Cutting An Employee's Salary

[Galong]

One of my Thai employees is acting up something aweful and it all started happening when she demanded a raise and I didn't give it to her.

Now she's sending me smart-aleck remarks in emails and on Messenger and her performance has dropped off dramatically. She's making mistakes, whether on purpose or not I don't know, and it's starting to affect my business.

She doesn't have an employment contract, but has been with me for five years. I'm thinking about hiring someone to replace her, but not right away. Eventually I'd like to phase her out, but I'd like to cut her salary if possible. I pay her 25,000 Baht per month and she just has to answer emails and do some book-keeping. It's a cush job with loads of perks. Everyone I know who knows what she does says I'm paying her waaaaay too much.

Can I cut an employee's salary for poor performance? Do I have to supply proof to the labor dept and if so, what is acceptable proof? Emails? Messenger chat conversations that I've copied?

Thanks

[madjbs]

Why don't you give her an official warning first and see if her performance picks up. You can mention she is already being overpaid.

[crewcut]

I'm no expert in this field but as your employee has no contract I'm sure you can terminate her employment at any time.

You may be obliged to pay compensation due to her termination, but this again may only count when an employee has a contract.

It seems a shame that after 5 years it may have to come to this, though. Why don't you do as madjbs suggests and give her a warning and an opportunity to redeem her recently un-professional behavior.

If she doesn't shape up consult a lawyer and get rid. For 25,000 baht per month you will have no shortage of keen workers to answer emails and shuffle files etc.

CC.

[singa-traz]

I'm no expert in this field but as your employee has no contract I'm sure you can terminate her employment at any time.

You may be obliged to pay compensation due to her termination, but this again may only count when an employee has a contract.

Read the Thai Labour law and you will see that your assumption is incorrect.

5 years, she is entitled to 6 months salary (180 days) for severance pay.

http://www.thailabour.org/law/thai/code.html#bonus1

[crewcut]

"You MAY be obliged to pay compensation due to her termination, but this again may only count when an employee has a contract".

I would say that my assumption that he may have to pay compensation was correct then. Wouldn't you?

CC.

[crewcut]

I notice on the link you have posted singa, that compensation could be avoided if he can prove any of the following:

An employer is not required to pay severance pay to an employee whose employment has been terminated for any of the following reasons:

1. Resignation

2. Dishonest performance of his duties or the intentional commission of a criminal act against the employer;

3. Intentionally causing loss to the employer;

4. Performance of gross negligence which result in severe loss to the employer;

5. Violation of the employer's work rules or regulations or order which are both lawful and equitable when the employer has already issued the employee with a prior written warning, except in a serious instance when the employer is not required to give a warning.

The written warning shall be effective for a period of one year as from the date of the commission of the violation by the employee;

6. Neglect of his duties for a period of three consecutive work days without reasonable cause, whether or not a holiday intervenes;

7. Imprisonment by reason of a final judgement.

8. An employment contract shall be terminated when the specified period in the employment contract expires, the works related are as follows:

8.1 Employment on a special project, which is not in the normal way of business or trade of the employer, where there is a fixed schedule for commencement and completion of work.

8.2 Work of a temporary nature with a fixed schedule for its commencement or completion.

8.3 Seasonal work in respect of which employees are only engaged during that season; provided that the work most be completed within a period of two years and the employer and employee have entered into a written agreement at or prior to the commencement of employment.

Wouldn't you agree?

CC.

[crewcut]

"She's making mistakes, whether on purpose or not I don't know, and it's starting to affect my business".

The sections 3 and 4 from the list above could come in to play here. If you issue a warning and her un-professional/ethical performance continues then section 5 could be used.

We still have not solid evidence however that because she has no contract if any of this count?

My own thoughts are that employees have these rights contract or not. So the sections above could come in useful if you were to try and avoid compo.

Me I'd warn her, give notification of a wage drop and if things continue sack her and give her the correct amount of compensation. She's been with you for 5 years that has to count for something.

What do you think Galong?

[singa-traz]

I notice on the link you have posted singa, that compensation could be avoided if he can prove any of the following:

An employer is not required to pay severance pay to an employee whose employment has been terminated for any of the following reasons:

1. Resignation

2. Dishonest performance of his duties or the intentional commission of a criminal act against the employer;

3. Intentionally causing loss to the employer;

4. Performance of gross negligence which result in severe loss to the employer;

5. Violation of the employer's work rules or regulations or order which are both lawful and equitable when the employer has already issued the employee with a prior written warning, except in a serious instance when the employer is not required to give a warning.

