Tag Archive: dismissal

  1. Dismissal of Employees in Thailand

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    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.

    Notice period

    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 pays

    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 SERVICESEVERANCE PAY RATE
    120 DAYS ~ < 1 YEAR30 DAYS
    1 YEAR ~ < 3 YEARS90 DAYS
    3 YEARS ~ < 6 YEARS180 DAYS
    6 YEARS ~ < 10 YEARS240 DAYS
    10 YEARS ~ < 20 YEARS300 DAYS
    > 20 YEARS400 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:

    • The employee performs his/her duty dishonestly or intentionally committed a criminal offence against the employer.
    • The employee willfully caused damage to the employer.
    • The employee committed negligent acts which caused serious damage to the employer.
    • The employee violated work rules, regulations or orders of the employer which are 
    • The employee was absent from duty without justifiable reason for three consecutive working days regardless of whether there is a holiday in between.
    • The employee was sentenced to imprisonment by a final court judgment. If the imprisonment is for offences committed by negligence or a petty offense, it shall be an offense that causes damage to the employer.

    Wrongful dismissal

    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:

    • Immediate dismissal without a clear and full explanation of the reason or the termination of the agreement without serious cause nor severance pay.
    • The termination of the agreement without payment of the unused annual leave.
    • The termination of the agreement based on the (claimed) violation of the work regulations by the employee without any prior warning.

    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.  

    Conclusion

    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.

  2. Termination of Employment : Part II – Dismissal of an employee

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    What are the definitions of “termination” and “dismissal”?

     

    Termination of employment is an employee’s departure from a job. Termination may be voluntary on the employee’s part, or it may be at the hands of the employer, often in the form of dismissal (firing) or a layoff. Dismissal or firing is generally thought to be the fault of the employee, whereas a layoff is generally done for business reasons (for instance a business slowdown or an economic downturn) outside the employee’s performance.

     

    Dismissal is when the employer chooses to require the employee to leave, generally for a reason which is the fault of the employee. In the case of the dismissal of an employee, the contract ends without notice and without severance pay.

     

    Checklist:

    If you decide to dismiss an employee (termination without notice), please pay attention our following advice for a correct termination.

     

    1. Existence of an important reason

    Under Thai law, a dismissal is considered under the following circumstances:

    • being dishonest in performing duties or intentionally committing a criminal against the employer
    • intentionally causing damages to the employer;
    • performing an act of negligence which causes severe damages to the employer;
    • violating work rules or regulations or disobeying the employer’s orders which are legal and fair and which the employer has already given a warning letter, except in serious cases for which the employer is not required to give a warning;
    • neglecting the work duties for a period of three consecutive work days without a reasonable cause, whether or not there is a holiday intervening in such period; and/or
    • having been imprisoned by a final judgement.

    If one of the aforementioned cases is committed with negligence or is a petty case, the employer must prove that he has suffered a damage.

     

    2. Ultima Ratio (“the last resort”)

    The extraordinary termination should always be the last resort. The employer must consider any other measure that may solve the problem like:

    • transfer to another workplace or department; and/or
    • ordinary termination.

     

    3. Declaration of the dismissal

    The employer should name the important reason in the termination letter.  If it is missing, the employer cannot invoke to this reason in a future proceeding.

    It is commendable to secure oneself with warning letters (please see our FLT memo related to “Warning Letter to Employee”)

     

    4. Provide the employee with the termination letter

    The termination letter should be provided via post or personally.

    The employee can have the termination reviewed by the Labor Court. If the Labor Court finds that the termination was unjust, the employer may be ordered to letting the employee work under the old conditions.

    If it comes to the result the termination was unjust, but the continuation of work is unacceptable, the employer has to compensate for damages.

     

    5. Practical measures

    If the employee leaves the organization, certain things need to be managed, for example:

    a) Return of property

    If the employee used employer property as a part of the job, make sure you collect them. For example:

    • company laptop
    • cellphone
    • office keys
    • ID badges

    b) Cancellation of any access

    You should cancel any access the employee might have to the office. Files, computer files should be protected and make sure that your IT staff cancels passwords to any company digital files. For example:

    • disconnect the computer login
    • remove the email address from the staff list
    • disable entry building code or entry swipe card

    For the e-mail-address, make an arrangement with your ID-administrator to determine exactly for how long this account will be active, to avoid unauthorized use by the departing employee.

    c) Cancellation of advantages

    Make sure that you cancel employee benefits. For example:

    • Health-, Dental-, Life-, Disability Insurance
    • Stop retirement contribution

    d) Final pay

    Make sure that your payroll department calculates the final hours of work as well as any unpaid vacation hours and let the employee know when he or she can get them.

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