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SALARY PAYMENT IN Thai baht (THB, ฿)
CONTRACT LANGUAGES Thai / English
PAYROLL TAX 5.2% – 6%
PAYROLL CYCLE Monthly
TIME TO HIRE 12 hours
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The Labor Protection Act stipulates the laws that govern what constitutes as valid reasons to terminate an employment contract in Thailand. Some statutory causes include:
These reasons are found within section 119 of the Labor Protection Act.
An employee can be dismissed without cause and severance pay if they have worked less than 120 within an organisation. An employee is wrongfully or unfairly dismissed if the reason, or lack of reason violates that of the Labor Protection Act. An employee can file a dispute of unfair or wrongful dismissal for the following reasons:
The wrongful dismissal penalties that apply can range from 5000 THB to 200,000 THB with potential imprisonment. If the court deems the dismissal unfair, the court may require an employer to rehire the employee or pay out compensation.
A minimum of 1 month written notice is expected when dismissing an employee in Thailand. Once dismissed, employer must pay out the final salary amount left, any unused annual leave payments and payment in lieu (if applicable) within 3 days. It is common to see 3 months’ notice period written within employment contracts between employer and employee, for which this amount would be expected to be followed.
If an employee has worked for longer than 120 days, they can be dismissed without cause but must be paid a severance amount based on how long they have been working at the organisation on a valid employment contract. The severance thresholds are as follows.
It may be possible for an employee to be paid in lieu of the notice period if this is agreed upon between employer and employee. There are no severance pay-outs for fixed term contracts shorter than 2 years or special projects.
For an employee to resign in Thailand, a signed written letter is necessary. Verbal or email notifications are not sufficient although can be sent to a direct manager as a type of heads up only. The letter should include at most a basic reason, or various reasons for the resignation. The letter should be given to the employer with 30 days’ notice of leaving the organisation. Mutual agreements between employer and employee for payment in lieu of notice period may be possible.
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If an employer and employee relation meet the standards of the Labor Protection Act, then termination is difficult without a just reason or following the process. Although the LPA stipulates the conditions for how and when an employee can be dismissed, sometimes due to lack of awareness, education or lack of valid employment contract, unfair dismissal claims do not get filed.
The main risk of termination an employment contract in Thailand is the possibility of a wrongful dismissal claim and the associated court, compensation, or penalty costs. The best way to mitigate this risk is to understand and follow the laws stipulated in the Labor Protection Act and the terms outlined in employment contracts.
