In Thailand, the Labour Protection Act (LPA) establishes guidelines for notice periods, severance pay, and lawful termination procedures to ensure fair treatment for employees and protect employer rights. Here’s an overview of the main policies surrounding termination and severance:

Notice Period Requirements

The LPA mandates that employers provide a minimum notice period of one pay cycle (typically one month) before terminating an employee’s contract, allowing sufficient time for the employee to secure new employment. The law also stipulates a maximum notice period of three months unless a longer duration is agreed upon in the employment contract, which must then be honored.

a. Notice in Lieu of Payment: Employers can replace the notice period with a one-time payment equivalent to the employee’s wages for that period, helping both parties transition smoothly.

b. Exceptions to Notice Requirements: In cases of severe misconduct, as outlined in Section 119 of the LPA, such as dishonesty, neglect, or criminal acts, employers are permitted to terminate without notice. Proper documentation of misconduct is essential to avoid legal repercussions.

Severance Pay Eligibility and Calculation

The LPA entitles employees to severance pay under specific circumstances, ensuring financial support for individuals facing job termination.

a. Eligibility: Employees are eligible for severance pay under the following conditions:

1. Termination without cause

2. Retirement (considered a form of termination under Thai law)

3. Resignation due to employer relocation causing significant hardship

4. Employee death, in which case severance is paid to beneficiaries

b. Severance Pay Calculation: Severance pay is calculated based on the employee's length of service at their last wage rate, as follows:

1. Less than 1 year: 30 days’ wages

2. 1–3 years: 90 days’ wages

3. 3–6 years: 180 days’ wages

4. 6–10 years: 240 days’ wages

5. 10–20 years: 300 days’ wages

6. Over 20 years: 400 days’ wages

c. Special Severance Pay: If an employer fails to provide the proper notice, the employee is eligible for additional severance equivalent to 30 days of wages. However, employees resigning without justified cause generally do not qualify for severance unless the resignation results from employer relocation.

Termination Process: With Cause and Without Cause

The termination procedure in Thailand involves clear guidelines to ensure compliance with the LPA and fair treatment for employees.

a. Termination with Cause: Section 119 of the LPA outlines grounds for termination with cause, such as dishonesty, willful negligence, or repeated violations despite warnings. Employers must have solid evidence and conduct a fair investigation before proceeding with termination for cause.

b. Termination without Cause: When termination occurs without cause, employers must:

1. Provide a written notice at least one pay cycle in advance, effective from the next pay date.

2. Calculate and disburse severance pay based on the employee’s service duration within seven days of termination.

3. Issue a withholding tax certificate (Por Ngor Dor 50) and job certification for the employee.

c. Additional Requirements: While not legally required, a discussion with the employee is recommended to maintain transparency and support a fair termination process.

Wrongful Dismissal Protections

Failure to follow these procedures can lead to wrongful dismissal claims. Employees terminated without valid cause or without adherence to required procedures can file a complaint with the Labor Court, which may award compensation based on the circumstances.

a. Takeaway: Compliance with Thailand’s LPA is crucial for employers to avoid legal issues and foster a fair work environment. For employees, understanding these rights ensures preparedness and support in cases of job termination.