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1. Civil and Commercial Code (CCC), Sections 575, 582, 583, and 585, on hire of services — the principal governing law
2. Labor Protection Act B.E. 2541 (1998), as amended to date, Sections 17, 17/1, 67, 118, and 119 — the principal law on termination of employment
3. Social Security Act B.E. 2533 (1990) — unemployment benefits
4. Act on the Establishment of Labor Courts and Labor Court Procedure B.E. 2522 (1979) — labor litigation
Contents
- What is an employment contract, and when does it come into existence?
- Advance notice: the first step that cannot be skipped
- Severance pay on termination: the rates under current law
- When can an employer dismiss immediately without paying severance?
- The certificate of employment: an employee right that employers often forget
- The correct procedure for a termination
What is an employment contract, and when does it come into existence?
Before turning to termination, it helps to understand what an "employment contract" (in the language of the Code, a hire of services) is. Thai law defines it clearly in Section 575 of the Civil and Commercial Code:
"A hire of services is a contract whereby a person, called the employee, agrees to render services to another person, called the employer, who agrees to pay remuneration for the duration of the services." (English text as published in the Thailand Law Library; unofficial translation)
Thai original: "อันว่าจ้างแรงงานนั้น คือสัญญาซึ่งบุคคลคนหนึ่ง เรียกว่าลูกจ้าง ตกลงจะทำงานให้แก่บุคคลอีกคนหนึ่ง เรียกว่านายจ้าง และนายจ้างตกลงจะให้สินจ้างตลอดเวลาที่ทำงานให้"
— Civil and Commercial Code, Section 575
An employment contract therefore has three essential elements: the employee agrees to work, the employer agrees to pay wages, and the relationship continues for as long as the work is performed. The contract need not always be in writing; an oral agreement can be legally binding, but in practice a written contract protects both sides far better.
Advance notice: the first step that cannot be skipped
When an employer wishes to terminate, the law does not allow it simply to tell the employee to leave immediately without advance notice, except in cases of serious misconduct, which are discussed in the next section. The advance notice rule comes from both the Civil and Commercial Code and the Labor Protection Act.
Section 582 of the Civil and Commercial Code sets the basic framework:
"If the parties have not fixed the duration of the contract, either party can terminate it by giving notice at or before any time of payment to take effect at the following time of payment. But no more than three-month notice need be given." (English text as published in the Thailand Law Library; unofficial translation)
Thai original: "ถ้าคู่สัญญาไม่ได้กำหนดลงไว้ในสัญญาว่าจะจ้างกันนานเท่าไร ท่านว่าฝ่ายใดฝ่ายหนึ่งจะเลิกสัญญาด้วยการบอกกล่าวล่วงหน้าในเมื่อถึงหรือก่อนจะถึงกำหนดจ่ายสินจ้างคราวใดคราวหนึ่ง เพื่อให้เป็นผลเลิกสัญญากันเมื่อถึงกำหนดจ่ายสินจ้างคราวถัดไปข้างหน้าก็อาจทำได้ แต่ไม่จำต้องบอกกล่าวล่วงหน้ากว่าสามเดือน"
— Civil and Commercial Code, Section 582
Section 17 of the Labor Protection Act adds that, for an employment contract of indefinite duration, which includes a probationary contract, notice must be given in writing and must reach the other party at or before a wage payment date so that the termination takes effect on the following wage payment date, although no more than three months' notice is required.
In practice, for an employee paid monthly, proper advance notice means giving written notice on or before the pay day of one month so that it takes effect on the pay day of the following month. In other words, the employee must be given at least one full wage period. If the employer wants the employee to leave immediately, Section 17 allows the employer to pay the wages that would be due up to the termination date stated in the notice and have the employee leave at once. Section 17/1 further provides that where an employer terminates the contract without giving advance notice under Section 17, paragraph two, it must pay a sum equal to the wages the employee would have earned from the date of dismissal until the date the termination takes effect, payable on the day the employee is dismissed. This sum is commonly called "payment in lieu of advance notice" and is separate from severance pay under Section 118.
