This country-specific Q&A provides an overview of Employment and Labour laws and regulations applicable in Thailand.
Does an employer need a reason to lawfully terminate an employment relationship? If so, state what reasons are lawful in your jurisdiction?
Yes, an employer does need a reason to terminate an employment relationship. The applicable law provides ‘serious grounds’ for employment termination to include a case where: (i) the employee commits a dishonest act towards his or her duties or intentionally commits a criminal act against the employer; (ii) the employee intentionally causes the employer to suffer losses; (iii) the employee commits a negligent act that causes the employer to suffer severe losses; (iv) the employee violates the employer’s work rules or regulations or orders that are legal and fair, and the employer having already given a written warning, except in serious situations for which the employer is not required to give a warning; (v) the employee neglects his or her duties for a period of three consecutive work days without a reasonable cause; or (vi) the employee has been imposed with imprisonment by a final judgment on account of an offence other than the offences arising out of negligent acts or petty offences, or on account of any offence arising out of negligent acts or any petty offence that has caused damage to the Company. With any one of these serious grounds, employment may be terminated without any statutory severance pay or compensation.
On the other hand, without serious grounds, an employment may be terminated with statutory severance pay if there are reasonable grounds, e.g., employee’s incompetence, poor quality of work, retirement, chronic illness, etc. However, even a termination made with statutory severance pay may be subject to the employee’s claims for compensation for unfair termination if such reasonable grounds are not well documented or cannot be proven. Such compensation for unfair treatment can be awarded by the court to the employee in a large amount, especially if such employee had a long period of service with the employer. Precedents set by various Supreme Court decisions indicate that reasonable grounds include circumstances of employer’s financial difficulties, or reduction of business units; provided that there is no discrimination or intended persecution against any particular employee.
What, if any, additional considerations apply if large numbers of dismissals (redundancies) are planned? How many employees need to be affected for the additional considerations to apply?
Save for statutory severance pay based on the employee’s year of service, there is no requirement for additional consideration to apply specifically to redundancy cases under Thai labour law.
What, if any, additional considerations apply if a worker’s employment is terminated in the context of a business sale?
The same rules with respect to statutory severance pay and requirements for fair treatment (as discussed above) apply with no other special requirements for additional considerations under Thai labour law in the context of a business sale.
What, if any, is the minimum notice period to terminate employment? Are there any categories of employee who typically have a contractual notice entitlement in excess of the minimum period?
The Labour Protection Act requires that an advance notice of at least one full pay period must be given in relation to an intended employment termination, i.e., before or on the payday to take effect on the following payday. There is a special provision for termination due to improvements in the working unit, production process, distribution, or service resulting from the use of machinery or a change in machinery or technology, which stipulates that the employer must notify the employee at least 60 days prior to the intended termination date. However, if an employment agreement provides for a period longer than the statutory notice period, such contractual notice period shall prevail. It should be noted that either statutory or contractual notice period seems to protect the employee’s rights rather than those of the employer.
Is it possible to pay monies out to a worker to end the employment relationship instead of giving notice?
Yes, it is possible. The Labour Protection Act allows an employer to terminate the employment with immediate effect, provided that the employer pays the contractual amount of wages until the end of the statutory or contractual notice period, whichever is longer. In other words, the employer may choose to terminate an employment with immediate effect insofar as wages in lieu of advance notice are duly paid to the terminated employee.
Can an employer require a worker to be on garden leave, that is, continue to employ and pay a worker during his notice period but require him to stay at home and not participate in any work?
Yes, an employer may require a worker to be on garden leave, that is, continue to employ and pay a worker during his notice period but require him to stay at home and not participate in any work.
Does an employer have to follow a prescribed procedure to achieve an effective termination of the employment relationship? If yes, describe the requirements of that procedure or procedures.
To initiate employment termination, an employer shall: (i) observe either statutory or contractual notice periods, whichever is longer, or make payment in lieu thereof; (ii) pay wages of the last payment period and compensation for any unused leave entitlements; (iii) make statutory severance pay; and (iv) provide the employee with a certificate of employment.
If the employer does not follow any prescribed procedure as described in response to question 7, what are the consequences for the employer?
Failure to: (i) observe either statutory or contractual notice periods or make payment in lieu thereof; (ii) pay wages of the last payment round; and (iii) make statutory severance pay; within three days from the date of employment termination, can result in the employer being punishable with an imprisonment for a term not exceeding six months and a fine not exceeding THB 100,000, or both. In addition, the employer is liable for a default interest at the rate of 15% per annum on the outstanding sum of such required payments.
How, if at all, are collective agreements relevant to the termination of employment?
Collective agreements can mention additional requirements for termination of employment, such as investigation before termination, number of investigation committee members from the Labour Union to be appointed, or additional compensation packages for termination of employment.
