In all cases, the termination of an employment contract must be in accordance with the terms of the agreement, the applicable labor rules and the applicable legislation. Under the Labor Protection Act, fixed-term employment contracts automatically end at the end of the period without the need for notice. If the employee has an open-ended employment contract, the employer may terminate the contract by giving the employee an employment termination letter at or before the time of payment of wages. Employees are entitled to at least one full cycle of information payment prior to the effective date of termination or payment of wages in lieu. However, the notice period shall not exceed three months.
For employees who receive their wages daily, the notice of termination must be sent before or on payday so that the effective date of termination is the next payday. An employer may immediately terminate an employee’s services by paying wages in lieu of notice equal to the number of days the information is insufficient. Following a termination, employees may bring an action for wrongful termination.
Thus, in the context of a termination, it is important to follow the following rules:
Before making a termination, make sure you are familiar with the termination procedure to avoid paying additional severance.
|➤ Respect the employee's 30-day notice period or more if the employment contract mentions a longer period|
|➤ Pay the employee the severance pay, the amount of which varies according to the employee's working time|
The notification of dismissal to an employee is part of the dismissal procedure and is a mandatory step. Once the decision to dismiss has been taken, the employer is required to send an employment termination letter to inform the employee, respecting certain deadlines.
Indeed, the notification of the dismissal must be done by means of an employment termination letter which can be delivered to the employee by different means:
|➤ Typically, it is sent by registered letter with acknowledgement of receipt|
|➤ The dismissal can also be sent by email|
|➤ It can also be delivered to the employee in person in exchange for a discharge|
The employment termination letter is of great importance in the event that the employee challenges the dismissal in court. Indeed, it delimits the perimeter of the possible litigation because only the reasons for the dismissal mentioned in this letter can be invoked by the employer before the labor court.
In the event of termination without cause, the employer must pay the employee severance pay. In some cases, the employer is not required to pay severance pay.
In all cases, the employer must comply with:
|➤ The employee's notice period|
|➤ Payment of severance pay|
|➤ Payment of commissions and bonuses if due|
|➤ Payment of paid vacations if the employee has not taken a day off during a consecutive work year|
When an employee does not respect his or her obligations, the employer may be forced to consider dismissal without paying severance pay. Depending on the seriousness of the facts, you may consider dismissing the employee with notice or without notice if the misconduct is extremely serious and has caused significant damage to the company.
If your employee commits numerous professional misconducts, you must notify him/her of these misconducts before proceeding with a termination of his/her contract. Indeed, before any dismissal for misconduct, we recommend that you send employee warning letters to your employee so that he/she understands the nature of the misconduct. If he continues to do so after you have notified him, you can proceed with a breach of contract, and you will not be obliged to pay him his severance pay.
If your employee has committed a very serious fault, you must analyze whether this fault alone can constitute a dismissal. Our lawyers can assist you in this analysis and inform you about your rights to dismiss your employee.
If the employee intends to harm the company, the employer is entitled to terminate the employment contract without paying the fee and without respecting the notice period. However, the employer’s intentional misconduct must have serious consequences for the company and must have caused damage.
Of course, other faults may justify the dismissal of your employee. In any case, we recommend that you hire a Thai lawyer if you wish to proceed with the dismissal of your employee.
To terminate an open-ended employment contract, the employee must be notified within a minimum period equal to the employee’s pay cycle, unless the employment contract provides otherwise. Thus, if the employee is paid monthly, the employment termination letter must be sent to the employee at least one month prior to the effective date of termination; if the pay cycle is greater than three months, the time period for notifying the employee may be three months. In the case of a fixed-term contract, it is not necessary to notify the employee with an employment termination letter before the end of the contract. It is advisable to send a registered letter with acknowledgement of receipt to keep proof of the date of notification.
If the employee is receiving severance pay, there is no legal obligation to notify the employee of the reason for termination. However, we recommend that the employee be notified of the reason for the termination to protect the employee from any claims of wrongful termination.
When the employee is dismissed without severance pay under Article 119 of the Labour Protection Act, the reasons for dismissal must be carefully detailed in the notification.