Severance pay on termination: the rates under current law
The point most often misunderstood by employers and employees alike is the rate of severance pay. Section 118 of the Labor Protection Act sets the rates according to length of service; following the amendment by the Labor Protection Act (No. 7) B.E. 2562 (2019), there are now 6 tiers, as follows:
"An employer shall pay severance pay to an employee whose employment is terminated, as follows:
(1) an employee who has worked continuously for one hundred and twenty days but less than one year shall be paid not less than his or her last rate of wages for thirty days, or not less than the wages for the last thirty days of work for an employee paid on a piece-rate basis;
(2) an employee who has worked continuously for one year but less than three years shall be paid not less than his or her last rate of wages for ninety days, or not less than the wages for the last ninety days of work for an employee paid on a piece-rate basis;
(3) an employee who has worked continuously for three years but less than six years shall be paid not less than his or her last rate of wages for one hundred and eighty days, or not less than the wages for the last one hundred and eighty days of work for an employee paid on a piece-rate basis;
(4) an employee who has worked continuously for six years but less than ten years shall be paid not less than his or her last rate of wages for two hundred and forty days, or not less than the wages for the last two hundred and forty days of work for an employee paid on a piece-rate basis;
(5) an employee who has worked continuously for ten years but less than twenty years shall be paid not less than his or her last rate of wages for three hundred days, or not less than the wages for the last three hundred days of work for an employee paid on a piece-rate basis;
(6) an employee who has worked continuously for twenty years or more shall be paid not less than his or her last rate of wages for four hundred days, or not less than the wages for the last four hundred days of work for an employee paid on a piece-rate basis."
— Labor Protection Act B.E. 2541 (1998), Section 118, paragraph one ((5) as amended and (6) as added by the Labor Protection Act (No. 7) B.E. 2562 (2019)) (unofficial translation; Section 118 as amended by the Labor Protection Act (No. 7) B.E. 2562 (2019))
Thai original: "ให้นายจ้างจ่ายค่าชดเชยให้แก่ลูกจ้างซึ่งเลิกจ้างดังต่อไปนี้
(๑) ลูกจ้างซึ่งทำงานติดต่อกันครบหนึ่งร้อยยี่สิบวัน แต่ไม่ครบหนึ่งปี ให้จ่ายไม่น้อยกว่าค่าจ้างอัตราสุดท้ายสามสิบวัน หรือไม่น้อยกว่าค่าจ้างของการทำงานสามสิบวันสุดท้ายสำหรับลูกจ้างซึ่งได้รับค่าจ้างตามผลงานโดยคำนวณเป็นหน่วย
(๒) ลูกจ้างซึ่งทำงานติดต่อกันครบหนึ่งปี แต่ไม่ครบสามปี ให้จ่ายไม่น้อยกว่าค่าจ้างอัตราสุดท้ายเก้าสิบวัน หรือไม่น้อยกว่าค่าจ้างของการทำงานเก้าสิบวันสุดท้ายสำหรับลูกจ้างซึ่งได้รับค่าจ้างตามผลงานโดยคำนวณเป็นหน่วย
(๓) ลูกจ้างซึ่งทำงานติดต่อกันครบสามปี แต่ไม่ครบหกปี ให้จ่ายไม่น้อยกว่าค่าจ้างอัตราสุดท้ายหนึ่งร้อยแปดสิบวัน หรือไม่น้อยกว่าค่าจ้างของการทำงานหนึ่งร้อยแปดสิบวันสุดท้ายสำหรับลูกจ้างซึ่งได้รับค่าจ้างตามผลงานโดยคำนวณเป็นหน่วย
(๔) ลูกจ้างซึ่งทำงานติดต่อกันครบหกปี แต่ไม่ครบสิบปี ให้จ่ายไม่น้อยกว่าค่าจ้างอัตราสุดท้ายสองร้อยสี่สิบวัน หรือไม่น้อยกว่าค่าจ้างของการทำงานสองร้อยสี่สิบวันสุดท้ายสำหรับลูกจ้างซึ่งได้รับค่าจ้างตามผลงานโดยคำนวณเป็นหน่วย
(๕) ลูกจ้างซึ่งทำงานติดต่อกันครบสิบปี แต่ไม่ครบยี่สิบปี ให้จ่ายไม่น้อยกว่าค่าจ้างอัตราสุดท้ายสามร้อยวัน หรือไม่น้อยกว่าค่าจ้างของการทำงานสามร้อยวันสุดท้ายสำหรับลูกจ้างซึ่งได้รับค่าจ้างตามผลงานโดยคำนวณเป็นหน่วย
(๖) ลูกจ้างซึ่งทำงานติดต่อกันครบยี่สิบปีขึ้นไป ให้จ่ายไม่น้อยกว่าค่าจ้างอัตราสุดท้ายสี่ร้อยวัน หรือไม่น้อยกว่าค่าจ้างของการทำงานสี่ร้อยวันสุดท้ายสำหรับลูกจ้างซึ่งได้รับค่าจ้างตามผลงานโดยคำนวณเป็นหน่วย"
The severance pay rates in table form:
| Length of service | Severance pay (days of wages) |
|---|---|
| 120 days to less than 1 year | 30 days |
| 1 year to less than 3 years | 90 days |
| 3 years to less than 6 years | 180 days |
| 6 years to less than 10 years | 240 days |
| 10 years to less than 20 years | 300 days |
| 20 years or more | 400 days |
Worked example: an employee earning a monthly salary of 30,000 baht who has worked for 5 years is entitled to 180 days' severance pay, calculated as follows: 30,000 ÷ 30 × 180 = 180,000 baht
An important note: before the amendment by the Labor Protection Act (No. 7) B.E. 2562 (2019), the top rate was 300 days, for employees with 10 or more years of service. That Act amended (5) so that it applies to employees with 10 but less than 20 years of service and added (6), a 400-day rate for employees with 20 or more years of service. The 30-day rate for employees with 120 days but less than 1 year of service already existed under the original Act. Using the old rates in a calculation can expose an employer to legal liability without realizing it.
