Severance Pay Thailand

Severance pay is a crucial aspect of employment in Thailand, offering financial protection to employees who are terminated without cause. Severance pay is compensation provided to employees who are terminated without cause, designed to support them during their transition to new employment. Both employers and employees must understand the laws surrounding severance pay to ensure fair treatment and compliance with Thai labor regulations. The Labor Protection Act B.E. 2541 (1998) sets out the rules for severance pay in Thailand and employee rights are upheld strongly by the Labour Department.

It isn’t always obvious when severance pay is due, which is why employee and employer disputes are very common.

– Employees are entitled to severance pay if they are terminated without cause, such as for redundancy, company restructuring, or economic reasons.

While these examples are valid reasons to reduce staff, this does not negate an employer’s responsibility to the employee, and severance pay must still be provided. Companies facing financial difficulties may negotiate with employees to offer a severance package that is mutually acceptable.

– No severance is required if the employee is terminated due to gross misconduct, which includes serious breaches of company policy, dishonesty, or criminal activity.

It is common for employees who are dismissed without severance pay to seek legal recourse. Therefore, it is essential for companies to have well-drafted employment contracts with clearly defined company policies, all reviewed by a legal professional. Additionally, employers should consult with a legal expert before initiating the termination process to ensure that they have lawful grounds for doing so.

– Contracts are not above the law, and unfair contracts will not hold up in court.

Employees who believe they have been treated unfairly or who question the fairness of their contract should seek legal advice. For employers, it is crucial to have contracts drafted or reviewed by a professional. Employees in full-time employment are not obligated to sign updated contracts if they do not agree with new policies, such as changes in working hours or company location. Even if a contract expires, employees remain protected under Thai law and cannot be dismissed without severance pay or a valid reason.

Length of Service and Corresponding Severance:

• • For service of 120 days but less than 1 year: 30 days wages.

  • For service of 1 year but less than 3 years: 90 days wages.

  • For service of 3 years but less than 6 years: 180 days wages.

  • For service of 6 years but less than 10 years: 240 days wages.

  • For service of 10 years or more: 300 days wages.

  • For service of 20 years or more 400 days wages.

Calculation Method:

Example Calculation: An employee earning 30,000 baht per month who has worked for 5 years would be entitled to 180 days’ wages, equating to approximately 180,000 baht. In addition the Employer must give 30 days written, advanced notice starting from the 1st of the month.

Warnings are typically issued to address performance issues or misconduct before termination is considered. The process generally involves three types of warnings, and these warnings must pertain to the same infraction in order to justify termination. After the final warning, the employee is given one last chance before termination can occur. Employees have the right to file for unfair dismissal, making it crucial for employers to maintain thorough evidence to support their claims. It is not uncommon for employers to try to force employees out with unsubstantiated warnings. Employees should check their rights with a lawyer or the labour department.

Types of Warnings:

• • Verbal Warning: Used for minor infractions; informal.
  • Written Warning: Formal documentation for serious or repeated issues.
  • Final Warning: Issued before termination, often after prior warnings.

Multiple Warnings for Different Issues:

• Separate Documentation: Each issue should be documented separately to build a case for potential termination without severance.
• Cumulative Effect: A pattern of behavior documented through multiple warnings can justify termination with limited or no severance pay.

When entering into contracts with employees, it is essential to treat them with respect and fairness. Most disputes can be avoided through honesty, clear communication, and the implementation of proper policies and systems. Employers should treat all employees equally and apply termination and severance policies uniformly. Detailed records of performance issues, warnings, and the reasons for termination should be meticulously maintained. Consulting legal professionals is crucial to ensure compliance with Thai labor laws and to minimize the risk of potential disputes. Additionally, company policies should be periodically reviewed to ensure they align with current labor laws and industry best practices.

If you are an Employee who thinks they have been unfairly dismissed, contact the Labour Department or a qualified lawyer such as Attori Law. We offer free consultation so don’t hesitate to ask for help.