Any employee who is terminated is entitled to compensation, except as otherwise provided by employment law.
Notice of termination is an essential element. It is a notice period to be respected by the party (the employer or the employee) who is at the origin of the decision to terminate the employment contract. Under Thai law, the notice period is 30 days. However, this period can be extended by a clause in the employment contract.
If an employee is terminated, it may be necessary to pay severance pay. Below you will find all the amounts related to the severance pay of an employee:
|Duration of employment||Severance pay|
|Less than 120 days||No severance pay|
|120 days - 1 year||Income of at least 30 days|
|1 year - 3 years||Income of at least 90 days|
|3 years - 6 years||Income of at least 180 days|
|6 years - 10 years||Income of at least 240 days|
|10 years - 20 years||Income of at least 300 days|
|More than 20 years||Income of at least 400 days|
The employer may not pay severance pay in the following case:
|➤ The employee dishonestly performs or intentionally commits a criminal offense against the employer|
|➤ The employee intentionally causes harm to the employer|
|➤ The employee commits a negligent act resulting in a serious loss to the employer|
|➤ The employee's act violates the employer's work rules, regulations or orders that are legal and fair, and receives a written warning|
|➤ The employee neglects his or her duties for three consecutive days without reasonable cause, whether or not there is a holiday in between|
|➤ The employee is subject to imprisonment upon final judicial determination|
According to Thai law, an employee must have 6 days of paid vacation after one year of work in the company. Therefore, make sure to calculate the days taken by the employee and to pay the remaining days after your employee’s termination.
Bonuses and commissions must be paid to the employee if they are entitled to them and as stated in their employment contract. Therefore, a terminated employee who is entitled to commissions or bonuses must be paid and the termination will not allow for the payment of bonuses except in exceptional cases.
If a company does not wish to pay severance pay, there are several options for not paying the amount:
In some cases, Thai law allows the employer not to pay the severance pay in certain specific cases indicated by Thai law. However, if you wish to terminate an employee, make sure that you have sent several warning letters to the employee to justify your termination for misconduct. Also make sure you have all the evidence of the employee’s misconduct to build a case against the employee.
A useful solution to avoid paying severance is to reach an agreement with your employee. For example, you can reduce or waive the severance payment if you agree to sign a memorandum of understanding to clarify these items. The memorandum of understanding is very useful in Thai companies in order to dismiss a person while finding an agreement that avoids a possible dispute between the employee and the employer.
If your employer fires you without cause, you can call our employment lawyers. We will get back to you as soon as possible. However, it is useful to know some recommendations to protect yourself:
In the event of a brutal dismissal without just cause, it is important not to sign the employment termination letter where the reason is disputed. The labor court may perceive any signature on the document as an acceptance of the reason for the termination.
You must express your disagreement with the reason for your termination. For example, you can send an email to your manager asking for an explanation and stating that you do not agree with your termination. Use neutral language and send it only to the appropriate people.
If no agreement can be reached and your employer wishes to terminate you without compensation as provided for under Thai law, you should file an application with the Labor Board to request payment of your severance pay and notice period, if any, and any other compensation to which you are entitled, or file an application with the Labor Court.
An employee may file a complaint against his or her employer in the labor court to obtain severance pay or compensation for wrongful termination after the employee is terminated without first filing a complaint with the labor inspector.
Thai law does not specifically define what constitutes “unfair dismissal”. In the event that the labor court finds that the employee has been wrongfully dismissed, the court may:
|➤ Order the employer to reinstate the employee on the same terms and conditions as before he or she left|
|➤ If the court decides that the parties are no longer able to work together, the employer must pay the employee compensation for wrongful termination, as calculated by the court|
On average, a labor court action is decided within nine to 18 months after the complaint is filed, or longer for complex cases. Labor Court judgments can be appealed to the Supreme Court within 15 days of the judgment being handed down.
Themis Partner assists employees and employers in complying with Thai labor laws, including termination of employment, severance pay, compensation, and challenges to wrongful termination. If you would like more information, please do not hesitate to contact us.