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Severance Pay for Terminated Employees in Thailand

Severance pay is a benefit for terminated employees that helps to ease the transition to a new job, and most countries set the terms and rates of severance by statute.  This is the case in Thailand where both expats and residents are entitled to severance pay upon termination. Termination can be the result of either the end of a contract, job change or the company no longer operating.

Because each country has different severance pay rules and rates, it is important to know the specifics if you are new to hiring in Thailand to avoid any complaints or claims by terminated employees.  This overview will get you started, but it is always worthwhile to consult with local experts about all employment and labor laws in a new country.

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Client Case: Severance Pay Rates in Thailand

Our local partner in Thailand became aware of a case where a contractor had been awarded severance, and wanted to confirm that severance rules would also apply to the expat and local employees they were handling on behalf of our clients.

After checking with the labor board, they gave us the following rates which we in turn shared with our clients that had employees in Thailand:

  • More than 120 days but less than 1 year = 30 days wages or salary
  • At least 1 year but less than 3 years = 90 days wages or salary
  • At least 3 years but less than 6 years =180 days wages or salary
  • At least 6 years but less than 10 years = 240 days wages or salary

(There are also different termination notices required for each of these service periods)

As this shows, the severance pay can be a significant cost to an employer after even one year of employment, and this could come as a surprise if the employer does not have severance rules in their home country (such as the US).

Exceptions to Paying Severance to Terminated Employees

There are exceptions to the severance rules in Thailand, and an employee cannot claim severance pay under any of the following circumstances:

  • Dishonesty in performing duties or criminal acts against the employer
  • Intentionally causing any damage to the employer
  • Negligence that results in serious damage to the employer
  • Violating work rules or regulations following a written warning
  • Neglect of work duties for three consecutive days
  • Imprisonment for criminal offenses

It is notable that poor job performance is not an exception to severance pay in Thailand, and if the termination is for incompetence the employee will still be entitled to severance.

Do you need more information about Thailand?

If notice and severance rules are new to you, then you may have more questions about Thailand such as:

Why are there different notice periods depending on length of service, and what are they?

Is severance pay run through the normal payroll process, or paid separately post- employment?

Is there a hearing process with the labor board if an employer claims that an exception to severance pay applies?

Our clients face questions like these every day when hiring abroad and we guide them through the compliance and regulatory challenges in all areas of employment rules, immigration and payroll.  We make international employment simple.

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Looking to hire an employee in Thailand? Get in touch.

The information in this article is subject to changes in local legislation.

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