The written warning shall be effective for a period of one year as from the date of the commission of the violation by the employee;

6. Neglect of his duties for a period of three consecutive work days without reasonable cause, whether or not a holiday intervenes;

7. Imprisonment by reason of a final judgement.

8. An employment contract shall be terminated when the specified period in the employment contract expires, the works related are as follows:

8.1 Employment on a special project, which is not in the normal way of business or trade of the employer, where there is a fixed schedule for commencement and completion of work.

8.2 Work of a temporary nature with a fixed schedule for its commencement or completion.

8.3 Seasonal work in respect of which employees are only engaged during that season; provided that the work most be completed within a period of two years and the employer and employee have entered into a written agreement at or prior to the commencement of employment.

Wouldn't you agree?

CC.

My personal experience is that Thai Labour Law and Court are Pro-Employee, and you would need serious and proven misconduct from the employee, for him to lose in court.

"Poor" performance is not on the list.

[crewcut]

Edited November 14, 2007 by crewcut

[bino]

My personal experience is that Thai Labour Law and Court are Pro-Employee, and you would need serious and proven misconduct from the employee, for him to lose in court.

"Poor" performance is not on the list.

Indeed, as Singa Traz says, it must be serious and proven misconduct, and you should have some sort of irrefutable evidence of this to show the labour court. Ideally, you should also have copies of written reprimands in an employee's permanent employment file that have been sent to the employee explaining the nature of the problem and the penalty and/or any corrective action required by the employee. These reprimands must be signed by the Managing Director and co-signed / acknowledged by the employee.

If the problem persists after having repeatedly (usually 3 times) reprimanded the employee in writing, the labour court *should* agree with the company decision to terminate the employee without severance pay.

Starting the "paper trail" on employees usually wakes them up!

Edited November 14, 2007 by bino

[blizzard]

why did u overpay in first place. was she a girlfriend...............lol.

[JohnC]

I am told the employment law here is very strict that being the case you cannot lower someones wages because of poor performance,also a contract of employment does not have to be in writing to be legal,if as you say she has been employed for five years any court would take that to signify she has a contract.

However, on the plus side you can issue verbal warnings based on poor performance, if there is no improvement in say two weeks you could then issue a written warning giving her a reasonable time to improve. I also believe that the actions you describe can be construed as gross misconduct which warrents immdediate dismissal.

Finally I would consult a lawer who is well versed in employment law to ensure you do not end up being sued for wrongful dismisal and although I know TIT I am assured that the law applies equally to all so being a farang should not disuade you from seeking legal advice. You might also find a written warning works wonders!!

[ThaidleHands]

6. Neglect of his duties for a period of three consecutive work days without reasonable cause, whether or not a holiday intervenes;

Tell her verbally you're closing the office for a week and she can take time off. Call her once a day in the morning; chit-chat for a few minutes, don't let anyone overhear you.

Your story: she non-reported, you tried to locate her, she refused to report to work until you guaranteed a pay rise. You continued to call seeking negotiation; she was inflexible. You terminated her with cause for neglect of duties.

Underhanded, yes, but if she's undermining your business you've got to move her on as quickly and cheaply as possible.

[bino]

Tell her verbally you're closing the office for a week and she can take time off. Call her once a day in the morning; chit-chat for a few minutes, don't let anyone overhear you.

Your story: she non-reported, you tried to locate her, she refused to report to work until you guaranteed a pay rise. You continued to call seeking negotiation; she was inflexible. You terminated her with cause for neglect of duties.

Whilst it may be fun to think of all of the Machavellian ways to deal with this, the example above will likely backfire beyond your wildest dreams.

If the employee in question talks to any of the other employees (I'm guessing that you have more than one Thai employee if you are a Farang with a work permit) - IE to make a plan for something to do over the "holidays".. lunch, shopping, trip upcountry, etc, and she finds out that the office is open and working, she could bring the other employees into court to testify on her behalf.

Calling her once a day during the "holiday" will only produce a phone bill as evidence. There will be no record of the content of the conversation, and it becomes your word against hers.