Does the employer have to obtain the permission of or inform a third party (e.g local labour authorities or court) before being able to validly terminate the employment relationship? If yes, what are the sanctions for breach of this requirement?
For employment termination of an employee who is a member of an employees’ committee, the employer is required by law to obtain a permission from the labour court prior to the intended termination. Violation of this requirement will result in the employer being punishable with an imprisonment for a term not exceeding one month or a fine not exceeding THB 1,000 or both.
In addition, if the intended employment termination is due to improvements in the working unit, production process, distribution, or service, arising from the utilization of machinery or a change in machinery or technology, which results in a reduction of employees, the employer must inform a labour official 60 days in advance of the intended date of termination. The notice must include the termination date, reason for termination and a list of affected employees.
What protection from discrimination or harassment are workers entitled to in respect of the termination of employment?
Please refer to response in item 1. above.
What are the possible consequences for the employer if a worker has suffered discrimination or harassment in the context of termination of employment?
The Court considers that such termination of employment is unfair and tends to render a judgment or order granting compensation and/or requiring a reinstatement in favour of the employee.
Are any categories of worker (for example, fixed-term workers or workers on family leave) entitled to specific protection, other than protection from discrimination or harassment, on the termination of employment?
There is specific protection for female workers who are pregnant from being terminated because of pregnancy. Also, there is specific protection for employees from termination of employment if the intended or threatened termination is a result of the employees being members of a labour union, or the employees or the labour union calling a rally, filing a complaint, submitting a demand, negotiating or instituting a lawsuit, or being a witness or adducing evidence to a labour officer, labour relations committee, or labour court, or is a result of the employees about to take the aforementioned actions. Also, employees are protected from termination of employment if they are relevant to a collective bargaining agreement during the enforcement of such agreement unless an exception of the law applies, such as dishonestly performing duties or intentionally causing damage to the employer.
Are workers who have made disclosures in the public interest (whistleblowers) entitled to any special protection from termination of employment?
There is no special protection from termination of employment for whistle-blowers unless stipulated in the work rules to protect such workers.
In any case, it is worth noting that some pieces of legislation may protect whistle-blowers from termination of employment or other forms of retaliation as a result of their assistance or provision of information to the authorities in its investigation of their employer for alleged violation of the applicable legislation.
In the event of financial difficulties, can an employer lawfully terminate an employee’s contract of employment and offer re-engagement on new less favourable terms?
Yes, the employment may be terminated due to financial difficulties. As discussed in item 1. above, the event of financial difficulties facing the employer is considered by the Supreme Court as a reasonable ground for termination of employment.
Nevertheless, in some circumstances, a ‘fire and rehire’ approach might not be a pragmatic option to vary the employment term, considering the amount of statutory severance pay which shall be imposed on the employer as a result of unilateral termination of employment and the risk of unfair termination claim. Preferably, the employer should initiate a negotiation discussion to change the employment term during the course of employment without termination of employment.
What, if any, risks are associated with the use of artificial intelligence in an employer’s recruitment or termination decisions?
Even though AI could eradicate human flaws in the employment determination process, it may end up making discriminatory decisions which violate fundamental principal of Thai labor law. For instance, if the data given to the system indicated that a person of certain gender or ethnicity is capable of performing a certain job better than a person of another gender or ethnicity, this could cause systemic bias and the AI may wind up regularly ranking persons of one gender or ethnicity higher than the other, resulting in the original problematic issue in the decision-making process that led to the use of AI in the first place.
What financial compensation is required under law or custom to terminate the employment relationship? How is such compensation calculated?
Financial compensation legally required include:
Statutory severance pay (as mentioned in item 1. above) is stipulated at the following rates:
Length of Service
Rate of Severance Pay
(equivalent to the last wage rate per day)
At least 120 days but less than 1 year
At least 1 year but less than 3 years
At least 3 years but less than 6 years
At least 6 years but less than 10 years
At least 10 years but less than 20 years
20 years or more
Note that this amount is calculated based on the latest wage rates. Fixed allowances payable to an employee, which have no clear written purpose of payment as welfare, would be regarded as wages, for instance, living allowances, position allowances, fuel allowances, etc. Without specifically stipulated as welfare, these allowances would be included in the computation of severance pay.
Note that severance pay is not required to be made if employment is terminated due to any one of the serious grounds (as described in paragraph 3 above).
Payment in lieu of unused annual leave entitlement and accumulated unused annual leave entitlement (if any).
If the termination of employment is not based on any one of the serious grounds (as described in paragraph 3 above), an employer must pay an employee’s wages for unused annual leave entitlement for the year in which the employment is terminated in proportion to the number of days of the employee’s annual leave entitlement. If the employee is entitled to accumulate days of annual leave, the accrued unused annual leave must also be paid to the employee.
