Most employees in Thailand know they are entitled to Severance Pay when their employment is terminated without cause by their employers. However, there are instances where employers may attempt to avoid paying Severance, either intentionally or out of ignorance of the law, when in fact they remain legally obligated to do so.
While there is an abundance of information available on how the Labour Protection Act B.E. 2562 (2019) regulates the rates and calculation of Severance Pay, this article sets out possible misconceptions employers may use to avoid paying Severance, so that you, as the terminated employee, can better understand your rights to Severance Pay.
Termination with cause: “Your performance was below our expectations.”
The inability or failure to perform a job, as measured by some standard used by the employer, does not in and of itself meet the criteria stipulated by law to avoid Severance Pay upon termination. Do not allow an employer to rely on this as sufficient to terminate your employment without paying Severance Pay.
Termination with statutory cause: “You violated our work rules/regulations,” or “You violated my order.”
Violation of an employer’s work rules, regulations or orders that are lawful and just do meet the statutory criteria for terminating an employee without Severance Pay. Nevertheless, your employer is first required to give you a written warning at a minimum, and possibly implement a performance improvement plan, which you must then violate again within twelve months of the written warning before your employment may be lawfully terminated with statutory cause. A termination letter issued under these circumstances must also detail how your alleged action violated the work rule(s) clearly and sufficiently enough for you to understand the reasons that gave rise to your termination.
There is an exception, however. An employer is entitled to immediately terminate your employment without prior written warning if your alleged violation of a work rule or order is considered “serious”. Unfortunately, what actions are deemed a serious violation are not well defined in law and are subject to justification by the employer if you disagree and choose to pursue a wrongful termination case in court.
Termination subject to a foreign jurisdiction: “Your employment contract is governed by foreign law. You are not entitled to any statutory payments according to Thai Labour Laws.”
Even if your employment contract states that it is subject to and governed by a different country, if you live, work full time and collect a salary in Thailand, you are most likely still be entitled to the protections given under Thai labour law.
If your employment is to be based in Thailand but you find yourself being asked to sign an employment agreement governed by another country’s laws, we highly recommend seeking legal advice before signing it.
Generally speaking, you’ll want to ensure that the terms of employment specify work in Thailand, and that your work permit is sponsored by and your salary is paid from a local Thai entity. With those three stipulations, it will be much easier to convince the Labour Court that your employment is protected by the Thai Labour Protection Act.
GPS Legal can help you
Whether you’re an employee seeking severance pay or an employer needing guidance on termination procedures, GPS Legal is here to assist. Our team of labor law experts can assess your situation, provide clarity on Thai labor laws, and guide you through the necessary steps to protect your rights and remain compliant. Contact GPS Legal today for personalized support.
