# Employment: The Security Deposit



## Song_Si

Yesterday my partner was told she'd been successful with her application for an accounts/finance role with a nationwide insurance company. 
However when looking at the contract/conditions of appointment there was mention of an 'employment bond' that had two purposes - as she'd be handling cash they held this bond in case the end of day cash-up was short, and secondly it would be forfeit to the company if she resigned within 12 months.

The amount required was equivalent to six-weeks gross salary.

News to me - hadn't heard of this - and I thought maybe just their company policy, but a little searching and it is covered in Thai Employment Law, and that their 6 week demand was well under the maximum of 60 days pay, but does not relate to breaking an employment contract as far as I have been able to ascertain.

Interested if anyone here has encountered this, how widespread the practice is. Many people may not have the money up front anyway.

Note: She has declined the offer for this and some other reasons re their working environment.




> *(b) Security Deposit*
> Under Section 10, an employer may not demand or receive a security deposit from the employee as security for work performance or damage,except in the case where by the nature of his or her work the employee has monetary or property responsibility and where permitted by notification of the Ministry of Interior.
> Pursuant to an Interior Ministry notification dated 19 August 1998, the amount of a bond may not exceed 60 times the average daily wages of the employee and may be demanded from the employee who works in the capacity of:
> (i) chief accountant,
> (ii) cashier,
> (iii) person who cares for or guards the premises or property of the employer or under the responsibility of the employer,
> (iv) bill collector,
> (v) person operating or supervising vehicles, and
> (vi) person responsible for the purchase and sale, exchange, lease, hire-purchase, lending, property deposit, mortgage, pledge, warehousing, insurance, money remittances, or banking.


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## stednick

*Supply and Demand*

In my experiences in Thailand I never came across the "employment bond" requirement. 

In the USA I am required by law to carry a performance bond and insurance as a stipulation of my professional license. My business in the USA was/is required by law to carry liability, workman's compensation and unemployment insurances. We also carry business interruption and product liability. I know in Thailand we carried a business insurance package, although, based on my Thai language reading skills, I don't have a firm grip on the details of all that it entailed. As we were not retail and did not handle any large "cash" transactions I don't believe we were concerned with, or covered for, employee errors or theft.

I know in the US we have many professions that require similar bonding to protect the business. In the US it is usually the company that pays for the bond. Any business that handles large amounts of cash or have valuable products are vulnerable to employee misappropriation and/or theft. All businesses are susceptible to loss due to employee errors. Most retail establishments have loss prevention divisions to minimize theft by both customers and employees. Professional licensee's are typically individuals and carry their own "errors and omissions" or protection insurance and bonds.

I understand the Insurance Company needs to protect itself against potential employee errors or criminal theft, however, as you state "many people may not have the money up front." The insurance companies requirement is by nature, self-limiting. In order for them to attract qualified and above average personnel, with the "employment bond" requirements, they must be paying a, relatively speaking, "lucrative" salary.

I personally would negotiate and require a two month sign-on bonus "up front" to cover the cost of the bond.


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## Newforestcat

Song_Si said:


> Yesterday my partner was told she'd been successful with her application for an accounts/finance role with a nationwide insurance company.
> However when looking at the contract/conditions of appointment there was mention of an 'employment bond' that had two purposes - as she'd be handling cash they held this bond in case the end of day cash-up was short, and secondly it would be forfeit to the company if she resigned within 12 months.
> 
> The amount required was equivalent to six-weeks gross salary.
> 
> News to me - hadn't heard of this - and I thought maybe just their company policy, but a little searching and it is covered in Thai Employment Law, and that their 6 week demand was well under the maximum of 60 days pay, but does not relate to breaking an employment contract as far as I have been able to ascertain.
> 
> Interested if anyone here has encountered this, how widespread the practice is. Many people may not have the money up front anyway.
> 
> Note: She has declined the offer for this and some other reasons re their working environment.


Hi,

I had a look and agree with you about where the laws stand.

Judging from what I have noticed, your partner did the right thing. This type of job is too demanding, you possibly are going to be pressurised or made to work overtime even for free on a regular basis. Just look at your local banks after opening hours. While most bank workers possibly leave work by 5-6 PM. Their bank managers often can only leave at 8-9 PM! 

If the is a cash shortfall from the tills at the end of the day, your security deposit will get smaller. Your employer can also demand it to be topped up to the agreed level. 

I don't think, in your partner's case, that the compay would try to steal the security deposit. I am pretty sure that, because nobody stays at this job or company long for various reasons; the employer just wants to prevent employees from leaving too soon.

Maybe you already know this. 

Cheers,


Dani


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## joseph44

Pretty common in Thailand; for contract jobs, but also for "free-lance" jobs. 
Problem is, that most Thai never resign, but just don't show up right after they received their last salary. 
Of course, there are contracts, but that's just a formality. Fines, penalties, etc are rarely ever enforced, therefore they use the "employment bond".


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## Mweiga

This security bond is common within the Thai banking industry also. Partner's daughter recently secured her first job after University with Om Sin bank who required a 30,000 baht cash deposit from her for security which they held on to for her first 6 months of work with them - and then paid it back to her (who then gave it back to me !).