Your word against hers will not work if your credibility is destroyed by the testimony of one of your other employees who would support her as described above, or she can prove to the court in any other way that the company was not closed. Furthermore, as mentioned before, the labour courts are very "pro-employee" and are not above granting damages over and above the severance and notice monies payable if it is found that the employee was screwed over by the company.

Start a paper trail... accepted and signed as acknowledged by the employee. This will stand up beautifully in court, because it bears her signature as having received and understood the documented situation / problem.

If the problem with this employee persists- talking to an attorney who is well versed in employment law would be worthwhile. Do it all "by the book", or you could be looking at a heavy damage settlement.

Edited November 14, 2007 by bino

[RAZZELL]

Why don't you take her out for a beer, meal, chat, whatever and try to resolve it amicably.

If she's worked for you for 5 years it would be a shame to let that relationship disintegrate. .

All the best and hope it works out.

RAZZ

[GuestHouse]

If she is in a position or has access to information that can damage your business, I'd remove that access and put her on other duties ASAP while you bring in ANOther employee on a more reasonable rate.

If you are planning to get rid of her - Pay her off and get rid of her.

If that means paying her severence pay then pay-up, learn the lesson and remove the problem before it gets worse.

Bht25K a month - whatever where you thinking?

[Galong]

Hi guys,

Thanks for all of the input. It seems that all of your thoughts kind of jive with mine. A. I'm worried that she could do more harm. B. if I let her go she's going to go straight to the labor board and seek 150,000 baht severance pay (and probably get it) C. I should talk to an attorney.

She was never my girlfriend. She can be amazing at work, helpful, fun, professional, etc. She supposedly went to highschool in NZ (I've never seen her diploma though) and her English is pretty good, BUT she makes gross errors like not knowing the difference between 'is' and 'are' and this make us look unprofessional. I run high-end tours and I know if I was a potential client and I got an email from someone at a company who didn't spell works correctly or used the wrong verb tense I'd think twice about going with them. The problem is that she's been doing this since day 1 and in spite of me constantly correcting her, it's not getting any better.

I have been keeping records of all of this. I also have an email from her (I don't think emails are legally binding though) where she says it would be easy to steal money from me.

I don't know what to do. On the one hand she is valuable, but on the other, I no longer trust her and think she would try to hurt the company if I sacked her...

"Bht25K a month - whatever where you thinking?"

I was thinking that I would treat her with respect and dignity and pay her what I'd pay what I'd pay a Westerner for doing the same job... silly me.

[p_brownstone]

I agree with Guesthouse, and I have been in this situation before in Thailand.

Under no circumstances should you consider reducing her Salary, giving warnings etc.; if she gets the slightest of hints that she’s on her way out she will cause as much damage to you and your Company as she can while she still has access to any information on your business.

Far better to “bite the bullet” and get rid of her immediately - and pay her full compensation under the Labour Law.

Assuming you can afford it of course.

And by “immediately” I mean just that, call her into your Office with no warning, tell her her performance has become unsatisfactory, hand her a cheque for compensation and quite literally give her 5 minutes to empty her desk of all her personal belongings and leave the premises – and stand over her while she does that to make sure she takes no Company information with her.

Change ALL Computer passwords and the locks on your Office / Home / Car if she has had access to them then Email and / or telephone all your Customers and Suppliers telling them that Miss XXXX XXXXXX is no longer employed by your Company and has no authority to act on your behalf in any way.

Finally, be very careful for a few weeks; there’s a saying in Thailand – "when you fire someone, they may fire back”.

All this may seem like over-reaction, particularly since you have known and apparently trusted the girl for 5 years but believe me, Thais do not take this sort of situation lightly.

Patrick

[Macx]

Apologies for veering slightly off topic.

What if the situation were reversed? Let's say an employee wishes to terminate her contract with an employer. Her contract requires her to pay the company a sum that is 10 times her monthly salary if she chooses to quit her job before one year of work with the company.

Would the company really go after the employee for quiting without paying the fine? How? What are the possibilities/repercussions?

[Galong]

Apologies for veering slightly off topic.

What if the situation were reversed? Let's say an employee wishes to terminate her contract with an employer. Her contract requires her to pay the company a sum that is 10 times her monthly salary if she chooses to quit her job before one year of work with the company.

Would the company really go after the employee for quiting without paying the fine? How? What are the possibilities/repercussions?

