Thailand Work Stoppage Case: Key Legal Lessons for Employers
Updated: Feb 27
What Happened
Following the ongoing labour dispute over bonuses, wage increases and long-service since 5 September 2025, Daikin Industries (Thailand) (“Employer” or “Company”) and its labour union Daikin Amata Rakseri Labour Union (“Union”) has failed to reach an agreement on annual bonuses and other benefits. This led the Company to declare a lawful lockout (a temporary work stoppage, not a layoff as innitially misunderstood), affecting approximately 1,500 unionized workers from 6 December 2025. After over 12-hour negotiation mediated by officials from the Department of Labour Protection and Welfare, both parties reached a resolution, and normal operation resumed on 9 December 2025.
What Triggered the Dispute
The dispute centered around several key issues:
2.1 Bonus and Salary Increase Proposals
The Employer’s initial proposal of five months’ salary + 12,000 THB and a 2% wage increase was rejected by the Union.
The Union argued the proposal was insufficient given the Company’s strong financial performance and high liquidity.
Moreover, employees had received seven months’ salary + 21,000 THB and a 4.5% salary increase the previous year, leading them to expect an improved offer of eight months’ salary + 28,000 THB and a 6% raise for 2025.
The Employer later revised its offer to six months’ salary + 12,000 THB and a 3% salary increase, and the Union responded with a demand of seven months’ salary + 30,000 THB and no less than a 4.5% raise.
The Employer emphasized the need to maintain cash reserves due to economic uncertainties and increasing competition in the air-conditioning market.
Conversely, the Union argued that the rising living costs were outpacing many employees’ wages.
2.2 Long-Service Reward Dispute
The Employer sought to discontinue its long-standing “3-baht of gold” reward for employees with 10 years of excellent service, replacing it with a fixed cash payment of 40,000 THB due to the rising and fluctuating gold prices that make budgeting difficult. The Union viewed this as a breach of prior commitments.
Under the previous policy agreed (included in each employment contract and company regulations), employees with excellent work record (no absence, no leave except statutory leave, and no tardiness) received the following benefits:
After 6 months: 500 THB
Year 1: 1,000 THB
Year 2: 2,000 THB
Year 3: 3,000 THB
Year 4: 4,000 THB
Year 5: 5,000 THB + 1 baht-weight of gold
Year 6: 6,000 THB + 1 baht + 1 salung of gold
Year 7: 7,000 THB + 1 baht + 2 salung of gold
Year 8: 8,000 THB + 1 baht + 3 salung of gold
Year 9: 9,000 THB + 2 baht-weight of gold
Year 10: 10,000 THB + 3 baht-weight of gold
In the end, the Employer and Union reached a one-year settlement:
Bonus: seven months’ salary + 15,000 THB
Wage increase: 3.0% for the following year
Long-service reward: gold gift replaced with a 50,000 THB cash reward
Shift-allowance: increased from 150 THB to 160 THB per day
Holidays: nine days for both New Year and Thai New Year festivals
Legal Framework: What Thai Law Allows and What’s at Stake
3.1 Settling Labour Disputes
Under the Labour Relations Act B.E. 2518 (1975) (“LRA”), when employer-union negotiations fail, an employer may lawfully implement a lockout if proper procedures are followed. During alockout, the employer is not required to pay wages, and the action does not constitute termination or unfair dismissal.
Employees, likewise, may lawfully conduct a “strike” as a last resort to settle disputes. Both lockouts and strikes are legally recognized industrial tools used to exert economic pressure during deadlocked negotiations.
3.2 Procedural Requirements
Under Section 34 of the LRA, both lockouts and strikes are prohibited unless:
demands have been submitted to the other party under Section 13;
the dispute has reached the stage of ‘failure to reach an agreement’ under Section 22; and
the required 24-hour advance written notice has been given to the conciliation officer and the other party.
Under Section 2, a labour dispute arises when no negotiation between the two parties occurs within 3 days of receiving the demand or when the negotiation cannot be concluded. The party submitting the demand must notify the conciliation officer within 24 hours. The conciliation officer must then mediate negotiations within five days. If no settlement is reached, the dispute becomes an unsettled dispute under Section 22.
In addition to using lockout/strike mechanisms or resolving the dispute themselves, both parties may jointly agree to appoint one or more arbitrators to issue an award under Section 26.
3.3 Special Rules for Certain Industries
For undertakings under Section 23 (such as those in the railway, port, telecommunication, energy, electricity, water works, oil, or medical services), or where Section 25 or Section 36 applies, the dispute must be referred to the Labor Relations Committee for decision. If the Committee’s decision is appealed, the Minister’s decision is final. During the Covid-19 pandemic, the Minister also prohibited strikes and lockout, requiring disputes to be referred to the Labour Relations Committee instead.
3.4 Clarifying Misinterpretations in the Media
Some news outlets incorrectly reported that Section 35 (3) automatically allows employers to hire substitute workers during a lockout. In fact, Section 35(3) empowers the Minister of Labour to intervene in a strike or lockout only when national security, the economy or public order are threatened by authorizing other persons to temporarily perform the work.
Key Legal & Practical Takeaways
4.1 For Employers
Review all employment contracts and long-standing benefits before restructuring them. Engage with employees and unions early, negotiate in good faith, and seek union consent.
Changes to established benefits such as shifting from gold gifts to cash should be legally assessed and handled carefully, as they can trigger serious trust and morale issues. If a benefit is included in individual employment contracts, individual settlements may be legally required.
In risk management, employers (including acquiring companies) must account for legacy obligations, such as non-monetary long-service rewards, wage and bonus expectations tied to profitability, and union reaction if benefits are unilaterally altered.
4.2 For Employees and Unions
When challenging wage or benefit adjustments, prepare clear documentation of benefit promises, past practice and contractual commitments. Public perception may favor the employer if demands lack documented reasoning.
Bonus and benefit expectations should be realistic and aligned with the company’s actual financial performance since bonuses are not legally mandatory.
Be prepared for the possibility of a lawful work stoppage since both strikes and lockouts can be legally valid.
Use formal negotiation channels, which lead to enforceable collective agreements governing wages, conditions and benefits.
Consider alternative proposals that reflect financial realities without compromising contractual obligations.
Seek legal advice, especially where long-service incentive changes may conflict contract terms.
Disclaimer & Contact
This article is provided for general information purposes only and does not constitute legal advice. While I strive to keep my legal analysis accurate and practical, changes in law or other circumstances may affect its application. For assistance in resolving a particular employer or labour union matter or in drafting and reviewing employment contracts, please contact me.
What to Expect When You Contact Me
I conduct a quick, no-obligation initial review of your matter.
I confirm which area of law it relates to and what options may be available.
If you wish to proceed, we will mutually agree on the scope of work before any professional fees apply.
📩 Contact: osa.chaichit@gmail.com
Osaris Chaichit
Attorney-at-Law (Thailand)
Notarial Services Attorney
Corporate & M&A Advisory
