The Thai Labor Protection Act
In Thailand, all employers, and employees, except for the government administration and state enterprises, are governed by the Thai Labor Protection Act of 1998 (“LPA”) (amended 2019). This act regulates the basic rights of both employees and employers by defining the working hours, welfare funding, holidays, sick leave, educational leave, maternal leave, overtime, and work safety. It also contains rules on how to legally end an employment contract, and the procedures to follow in case of wrongful dismissal.
In Thailand, an employer is entitled to terminate the employment of employees at his/her discretion and is not required by law to specify a reason for dismissal. However, if the grounds for dismissal are not specified, an employer is obligated to make payment of statutory severance pay at the rate set out by the LPA, to an employee whose employment was terminated without reason or for reasons other than those stipulated in Section 119 of the LPA.
Dismissal without cause
Section 118 of the Labor Protection Act states that employees who have worked for 120 days or more are entitled to receive severance pay if they are dismissed without cause. Employees who have worked for less than 120 days can be dismissed without cause and are not entitled to receive severance pay.
The minimum notice period for the dismissal of employees must equal to at least 1 payment period but does not need to be longer than 3 months. However, if the employment contract provides a notice period of over 3 months, the employer must comply with such specific notice period.
Please note that a notice of dismissal is not required if an employee is being dismissed due to the reasons stipulated in section 119 of the LPA.
Severance pay must be paid to the employee when he/she is dismissed without cause and is based on the duration of the employment:
|LENGTH OF SERVICE||SEVERANCE PAY RATE|
|120 DAYS ~ < 1 YEAR||30 DAYS|
|1 YEAR ~ < 3 YEARS||90 DAYS|
|3 YEARS ~ < 6 YEARS||180 DAYS|
|6 YEARS ~ < 10 YEARS||240 DAYS|
|10 YEARS ~ < 20 YEARS||300 DAYS|
|> 20 YEARS||400 DAYS|
Dismissal with a cause
Section 119 of the LPA states that an employee will not be entitled to severance pay if his/her employment is terminated on the following grounds:
Wrongful dismissal refers to a situation where an employer has terminated or laid off an employee in a manner that violates the employee’s rights under the LPA. Violation of the LPA may result in the employer receiving a fine of between 5,000 and 200,000 THB and/or imprisonment of up to one year.
Section 49 of the Labor Court Establishment and Dispute Procedure Act B.E. 2522 (1979) states that in the dismissal case, if the Labor Court thinks the dismissal is unfair, it shall order the employer to reinstate the employee at the same level of wage at the time of dismissal. However, if the labor court thinks that such employee and employer cannot work together, it shall fix the amount of compensation to be paid by the employer which the Labor Court shall take into consideration the age of the employee, the working period of the employee, the employee’s hardship when dismissed, the cause of dismissal and the compensation the employee is entitled to receive. Cases of wrongful dismissal include:
Due to the fact that section 49 of the Labor Court Establishment and Dispute Procedure Act B.E. 2522 does not provide a clear definition, or conditions for wrongful dismissal, it is the discretion of the Court to decide whether or not such dismissal is a lawful, and the amount of compensation to be awarded to the employee in case of a wrongful dismissal.
In conclusion, the LPA regulates the basic rights and duties of employees and employers in Thailand. All employers and employees, except for the government administration and state enterprises, are governed by the LPA. Violation of the LPA either by wrongful dismissal or any other violations may result in the employer having to compensate the employee, receiving a fine of between 5,000 and 200,000 THB and/or imprisonment of up to one year.
If an employee has worked for an uninterrupted period of over 120 days, and he/she was dismissed without cause, he/she is entitled to statutory severance pay of from 30 days‘ wages to 400 days‘ wages. If the employee was dismissed due to causes specified under section 119 of the LPA, the employer is not required to provide advance notice of dismissal, and he/she is not entitled to receive severance pay.
The notice period for the dismissal of an employee is at least 1 payment period but does not need to be longer than 3 months unless otherwise stated in the employment contract.
If an employee feels that he/she was a wrongfully dismissed, he/she may file a case with the Labor Court, but according to section 49 of the Labor Court Establishment and Dispute Procedure Act B.E. 2522, whether or not the dismissal was unlawful, and the amount of compensation the employee is entitled to depends on the sole discretion of the Court.
If you have any questions regarding these Dismissal of Employees in Thailand, feel free to contact us at [email protected], or call us at +66 (0)2 117 9131-2.