keywords: Mazars, Thailand, Legal , DBD, Welfare Loans, Foreign Business Act

3 January 2014

Facts

A foreign-owned company registered as a limited company in Thailand was appointed by the group to arrange welfare loans to the employees of the group companies. These welfare loans are clearly specified in the work regulations and announced to the employees.

The company has set the conditions on borrowing that:

• the lending amount should not exceed 150% of salary;
• an emergency loan will be free of interest; and
• normal interest rates do not exceed 3%.

The company consulted with the Department for Business Development (“DBD”) whether such lending falls under a restricted business (“Service”) under the List attached to the Foreign Business Act B.E. 2542.

Ruling

As the main business of the company is not lending money nor supporting the group companies, the welfare loan to be provided for the employees is not deemed to be for commercial or profit seeking reasons. Therefore, it is deemed that such lending would not cause a negative impact to Thai companies operating in this business. Further, as such welfare is clearly stipulated in the work regulations and clearly announced to the employees, this would constitute sufficient evidence to convince the DBD when a company inspection occurs.

Accordingly, the company can arrange welfare loans to employees without obtaining a license to operate the business according to the Foreign Business Act B.E. 2542.