Hey Macx,

Funny you should say this. I also had a guide quit a while ago. I was shocked as I treated him like gold and praised him constantly for doing good work. He said he wanted to quit to go back to school, so I thought that was quite reasonable. However, shortly before he quit, he 'borrowed' 8,000 baht from my company. It's been a few months and he hasn't paid back one baht! God I hate getting screwed especially when I consider myself to be a very easy-going boss. I do have a contract for this loan, so I'm thinking about seeing the cops about it. Fat chance they'll do anything, but that might change if I offer them half of what is owed. I've lived here long enough to figure that one out!

Any of you other guys have problems with employees like I'm having? I pay very high wages, I'm very easy-going and I don't yell or raise my voice when they screw up... I'm baffled. I would love to work for me

[GuestHouse]

How much were you paying the guide?

If substantially less than the dolly in the office then I'm sure he wasn't happy.

You perhaps should consider doing a short course on man management or some reading up on management and motivation.

I had to deal with a very serious offence by one of the expats in my department a couple of weeks ago (Gross Misconduct - Subject to summary dismissal). In the past I've had to deal with one other such case.

In both cases I went through all the motions according to company policy but still struggled with the issue on an emotional level.

I mentioned this to my HO manager and he suggested one of our internal courses 'Dealng with Conflict'. I'm working through that in the evenings at the moment, it has been a great help in understanding what I got wrong and what I got right.

We can all of us always learn new things - and should do.

[Galong]

How much were you paying the guide?

If substantially less than the dolly in the office then I'm sure he wasn't happy.

You perhaps should consider doing a short course on man management or some reading up on management and motivation.

I pay my guides a bit more than any other tour operator on Phuket. My theory is to buy loyalty. He was making at least 20K and sometimes over 30K per month.

I've read books on human resource management, motivation, etc, but I think this might fall in the category of a cultural abnormality. Even though I treat everyone like gold, there could be an underlying issue about working for a foreigner... I don't know, this is just a guess. It certainly can't be salary issues.

I had a couple of Westerners work for me in the past and they screwed me MUCH more than any of my Thai staff. It was costly getting rid of them.

[Galong]

I might add... my other guides are really pissed off at the guide who quit. They can't believe that he would do this to me.

[torrenova]

I'm not going to say you should have done this and you should have done that because I think you already know that.

Lets work this problem.

She must know that she is overpaid. She must also assume that she cannot get a similar salary from another employer. She may want to leave but she wants her compensation and wants you to fire her. We have no knowledge of her salary rises over the last 5 years but I suspect there have been some. If they were annual, and that time is now, then she is somewhat justified in asking but she is not doing the right thing after refusal.

Whatever happens, she is going to have to go. You say that she is not up to the job so you need someone who is and for that money, you can easily find someone. Don't make the mistake next time of paying OTT from day one. Certainly have a probationary period of a minimum of six months.

So how do you get rid of her ? First of all, assess what happens if she is not in the office tomorrow and never works again. Can your business survive and if so who will cover her job. Theoretically, someone should be able to step into her shoes in an emergency anyway.

I do not profess to be an expert in Thai employment law but I wonder what additional costs are brought to bare if you negotiate a settlement ? If she thinks it will be 6 or 12 months before she gets 150k then she may well accept 50k now and sign whatever necessary to precule any action being taken against you. You may make any reason you like for stalling her or you may agree that the only option if she insists on 150k is to pay her 10k per month for 15 months. Again, she may take 50k now.

You cannot give in an promise her something if she improves as she will then have you over a barrel. Conversely, if she knows her rights, you can gain nothing by threatening her with dismissal if she does not improve.

I suggest you gather all your information and consult a lawyer.

One final thought is, after consulting a lawyer, to get her to agree to sign a contract of employment which very tightly stipulates that abuse of the email is gross misconduct and a sackable offense, threats to steal can also be covered in a round about way. In essence, I believe you could create a contract of employment which is fair but which stipulates that the actions she currently undertakes give grounds for dismissal. If she refuses to sign it after taking it away for perusal, then she has legal help already and is trying to screw the 150k out from you and I would revert to a negotiated immediate settlement.

[Galong]

Thanks a million Torrenova!!

That's excellent advice and it all make a lot of sense.

