Various parts of the private sector, including the automobile, electronic and textile industries have been badly affected by the current financial crisis. As a result, thousands of workers have been laid off as these industries struggle for their survival. As these laid off employees are attempting to cope with the unanticipated loss of income and the increasing cost of living while they are searching for new employment, the role of the Social Security Fund (the “Fund”) has become more vital than ever in providing money to assist these people in these troubled times. However, the recent experience shows how the Fund overly places emphasis on protection of less fortunate employees while completely ignoring another type of individuals; directors. This has left directors, who may ultimately be in no better position than other employees, with no protection or assistance from the Fund at all.
The Fund was set up by the Social Security Act B.E. 2533 to provide monetary support to assist its members in case of harm or illness, child delivery, disability, death, child welfare, old age, or unemployment. It is financially supported by monthly contributions from its members, the members’ employers and the government. There are two types of individuals who are eligible to become Fund securers (or members): (1) “employees” between the ages of 15 and 60 (who automatically become members of the Fund); and (2) “non-employees” who submit requests for membership and make annual contributions. However, these non-employees are entitled to substantially less monetary support than employees and are not entitled to assistance in case of unemployment.
It has recently been the Fund’s view that directors of companies shall never be regarded as employee members of the Fund since directors are not considered “employees”. Therefore, directors can become members of the Fund only as “non-employee” members by way of submitting a request and making annual contributions. This means that directors have to bear extra burdens in order to receive less government assistance in their times of need than employees. Even worse, if directors become unemployed, possibly as a result of their business closing down, they will not receive any financial assistance from the Fund, even though they are members.
Some argue that one of the objectives of the Social Security Act is to provide a source of fair and equal financial support to people during their times of hardship. In order to achieve this, a broader and more practical view of the definition of employee is needed to maintain a fair and peaceful society, especially in these troubled economic times. They point to the fact that in many cases, the mere fact that a person is a director of a company should not preclude the person from being considered an employee. They cite, for example, the common case where a local employee is appointed as a director by the company’s headquarters to help facilitate the local company’s performance of its day-to-day tasks. This appointment does not mean that this person is granted absolute authority to run the company. Rather, the person only has signing power, while all decision-making powers still reside at headquarters. Accordingly, this person should not be barred from becoming an employee member of the Fund based on their director status alone. Therefore, in assessing whether individual directors are qualified to become employee members, it is recommended that the Fund look beyond their “director” title and consider whether they:
- are under an employment contract with the company;
- are paid for their work for the company;
- must comply with the company’s work rules and regulations including normal work hours and leave policies, and/or
- have a supervisor to whom they must report.
To help demonstrate that a person is in fact an employee and should be considered an employee member, all information in relation to the person’s job description above should be submitted to the Fund.
This article is one of several that appear in
Asia Pacific Law@Work, first edition, 2009.