The Southeast Asian nation, which has come under scrutiny for slavery and trafficking in its seafood industry, has added "forced labor or service" as an offence in its anti-human trafficking law, according to a notification on Sunday.
Anyone found guilty can be jailed for four years and fined 400,000 Thai baht ($12,516), with more severe penalties if a victim is harmed.
"It shows the serious intent of the Thai government in tackling forced labor and improving the image of the country," said Puttanee Kangkun, a human rights specialist with advocacy group Fortify Rights in Bangkok.
"It spells out the conditions, and the penalties are quite strict. But we have to see how effective the implementation is," she told the Thomson Reuters Foundation on Monday.
There are about 4.9 million migrants in Thailand, making up more than 10 percent of the country's workforce, according to the United Nations. Most are from poorer neighbouring countries including Myanmar, Cambodia, Laos and Vietnam.
Migrant workers get few protections such as a minimum wage and overtime pay, and contend with unsafe working and living conditions, the U.N. said in a report earlier this year.
Besides the seafood industry, exploitative practices have been recorded in domestic work, construction, agriculture, livestock, hospitality, garment manufacturing and other sectors in the country, it said.
The amendment widens the definition of forced labor and includes anyone engaged in the purchase, sale, confinement or exploitation of a person.
It can be enforced immediately, whereas a new law could have taken years to draft and enact, said Ruttiya Bhula-Or, an assistant professor at Bangkok's Chulalongkorn University.
"But its inclusion as part of the anti-human trafficking act can also make it less potent, and the definition of forced labor remains unclear," she said.
Thailand has taken some steps to tackle abuse by eliminating recruitment fees paid by workers, and banning the practice of withholding identification documents.
Last June, it became the first country in Asia to ratify the forced labor protocol of the International Labor Organization (ILO) for combating all forms of forced labor, including trafficking, and ensuring access to remedies and compensation.