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## Song_Si

thanks for these answers

^ do you know if they also had the clause re resigning withing that 6 months and whether they would in that case retain the security deposit?


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## joseph44

There we go............officially there is a probation period of 119 days. During those 199 days the employer is allowed to kick an employee out, and an employee is allowed to leave immediately. 

I would say, that a security deposit has to be returned if both parties decide to part ways within the 119 days probation. 

It can not be that the labor-law allows both parties to part within 119 days AND allows at the same time to require a security-deposit to be paid by the employee which won't be returned. 

This is a typical question to be asked during a job-interview; of course the new employee won't ask this, because it may be seen as offensive ("talk about that even before you start work")


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## Newforestcat

Security deposits are legally acceptable only to safeguard employers against reputation and financial damages. As the job position here is in the finance and accounts department, the would-be employer has not broken the laws by requiring such deposit. HOWEVER, the second reason given is non-compliant. THEY CANNOT DEDUCT YOUR DEPOSIT, IF YOU LEAVE EARLIER, the laws do not allow security deposits to be abused in such manners. Having said that, if they can prove that your early resignation has caused any financial loss, what will happen? I also don't think that the deposit would have been returned before your partner had left. It was not just there to prevent her from leaving too soon! 

Depending on the terms and conditions of individual agreements, employers may be able to increase the deposit as salaries increase. Remember the 60-day rule? As the roles are more vital to the employers and salaries increase, so do the financial risks.

The info below may be interesting. It should help you to sleep anyway:

Security deposits are required to be put in bank accounts in employees' names at the expense of their employers; the employers then have to give the details of the bank accounts to employees within seven days of the agreements being made or face a 100000 Baht fine. This is similar to what authorised FX brokers are required to do with clients' funds in the UK. If your employer goes bust, your security deposit will still be safe from their creditors. In theory, it sounds good if you are not an employee whose security deposit account is held by a bank that is about to or has gone bust. Thai government no longer guarantee any bank deposits! 

In practice, the laws do not stop employers from increasing the security deposits as salaries increase. In practice, Thai banks force the employees to increase the security deposits so they hold more deposits as a result. If you do not read the agreement properly, you could be in for a big shock! I have been told by an ex-bank employee that the practice/abuse has caused a lot of bank workers to quit. They simply run out funds, plots of land and options to recruit new depositors.

Employers are required by law to give deposits back within seven days or pay 15% interest per year on any overdued amounts to ex-employees. If you can prove that they intentionally keep missing the seven days' deadlines, the interest will increase by 15% every week! I am not sure how this will be enforced but can see why this is included.


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## Mweiga

Song_Si said:


> thanks for these answers
> 
> ^ do you know if they also had the clause re resigning withing that 6 months and whether they would in that case retain the security deposit?


... not sure - I'll ask her when I next see her.

She really wanted this particular job with Om Sin as employees are treated more or less as civil servants with this bank being the Govt. savings bank - she had to take and pass the Thai Govt. civil service exam after a few months before being confirmed as permanent staff. She now gets free medical and is eligible for a Govt. type pension - it's regarded as a pretty secure lifetime job , as much as anything is these days. They also gave her a loan on very generous terms to buy a house. All in all the cash security deposit was a small risk compared to the excellent benefits of this employment.


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## Mweiga

Mweiga said:


> ... not sure - I'll ask her when I next see her.
> 
> She really wanted this particular job with Om Sin as employees are treated more or less as civil servants with this bank being the Govt. savings bank - she had to take and pass the Thai Govt. civil service exam after a few months before being confirmed as permanent staff. She now gets free medical and is eligible for a Govt. type pension - it's regarded as a pretty secure lifetime job , as much as anything is these days. They also gave her a loan on very generous terms to buy a house. All in all the cash security deposit was a small risk compared to the excellent benefits of this employment.


... just talked with her. Apparently it was a 12 month hold period for this 30,000 baht cash security deposit , which I'd forgotten, and if she'd decided to quit the job any time during this first one year period Om Sin would have paid her back all the deposit. No deposit forfeit clause.

After the 12 months were up and they'd paid back all the cash desosit , and she'd had her permanent position confirmed after passing the Thai civil service exam , she was then required to open and deposit a further 10,000 baht in a "lotto" account that Om Sin operates whereby cash prize draws are held at regular intervals against these lotto account numbers. The money has to remain in this non-interest bearing account for the duration of her employment and she gets it back whenever she quits working for them. 

These may seem strange requirements by Om Sin but they are outweighed by excellent employment conditions, prospects and benefits.


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## Song_Si

thanks everyone for info provided.

**********
since I started this one . . . an update
A new offer, same company but this time a 4-week fixed-term contract starting Monday on a finance/accounts project, no security bond etc. May work out well, chance to see if they're a good employer, and for them to see if she's a good employee; offer is still there for full-time job after this one-off contract.

_watch this space_

***

as a side note, who knew buying blouses and skirts could take several hours? (not on staff so no uniform provided). While this shopping endurance test was underway i had a coffee, an icecream, bought a new motorbike helmet, tried on several pairs of trousers, . . . and as required, kept saying _'yes, that one looks good'._


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