By Gabrielle Eaton – International Intern from Sydney, Australia to the RSM Law Firm in Thailand
The law surrounding the termination of employees in Thailand is called the Thai Labor Protection Act B.E. 2541 (1998) and is extremely strict and is taken incredibly seriously as there are many legal processes and procedures within it that are designed to ensure the impartiality and protection of Thailand’s workers. If the laws are not held to the utmost standard, then the financial liabilities and legal consequences can be costly towards business owners, which is why terminations should not be taken lightly, should be discussed with HR, and legal departments to consider the risks. In fact, it would be most wise for any employers contemplating letting go of staff for whatever reasons to seek advice from international law firms in Bangkok who specialize in this area.
Within the Thai business environment there are three primary reasons for an employee to be let go: cutting costs, misconduct, and underperformance. It is important to bear in mind that each of these situations has different regulations set in place that require reference to various parts of the Thai labor law, however the general procedure for termination of employment under Thai law is as follows:
Issuing Warning
It is required that in considering the termination of an employee for certain cases of misconduct and underperformance an employer must first issue a warning to the said employee about what they have done that has violated a work rule. These rules must be fair and legal, and the letter must outline exactly what the employee did wrong as well as a statement declaring that the employee acknowledges that if they repeat these actions the employer is entitled to terminate the worker without severance. Warnings are only valid under the Thai Labor Law for a period of 12 months and verbal warnings are not acknowledged by labor courts as valid warnings, so if a terminated employee were to sue the company for wrongful termination a verbal warning or a written warning over 12 months old would not be considered valid evidence of compliance with the correct legal procedures.
Provide Written Notice of Termination
To terminate an employee legally, you must give them a written notice of termination, one payment period before their intended termination, or payment in lieu of notice. Payment in lieu of notice is used in situations where the employee does not receive a notice period, however it is not required for cases of gross misconduct. It is calculated based on the workers gross daily rate multiplied by the number of days the notice period would have been.
Pay their Severance.
Severance in Thailand is calculated using the employees current wage and the length of employment at the time of termination using the table below:
| Employment period | Severance Pay Rate |
| 120 days but < one year | 30 Days |
| 1 year but < 3 years | 90 Days |
| 3 years but < 5 years | 180 Days |
| 6 years but < 10 years | 240 Days |
| 10 years but < 20 years | 300 Days |
| 20+ years | 400 Days |
Severance pay is not required under any of the specific circumstances stated under Section 119 of the Thai Labor Protection Act, which focuses on situations where an employee is terminated due to cases of gross misconduct (e.g., fraud, serious insubordination etc.).
| Section 119
An employer may not pay severance pay to an employee when employment. is terminated upon any of the following conditions: (1) performing his/her duty dishonestly or intentionally committing a criminal offence against the Employer. (2) willfully causing damage to the Employer. (3) committing negligent acts causing severe damage to the Employer. (4) violating work rules, regulation or order of the Employer which is lawful and just, and after written warning having been given by the Employer, except for a serious case with no requirement for the Employer to give warning. The written warning shall be valid if it does not exceed one year from the date when the employee commits the offence. (5) absenting himself/herself from duty without justifiable reason for three consecutive working days regardless of whether there is a holiday in between. (6) being sentenced to imprisonment by a final court judgment. |
This is called “termination with cause.” Severance is also not required for probationary workers who have been working for less than 119 days. In situations such as getting laid off where a worker’s job may no longer exist due to the replacement by machine and an employer decides to terminate them, in addition to a normal severance pay an employee would also receive redundancy pay.
Outstanding wages
In addition to severance pay or redundancy payment, terminated employees are also entitled to pay out such as unused annual leave, sick leave, and any other benefits stated in their contracts within three days of termination.
Handle disputes
If the employee is unhappy with the way their termination was managed, they may decide to go to a law firm in Thailand and draft a demand letter or file a complaint with the department of labor protection and welfare or directly with the Court. The company they were terminated from can then choose to either negotiate with the ex-employee or proceed to Court. The Thai Labor Court often tends to favour the employee over the employer so it is generally preferred to negotiate as the Court’s first course of action is usually to get the two parties to negotiate, thus avoiding wasting money on an unnecessary court visit and putting your company at potential financial stake. In addition, if negotiations fail and the company is found guilty by the courts of unfair dismissal, the employee could receive an extra one month’s compensation for every year they have worked for the said company in addition to the normal severance pay and payment in lieu of advance notice.
Summary
Terminating an employee in Thailand can have an array of significant consequences on a business if done incorrectly which is why it is so important for employers to look out for themselves and do it right. With RSM by your side you will be provided with a team of expert Thai lawyers who can guide you through the process of terminating an employee and navigating your way around the complex laws associated with it. At RSM we believe ensuring the protection of the reputation and financial status of your business should be done with as much diligence and care as possible and all necessary steps should be taken.
RSM Thailand Key contacts
Pardorn Suchiva
Legal Director – RSM Thailand Law Firm
RSM (Thailand) Limited
E: Pardorn.Suchiva@rsmthailand.com
Krit Komkrit
Associate Director
RSM (Thailand) Limited
E: Krit.Komkrit@rsmthailand.com
Pataraporn Sirisopikun
Senior Manager – Legal and China Practice
RSM (Thailand) Limited
E: Pataraporn.Sirisopikun@rsmthailand.com