Unfortunately, we're a small company and we don't have anyone who could fill in for her either temporarily or permanently... except for me. I don't want to do her job as it's tedious and I need to do other things that are much more beneficial to the company. But alas, I do see your point and it is rather silly (foolish?) to not have someone else ready to stand in for her just in case.

Thanks a lot to all who have contributed

[madjbs]

I agree with Guesthouse, and I have been in this situation before in Thailand.

Under no circumstances should you consider reducing her Salary, giving warnings etc.; if she gets the slightest of hints that she’s on her way out she will cause as much damage to you and your Company as she can while she still has access to any information on your business.

Far better to “bite the bullet” and get rid of her immediately - and pay her full compensation under the Labour Law.

Assuming you can afford it of course.

And by “immediately” I mean just that, call her into your Office with no warning, tell her her performance has become unsatisfactory, hand her a cheque for compensation and quite literally give her 5 minutes to empty her desk of all her personal belongings and leave the premises – and stand over her while she does that to make sure she takes no Company information with her.

Change ALL Computer passwords and the locks on your Office / Home / Car if she has had access to them then Email and / or telephone all your Customers and Suppliers telling them that Miss XXXX XXXXXX is no longer employed by your Company and has no authority to act on your behalf in any way.

Finally, be very careful for a few weeks; there’s a saying in Thailand – "when you fire someone, they may fire back”.

All this may seem like over-reaction, particularly since you have known and apparently trusted the girl for 5 years but believe me, Thais do not take this sort of situation lightly.

Patrick

This is just silly, while it may be appropriate in some extreme cases it is stupid to think every person you get rid of is going to come and steel your car and go to great lengths to destroy your company etc... If you have a big company you are going to have to be getting an awful lot of new locks every year.

[bdenner]

The OP does have a dilemma to confront and I’m not sure there is an easy way out BUT:-

In future can I suggest you do what we did when I worked for a multinational here in Thailand. Hired the vast majority our local staff through various labour hire companies. They are then responsible for performance etc. All I had to do was tell them who I wanted and who I didn’t within my area of responsibility.

I’m sure you will not be paying 25K Baht for an English speaking mail sorter.

[p_brownstone]

I agree with Guesthouse, and I have been in this situation before in Thailand.

Patrick

This is just silly, while it may be appropriate in some extreme cases it is stupid to think every person you get rid of is going to come and steel your car and go to great lengths to destroy your company etc... If you have a big company you are going to have to be getting an awful lot of new locks every year.

I am obviously not suggesting that this course of action is required every time an employee is dismissed.

The OP himself says "I no longer trust her and think she would try to hurt the company if I sacked her... "

In addition, although she has worked for the Company for 5 years at an inflated salary she displays no loyalty at all and when her demand for an increase is rejected appears to be deliberately making mistakes to affect the Company's business and reputation.

With that background I beleive my suggestion is not only valid but the most sensible way of handling the situation.

Patrick

[madjbs]

This kind of reminds me of the story of Siam Superbike, the owner paid wages more than the market price and ended up getting scammed by his staff all the time. In the end he put it down to the mentality that if your paying too much then you must be stupid, people got greedy and decided to take him for more money as they already believed he was foolish. It seems no respect is gained from overpaying your staff.

Edited November 15, 2007 by madjbs

[Smithson]

This kind of reminds me of the story of Siam Superbike, the owner paid wages more than the market price and ended up getting scammed by his staff all the time. In the end he put it down to the mentality that if your paying too much then you must be stupid, people got greedy and decided to take him for more money as they already believed he was foolish. It seems no respect is gained from overpaying your staff.

I tend to agree, if you're paying high salaries it appears you've got the cash, which they can resent and they might also try and take advantage.

Worse still if you're a nice guy and informal with staff they can lose respect with you. When we first hired staff, I paid them well, also paying for studying. Things didn't work out at all.

Since then I've taken my partner's advice and paid more Thai style salaries. We pay a little more than elsewhere, but expect hardworking staff. We also don't cut their salaries if they make mistake, ALWAYS pay on the 1st of the month, take them to dinner occasionally. I'm also not too friendly with them, I don't yell but if they make a mistake I let them know and walk away.

Alot of Thais are treated poorly by employers, if you treat them too nicely they can become spoiled. If you're dealing with young Thais educated overseas they may be from wealthy families and spoiled already.