However, if the employment is terminated for cause based on any one of the serious grounds, the employee is not required to make payment in lieu of any unused annual leave entitlement for the year in which the employment is terminated. Note that in such case, the employee being entitled to accumulate days of annual leave is still entitled to payment in lieu of any unused annual leave so accumulated at the time the employment is terminated.
Payment in lieu of advance notice
Instead of observing the statutory or contractual notice periods (as described in paragraph 6 above), an employer may choose to make payment in lieu thereof.
Note that in the circumstance of any one of the serious grounds (as described in paragraph 3 above), termination may be made with immediate effect without any advance notice or payment in lieu thereof.
Other monetary benefits (if any are promised during the employment period).
Cost of the return journey.
If an employee has been brought from elsewhere at the employer’s expenses, the employer is obliged to pay the cost of the return journey when an employment contract comes to an end, unless otherwise provided in the contract, provided that the employment has not been terminated because of the fault of the employee and the cost is for the employee’s return to the original location.
Can an employer reach agreement with a worker on the termination of employment in which the employee validly waives his rights in return for a payment? If yes, describe any limitations that apply, including in respect of non-disclosure or confidentiality clauses.
Yes, an employer and an employee can reach an agreement to validly waive the employee’s rights in return for a payment. For example, a mutual separation agreement may be concluded for a mutual and amicable termination of employment. This kind of agreement is enforceable where the parties can stipulate clauses on a mutual release of claims and non-disclosure or confidentiality. However, during the process of negotiation, there should not be actions that would be interpreted as an employee being coerced to sign or conclude the agreement. Otherwise, such an agreement would be deemed as unilateral termination of employment and could lead to an unfair dismissal claim.
Is it possible to restrict a worker from working for competitors after the termination of employment? If yes, describe any relevant requirements or limitations.
An employer does not have supervising authority over a worker after the termination of employment. Thus, there will be no restrictions over the worker from working for a competitor of the employer after the termination of employment.
However, it is possible to restrict a worker from working for the employer’s business competitors after the termination of employment, through a contract duly signed by the employee to that effect.
The Supreme Court ruled that a non-competition clause to protect an employer’s legitimate rights for operating its business is enforceable and not regarded as contrary to public order and good morals, if such clause does not absolutely prohibit an employee from working in other areas and does not impose unreasonable obligations on the employee.
Can an employer require a worker to keep information relating to the employer confidential after the termination of employment?
Yes, confidentiality requirements should be made in a form of a contractual obligation to bind an employee to keep information related to the employer acquired during employment as confidential. This confidentiality clause will protect legitimate rights of the employer’s business.
Apart from post-contractual obligations, disclosure of trade secrets without authorization would violate the Trade Secret Act B.E. 2545 (2002) and the Penal Code.
Are employers obliged to provide references to new employers if these are requested? If so, what information must the reference include?
An employer is obliged to provide a certificate of employment upon the end of employment regardless of the reason for termination of employment according to the Civil and Commercial Code. The certificate of employment must stipulate the length of service and description of work performed by the worker. A Supreme Court judgment sets a precedent that an employer has no right to mention any statement unfavourable to the employee, e.g., termination of employment for cause.
What, in your opinion, are the most common difficulties faced by employers in your jurisdiction when terminating employment and how do you consider employers can mitigate these?
Most employers believe that they are free of legal risks if all statutory payments (as listed item 17. above) are made upon an employment termination. In reality, any employer failing to prepare ‘reasonable grounds’ (see item 1. above) may be entangled in a lawsuit initiated by the employee for an unfair or wrongful dismissal claim against the employee and/or its directors. Therefore, employers must consider whether the reason for termination of employment is just and proportionate to the employee’s misconducts or violations of any discipline. Also, advice on preparation for termination of employment and legal risks associated therewith should be considered.
In the case of employment termination either with reasonable grounds or with any other reasons (where severance pay must be made), an agreement for mutual separation of employment could be an option to mitigate risk of being sued for unfair dismissal. Mutual separation of employment is not considered a termination of employment unilaterally made by the employer that will trigger liability for compensation. It is strongly advisable that an agreement for mutual separation shall include the parties’ mutual releases or discharges of their obligations to one another. In practice, a successful conclusion of mutual separation agreement requires thoughtful and insightful preparation of relevant documentation and dialogue for conducting a separation meeting.
Are any legal changes planned that are likely to impact the way employers in your jurisdiction approach termination of employment? If so, please describe what impact you foresee from such changes and how employers can prepare for them?
There are no recent legal changes in Thailand in terms of termination of employment that would impact employers.
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