When can an employer dismiss immediately without paying severance?
The law allows an employer to dismiss an employee immediately, without advance notice and without severance pay, but only in the cases of misconduct specified in the Act. Section 119 of the Labor Protection Act provides:
"An employer need not pay severance pay to an employee whose employment is terminated on any of the following grounds:
(1) performing his or her duties dishonestly or intentionally committing a criminal offense against the employer;
(2) willfully causing damage to the employer;
(3) negligently causing serious damage to the employer;
(4) violating the work rules, regulations, or lawful and fair orders of the employer after the employer has given a written warning, except in a serious case where the employer need not give a warning; a written warning remains effective for no more than one year from the date the employee committed the offense;
(5) abandoning his or her duties for three consecutive working days without reasonable cause, whether or not there is a holiday in between;
(6) being sentenced to imprisonment by a final judgment.
In the case of (6), if the offense was committed through negligence or is a petty offense, it must have caused damage to the employer.
Where an employer terminates employment without severance pay under paragraph one but did not state the facts constituting the ground for termination in the letter of termination, or did not inform the employee of the ground at the time of termination, the employer may not raise that ground later."
— Labor Protection Act B.E. 2541 (1998), Section 119 (unofficial translation)
Thai original: "นายจ้างไม่ต้องจ่ายค่าชดเชยให้แก่ลูกจ้างซึ่งเลิกจ้างในกรณีหนึ่งกรณีใด ดังต่อไปนี้
(๑) ทุจริตต่อหน้าที่หรือกระทำความผิดอาญาโดยเจตนาแก่นายจ้าง
(๒) จงใจทำให้นายจ้างได้รับความเสียหาย
(๓) ประมาทเลินเล่อเป็นเหตุให้นายจ้างได้รับความเสียหายอย่างร้ายแรง
(๔) ฝ่าฝืนข้อบังคับเกี่ยวกับการทำงาน ระเบียบ หรือคำสั่งของนายจ้างอันชอบด้วยกฎหมายและเป็นธรรม และนายจ้างได้ตักเตือนเป็นหนังสือแล้ว เว้นแต่กรณีที่ร้ายแรง นายจ้างไม่จำเป็นต้องตักเตือน หนังสือเตือนให้มีผลบังคับได้ไม่เกินหนึ่งปีนับแต่วันที่ลูกจ้างได้กระทำผิด
(๕) ละทิ้งหน้าที่เป็นเวลาสามวันทำงานติดต่อกันไม่ว่าจะมีวันหยุดคั่นหรือไม่ก็ตามโดยไม่มีเหตุอันสมควร
(๖) ได้รับโทษจำคุกตามคำพิพากษาถึงที่สุดให้จำคุก
ในกรณี (๖) ถ้าเป็นความผิดที่ได้กระทำโดยประมาทหรือความผิดลหุโทษต้องเป็นกรณีที่เป็นเหตุให้นายจ้างได้รับความเสียหาย
การเลิกจ้างโดยไม่จ่ายค่าชดเชยตามวรรคหนึ่ง ถ้านายจ้างไม่ได้ระบุข้อเท็จจริงอันเป็นเหตุที่เลิกจ้างไว้ในหนังสือบอกเลิกสัญญาจ้างหรือไม่ได้แจ้งเหตุที่เลิกจ้างให้ลูกจ้างทราบในขณะที่เลิกจ้างนายจ้างจะยกเหตุนั้นขึ้นอ้างในภายหลังไม่ได้"
Section 583 of the Civil and Commercial Code lays down the same principle: "If the employee willfully disobeys or habitually neglects the lawful commands of his employer, absents himself for services, is guilty of gross misconduct… he may be dismissed by the employer without notice or compensation." (English text as published in the Thailand Law Library; unofficial translation) Thai original: "ถ้าลูกจ้างจงใจขัดคำสั่งของนายจ้างอันชอบด้วยกฎหมายก็ดี หรือละเลยไม่นำพาต่อคำสั่งเช่นว่านั้นเป็นอาจิณก็ดี ละทิ้งการงานไปเสียก็ดี กระทำความผิดอย่างร้ายแรงก็ดี… ท่านว่านายจ้างจะไล่ออกโดยมิพักต้องบอกกล่าวล่วงหน้าหรือให้สินไหมทดแทนก็ได้"
A point of caution for employers: state the ground for termination clearly in the termination letter. The final paragraph of Section 119 provides that if the employer did not state the facts constituting the ground for termination in the letter of termination, or did not inform the employee of the ground at the time of termination, the employer cannot raise that ground later. In other words, if the employer dismisses without stating the ground, it may still have to pay severance pay even if the employee actually committed the misconduct.
