Undue termination of employment is a worldwide epidemic. As all working people aim to achieve financial security, loss of a job for unfair reasons is demeaning whatever the cause may be. Thailand is affected by this epidemic in a similar manner. To cushion its heartbreaking effects, a discussion on the labor laws of Thailand concerning termination and severance pay is called for.

Termination of employment equates to end of employment- end of the employees obligation to render work, and the end of the employer’s obligation to pay for the work done.

This obligation may end due to several causes which may either be just or unjust. If employment is terminated for a just cause (permissible cause under the law), the employer is NOT required to give severance pay.

SEVERANCE PAY

Severance pay is the compensation given to the employee when a contract is terminated or when the employer commits any act to prevent the employee from continuing to work or discontinues payment of wages to this end. This compensation is also due when the termination is the result of the employer’s inability to continue business operations. The compensation is not due upon termination of a contract concluded for a definite period. The latter is not termination per se but merely the end of the duration of the contract presumably entered into freely by the parties to it.

Severance pay will also be denied the employee when the employee has been dishonest on duty; has deliberately committed a criminal offence against the employer; has intentionally caused damage to the employer; has violated working rules or lawful orders from the employer; has been absent for three consecutive working days without justification; has caused serious damage to the employer due to negligence; or has been sentenced to imprisonment.

EMPLOYEES ENTITLED TO SEVERANCE PAY

As already stated, regular employees under contract are entitled to severance pay as a general rule. Fixed-term employees or those whose work duration is specified at a specific duration only may also be given severance pay if the duration of their employment is up to a maximum of two years on a temporary project. Seasonal employees performing work which is not part of the main business of the employer are also entitled to severance pay provided that in both cases, the employment agreement is put into writing at the onset of the employment period.

AMOUNT OF SEVERANCE PAY

The amount of compensation depends on the length of service. For an uninterrupted period of service between 120 days and one year the compensation for time-rate and piece-rate work alike amounts to the last 30 days’ wages. For a period of service between one and three years, compensation equals the last 90 days’ wages. For a period of service of over three years the amount of compensation corresponds to the last 180 days’ wages. The period of service includes holidays, leave days and days that the employee has been exempted from work for the convenience of the employer.

In the event that the work of the employee is interrupted due to the employer’s fault, suck discontinuity is disregarded, regardless of the assignment of the employee and the length of the gap between assignments.

In the event of retrenchment following restructuring, an employer who does not give notice or gives notice less than 60 days in advance must pay compensation in lieu of notice, equal to the last 60 days’ wages.

This compensation substitutes for the normal compensation in lieu of notice provided for in the CCC. If the employee has been employed for at least six years, however, the employer must pay additional compensation equal to 15 days’ wages for every year of employment, with a maximum amount equal to 360 days’ wages. With respect to this additional compensation, a period of work of more than 180 days constitutes a year.

VALID GROUNDS FOR DISMISSAL

The Labor Protection Act of Thailand sets out the grounds on which an employer may dismiss an employee without notice and without having to make a severance payment:

1. Dishonesty in performing duties or intentionally committing criminal offenses against the employer.
2. Intentionally causing loss to the employer.
3. Acting recklessly or negligently, causing serious loss to the employer.
4. Violation of the employer’s rules, regulations or orders, which are both lawful and fair, provided the employer has given prior warning, except in a serious case where the employer is not required to give a warning. A written warning is effective for one year from the date of the violation.
5. Absence from duties for three consecutive working days without reasonable cause, whether or not a holiday intervenes.
6. Imprisonment under a final court judgment. If the offense is one of negligence or a petty offense, it must cause loss or damage to the employer.

Pregnancy and involvement in trade union membership or trade union activities are NOT valid causes for dismissal under Thai laws.

DISMISSAL NOTICE

Where an employer dismisses an employee for a permitted statutory reason, the reason for such dismissal must be stated in the dismissal notice. If the reasons are not so stated, then the employer will be estopped from raising them as a defense in any proceedings subsequently brought by the employee.

When an employment contract for a fixed period has expired, the employment will end without giving notice.

Where the employment contract does not specify the period of employment, either party may terminate it by giving to the other written notice, within, or before the wages are due, with the effect that employment is terminated when the next payment is due, but not more than three months notice need be given.

A probationary period is deemed to be a non-specified employment contract. In the case of termination, the employer must pay wages due to the date employment is ended, as notified, and the employee may leave. Payment may be given in lieu of notice.

No notice is required where employment is terminated for permitted cause under either the Labor Protection Act, or the Civil and Commercial Code.

If you need more information about employment disputes in Thailand you should contact a Thailand lawyer.