Compliance
Comprehensive Guide to Employment and Labor Law Termination Procedures in Thailand

Lawful Termination of Employment in Thailand


In Thailand, employers must have valid reasons to terminate an employment relationship. Termination is considered lawful under serious grounds, including:


1. Dishonest acts or criminal offenses against the employer.

2. Intentional actions causing losses to the employer.

3. Negligence resulting in severe losses for the employer.

4. Violation of work rules or regulations after a written warning, except in severe cases.

5. Absence from duty for three consecutive workdays without reasonable cause.

6. Imprisonment for offenses other than petty offenses or negligent acts causing damage to the company.


Termination based on these grounds can be done without statutory severance pay. However, without these serious grounds, termination may require statutory severance pay, which must be well-documented to avoid claims of unfair termination.


Mass Dismissals and Redundancies


Thai labor law does not mandate additional considerations for redundancies beyond statutory severance pay based on years of service. Employers must ensure compliance with standard severance provisions.


Termination in the Context of Business Sales


When terminating employment due to a business sale, the same rules for statutory severance pay and fair treatment apply. No special additional considerations are required.


Minimum Notice Period for Termination


The Labor Protection Act mandates an advance notice period of at least one full pay period. For terminations due to improvements in operations or technology, a 60-day notice is required. Contractual notice periods longer than statutory periods take precedence.


Payment in Lieu of Notice


Employers can terminate employment immediately by paying the wages for the statutory or contractual notice period. This allows immediate termination without breaching notice period requirements.


Garden Leave


Employers can place employees on garden leave during the notice period, meaning they continue to pay the employee while requiring them to stay at home and not work.


Prescribed Termination Procedures


To terminate employment effectively, employers must:


1. Observe statutory or contractual notice periods or pay in lieu.

2. Pay wages for the last payment period and unused leave entitlements.

3. Make statutory severance payments.

4. Provide a certificate of employment.


Consequences of Failing to Follow Procedures


Non-compliance with termination procedures can result in imprisonment up to six months, fines up to THB 100,000, or both. Employers may also face default interest on unpaid amounts.


Collective Agreements and Termination


Collective agreements may impose additional termination requirements, such as mandatory investigations or extra compensation packages. Employers must adhere to these stipulations.


Third-Party Permissions for Termination


For terminating members of an employees' committee, employers must obtain permission from the labor court. Violating this requirement can lead to imprisonment, fines, or both.


Protection from Discrimination and Harassment


Termination of employment due to discrimination or harassment is considered unfair. Courts may award compensation or require reinstatement of the employee.


Specific Protections for Certain Workers


Pregnant employees, union members, and those involved in collective bargaining or legal proceedings related to labor issues are protected from termination.


Whistleblower Protections


While Thai law does not specifically protect whistleblowers from termination, certain legislation may provide protection if they assist authorities in investigations against their employer.


Termination Due to Financial Difficulties


Employers can terminate employment due to financial difficulties, which the Supreme Court considers a reasonable ground. However, negotiating changes to employment terms without termination is preferable to avoid severance pay and unfair termination claims.


Risks of Using Artificial Intelligence in Termination Decisions


AI in employment decisions can lead to discriminatory outcomes. Employers must ensure AI systems do not perpetuate biases based on gender, ethnicity, or other protected characteristics.


Financial Compensation for Termination


Employers must provide statutory severance pay, payment for unused leave, wages for the notice period, and other promised benefits. Severance pay rates are based on the employee's length of service.


Mutual Termination Agreements


Employers and employees can agree to terminate employment mutually, with the employee waiving rights in return for a payment. Such agreements should be free from coercion to avoid unfair dismissal claims.


Restricting Post-Employment Competition


Non-competition clauses in employment contracts are enforceable if they protect the employer's legitimate business interests and do not impose unreasonable restrictions on the employee.


Confidentiality Obligations Post-Employment


Employers can require confidentiality of business information through contractual obligations. Unauthorized disclosure of trade secrets can result in legal action under the Trade Secret Act and Penal Code.


Providing Employment References


Employers are required to issue a certificate of employment upon termination, stating the length of service and job description. Negative comments about the employee should be avoided.


Common Challenges in Termination


Employers often face legal risks if termination grounds are not well-documented. Preparing reasonable grounds for termination and considering mutual separation agreements can mitigate these risks.


Legal Changes Impacting Termination Practices


Currently, there are no significant legal changes in Thailand affecting employment termination practices.


By understanding and adhering to these guidelines, employers in Thailand can navigate the complexities of employment termination while minimizing legal risks and ensuring fair treatment of employees.