The certificate of employment: an employee right that employers often forget
When the employment contract ends, for whatever reason, the employee is entitled to ask the employer for a certificate of employment. Section 585 of the Civil and Commercial Code provides:
"If a hire of services comes to an end, the employee is entitled to a certificate as to the length and nature of his services." (unofficial translation)
Thai original: "เมื่อการจ้างแรงงานสุดสิ้นลงแล้ว ลูกจ้างชอบที่จะได้รับใบสำคัญแสดงว่าลูกจ้างนั้นได้ทำงานมานานเท่าไรและงานที่ทำนั้นเป็นงานอย่างไร"
— Civil and Commercial Code, Section 585
The certificate must state at least two things: the length of service and the nature of the work performed. The employer has no right to refuse to issue it, even where the employee was dismissed for misconduct.
The correct procedure for a termination
To ensure that a termination is lawful and to reduce the risk of litigation, an employer should proceed in the following order:
Step 1 — Prepare the termination letter It must state the effective date and the ground for termination and be signed by an authorized person. Deliver it to the employee against proof of receipt, or send it by registered mail.
Step 2 — Calculate and pay all amounts due These consist of all unpaid wages, severance pay under Section 118 (if applicable), payment in lieu of advance notice under Section 17/1 (if no advance notice was given), pay for the annual leave to which the employee is entitled under Section 67, and any other benefits under the employment contract.
Step 3 — Notify the Social Security Office When a person ceases to be an employee, his or her status as an insured person ends (Social Security Act, Section 38). The employer must report this change to the Social Security Office by the 15th day of the month following the month in which the employee left (Section 44). The employee needs this record to claim unemployment benefits under Section 78.
Step 4 — Issue the certificate of employment Under Section 585 of the Civil and Commercial Code, it must be issued when the employee asks for it.
Unfair dismissal (Act on the Establishment of Labor Courts and Labor Court Procedure B.E. 2522 (1979), Section 49) allows an employee to sue in the Labor Court for damages over and above severance pay. If the Labor Court finds the dismissal unfair, it may order the employer to reinstate the employee at the wage rate received at the time of dismissal or, if it considers that the parties can no longer work together, fix an amount of damages for the employer to pay instead, taking into account the employee's age, length of service, and hardship, the reason for the dismissal, and the severance pay to which the employee is entitled. Seeking labor law advice before acting therefore goes a long way toward reducing risk in the long run.
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Request a ConsultationKey points
- An employment contract comes into existence as soon as the parties agree; it need not be in writing, but a written contract gives better protection.
- An ordinary termination requires written advance notice of at least 1 wage period (and no more than 3 months).
- Severance pay has 6 tiers, from 30 days (120 days to 1 year of service) to 400 days (20 years or more).
- Immediate dismissal without severance pay is possible only in the 6 cases under Section 119, and the ground must be stated in the termination letter or communicated to the employee at the time of dismissal.
- The employer must issue a certificate of employment on request and notify the Social Security Office by the 15th day of the month after the employee leaves.
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