This guide aims to give you a complete overview of severance pay in Thailand.
Severance pay is paid at different rates depending on the employment period and under special circumstances, an employee will also be entitled to special severance pay.
Let’s dive into more details about severance pay in Thailand.
What is severance pay in Thailand?
Severance pay is the compensation an employer provides to a terminated employee who is dismissed which may be with or without a cause.
Both Thai and foreign employees are entitled to severance pay.
Severance pay rates in Thailand
The new Labour Protection Act (No.7) B.E. 2562 (2019) became effective on 5 May 2019. The Labour Protection Act increased the number of days of the wage for terminating an employee with an employment period of 20 years or more.
The rates of severance pay are as follows:
|Employment period||Rate of severance pay|
|120 days but less than one year||30 days|
|One year but less than three years||90 days|
|Three years but less than six years||180 days|
|Six years but less than 10 years||240 days|
|10 years but less than 20 years||300 days|
|20 years or more||400 days|
Exceptions to paying severance pay
According to section 119 of the Labour Protection Act, the company is not required to pay severance pay to an employee whose employment has been terminated for any of the following reasons:
- Dishonest performance of his duties or the intentional commission of a criminal act against the company
- Wilfully causing damage to the employer
- Committing negligent acts causing serious damages to the employer
- Violation of the company’s work rules and regulations or orders which are both lawful and equitable when the company has already issued the employee with a prior written notice
- Neglect of his duties for a period of three consecutive workdays without a reasonable cause, whether or not a holiday intervenes
- Being sentenced to imprisonment by a final court judgement
An employee who has entered a fixed-period contract is not entitled to receive severance pay when the contract is terminated.
If the Labour Court considers that the employment contract is not in accordance with the fixed-period contract requirements, the employer will be required to pay severance pay.
Special severance pay
Severance pay vs special severance pay
Severance pay is the money paid to employees when the employer decides to terminate the employee, while special severance pay is the money an employer pays to the employee based on termination due to special circumstances as stipulated in the Labour Protection Act.
When is special severance pay paid?
Relocation (section 120)
If an employer relocates the place of business and the relocation affects the ordinary course of living of the employee, the employer must notify the employee about the relocation not less than 30 days in advance.
As a result of the relocation the employee does not wish to work at the new location, the employee can terminate the employment contract within 30 days from receiving the notification of relocation or from the date of relocation. In this case, the employee is entitled to special severance pay not less than the severance pay the employee is entitled to.
If the employer fails to notify the employee in advance, the employer shall also pay special severance pay in lieu of advance notice of an amount equal to 30 days of the most recent wage rate received.
The special severance pay or severance pay in lieu of advance notice should be paid within seven days from the date the employee terminates the contract.
Improvement made to work unit, production, distribution or service processes (section 121)
When an employer terminates the employee because improvement being made to the work unit, distribution, production or service processes, arising from the utilization of machinery or change of machinery or technology, causing a reduction in the number of employees, the employer shall notify the Labour Inspector and the following information at least 60 days in advance of the termination date:
- The employees to be terminated
- The date of the employment termination
- Reasons for employment termination
- List of names of the employees
If the employer fails to give notice to the employee in advance or less than 60 days, the employer must also in addition to the severance pay, special severance pay equal to 60-day wage at the most recent wage rate received.
In the case that the employee has worked consecutively for six years or more, the employer shall pay special severance pay in addition to the severance pay in an amount not less than the wage received at the most recent rate for 15 days for each complete year of work, but the total severance pay shall not exceed the amount of the wage at the most recent wage rate for 360 days.
For special severance pay calculation, if the employment period is less than one year but the fraction is more than 160 days, it is considered to be one year of employment.
Acclime provides professional services regarding HR administration and can assist when calculating severance pay for employees.