The correct understanding of Thai Labor Law is key for the success of many businesses and the implementation of good relationships between employers and employees. During the last three years H&P advised five foreign embassies on Thai Labor Law and compliance and our lawyers in Bangkok prepared labor law opinions and memorandums for dozens of corporate clients doing business in Thailand.
In terms of litigation, H&P lawyers in Thailand represented both: employers and employees in several labors’ disputes in mediations and also at the Labor Court. Some of the key aspects to consider are:
In most countries, the severance pay is a matter of agreement between the employer and employee. However, in Thailand, it is the requirement that the employer must pay the severance pay upon the termination of employment regardless of whether this right is stipulated in the employment contract.
Under section 118 and 118/1 of Labor Protection Act B.E 2541 (“LPA”), the employer is required to pay the severance pay in three cases:
1.) Employer terminates the contract without employee’s default – also including the case that the employer terminates the employment due to critical situation of its business)
2.) Employment contract is a fixed-term contract, and the employer does not renew the employment after the expiration of that term.
3.) Retirement of employee who is over 60 years old.
RATE OF SEVERANCE PAY
The rate of severance pay is based on the length of employment.
Work Period and Severance pay (latest base salary)
120 days but less than 1 year: 30 days
1 year but less than 3 years: 90 days
3 years but less than 6 years: 180 days
6 years but less than 10 years: 240 days
10 years but less than 20 years: 300 days
Over 20 years: 400 days
Apart from the reverence pay, it should be noted that the employer may also be liable to the compensation if employee is dismissed with no reason or forced to quit from the job during the term of employment.
If you need legal advice on Thai Labor Law, please contact our law firm in Bangkok at [email protected]