As a result of COVID-19 pandemic crisis, many businesses are reviewing costs and one of the measures under consideration may include reduction of the workforce. In accordance with Thai Labour Laws, making staff redundant owing to financial reasons or as a result of the recession is considered to be “termination without cause” and therefore subject to severance payments as follows: –
|Years of Service||Severance pay due|
|More than 120 days but less than 1 year||30 days at current pay rate|
|More than 1 year but less than 3 years||90 days at current pay rate|
|More than 3 years but less than 6 years||180 days at current pay rate|
|More than 6 years but less than 10 years||240 days at current pay rate|
|More than 10 years||300 days at current pay rate|
The following legal claims may arise for headhunter company in Thailand from making staff redundant: –
An employer is required to inform their staff that they are to be terminated at or before the current pay date in order for the termination to be effective for the following pay date i.e. if the current pay date is 29th May 2020, notice of termination should be given on or before 29 May 2020 for this to be effective from the date of the payment of the June 2020 salary. In the event that an employee is terminated with immediate effect, a payment in lieu of the one month notice period is required.
Longer notice periods may be required in the event that this is specified in an employee’s contracts, e.g. if the employee is subject to three months’ notice, this must be given on or before 29 May 2020 if he/she is to be terminated effective from the pay date for 28 August 2020, otherwise a payment in lieu of three months’ notice may be required.
In this event, the employer may be liable to pay out the remaining period of the contract. However, the employer will not be subject to the payment if the agreement is for a fixed period of not more than two years and the employment was made for a specific project which is not deemed to be in the employer’s “normal course of business” or for seasonal work.
Even in instances where full severance payments have been made in accordance with the Labour Code, an employee who has been terminated may still file a claim for unfair termination with the Labour Court. In the event that the Court rules in favour of the employee, the most common rulings are that: –
In considering these cases, the Court may consider the following matters: –
It is noted that the Courts consider that the loss of business does not necessarily constitute an acceptable reason for the termination of an employee, but rather that this is a result of mis-management.
As outlined above, laying off of employees can often be harmful and costly to both the employee and the employer. From the employee’s point of view, losing one’s job is ranked third amongst life’s most stressful situations and whilst redundancy money (severance) can assist the ex-employee during their search for a new role, a well designed and implemented outplacement program can make the transition to a new job both more acceptable, successful and very often more rapid. Perhaps most importantly, a well presented and implemented outplacement program is far more likely to result in acceptance of his/her situation by the employee who has just been made redundant.
Most outplacement services focus on four keys stages in a terminated employee’s transition to a new job:
RSM Thailand’s as a headhunter company in Thailand recently launched outplacement program adopts some of the key elements of a standard career transition product, but is more focused on the ultimate goal of finding new jobs for recently laid off employees. Utilizing the core strengths of RSM Thailand’s current services, namely it’s market leading recruitment company RSM Recruitment (Thailand) Limited and its Corporate Legal Division, RSM Thailand is uniquely placed to both advise ex-employees on available positions in the market and employers on the legal requirements associated with downsizing their staff levels.
If you would like to receive consultation on recruiting new staff, the legal implications on terminating staff via redundancies or alternatively RSM Thailand’s outplacement program, please contact us either on telephone 02-670-9002 or email@example.com.