Minimum Notice Period

Article 16 of the Labor Standards Act (LSA) specifies the minimum notice period required for an employer to terminate an employee:

- For employees with 3 to 12 months of service: 10 days’ notice.

- For employees with 1 to 3 years of service: 20 days’ notice.

- For employees with more than 3 years of service: 30 days’ notice.

After receiving notice, employees can request leave during work hours (up to 2 days a week) to search for a new job, and they must still receive their wages during this time.

Reasons for Termination

Article 11 states that an employer can only terminate a labor contract under the following conditions:

1. The business is closing or being transferred.

2. The business is experiencing losses or downsizing.

3. Work is suspended for over a month due to force majeure.

4. The nature of the business changes, necessitating workforce reduction, with no suitable positions available for reassignment.

5. The employee is genuinely incompetent for the job.

Severance Pay Calculation

Employees can estimate their severance pay using the government website here.

Severance pay is calculated as follows:

- Severance Pay = (Six months' average salary) × (Severance pay base)

- Six months' average salary = (Total of six months' basic salary + KPI bonus) ÷ 6

- Severance pay base = (Severance date - Start date) ÷ 12 months × 0.5

For special leave, the formula is:

- Special leave pay = (Basic salary + KPI bonus) ÷ 30 × Statutory special leave days not taken.

Contract Non-Renewal and Layoffs

If a contract is not renewed upon expiration, it is treated as a layoff. The procedure is the same as termination, requiring a 10-day notice period, a legitimate reason for the layoff, and payment of severance pay. Since the decision to not renew the contract is made by the company, not the employee, the company must pay severance pay if the contract is not renewed, provided the termination is not due to the employee's resignation.

Notification for Contract Renewal for Foreign Employees

For foreign employees, the company must notify them at least one month in advance if they intend to renew the contract. This is because renewing visas, residence permits, and other related documents takes at least one month.