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Termination of employment contract
Termination of employment contracts is a sensitive issue that employers and employees must navigate with care. In Thailand, termination procedures are governed by various labor laws and regulations to protect the rights and interests of both parties involved.
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Thailand’s Labour Protection Act
The Thai Labour Protection Act came into force in 1998 and underwent a subsequent revision in 2019. Its primary objective was safeguarding employees’ rights while defining employers’ rights. The employment relationship in Thailand is influenced by several other legal components, such as the Labor Relations Act of 1975 and the Social Security Act of 1990.
Lawyer for employment in Thailand
Thailand is a fast-moving economy providing many opportunities for businesses and employees. As any country, it has laws and principles covering the employer-employee relationship. Employers and employees in Thailand have to be well-versed in employment law with the help of a lawyer for employment to comply with it, protect their rights, and develop a positive corporate culture.
Severance pay for termination of employment in Thailand
Another factor may be that one could unexpectedly lose their job, which sometimes is caused by unforeseen circumstances during times of great unpredictability. For example, your organization might have to face cutbacks in operational expenditures. These may include not only reductions in wages, but also the automatic reduction of costs of utilities and others for your organization, control of employment and supplements to it, taxes for employment and others. When dismissing an worker without cause, the boss must also supply written notice of dismissal . A severance pay is also required in Thailand. It differs in its hands on the worker’s continuous resources.
More Informations about Termination of Employment in Thailand
In Thailand, there is the possibility to terminate an employment contract not only by employers but also by employees. Below, there is a table explaining who can realize a termination:
For the employer :
- Termination for a cause: If there is a valid reason which makes it impossible to continue employing an individual who breaks statutory duties, commits serious misconduct, repeatedly fails to comply with the rules, or engages in unlawful conduct
- The necessity to give a written notice explaining the circumstances and reasons
- Expiry of fixed-term contract
- If it was stated in the employment contract and the contract itself was made relating the aforementioned circumstances
- Operational reasons: Bankruptcy of the company, lack of funds, restructuring of the company, etc.
For the employee :
- Resignation : Written proposal of resignation
The employment contract can be terminated in Thailand for several reasons. Some of them are quite common:
Voluntary resigning : As for this way of terminating the employment contract, the employee must write a resignation of employee letter and pass it to the employer . There can be multiple reasons for this decision, including the intention to get another job, to grow professionally faster, to move to another city or to solve personal issues.
Termination for cause : The employer has the right to terminate the employment contract in Thailand if an employee violates the agreement with conduct or performance that does not meet the specified standards. There are some reasonable grounds for that, such as misconduct, multiple policy violations, dishonesty, insubordination, or even criminal activities. Moreover, such reasons usually have to be described in the contract from the start.
Expiry of fixed-term : In case the employment contract is of fixed-term nature, the employer has no need to terminate it at some point it will automatically stop existing at the end of the term agreed by the parties.
Redundancy or operational requirements : There can be a situation when an employer has to terminate the contract due to redundancy or operational requirements, such as closing business activities or restoration. In such case, the employer must act in compliance with specific legal requirements and inform the employee in advance and offer a compensation or another job.
Mutual agreement : Sometimes, both an employee and an employer may want to stop their cooperation for various reasons, and in such case, they can choose to terminate the contract by mutual agreement. In practice, the standard employment contract may provide both sides with the opportunity to do that. They may stop it for specified reasons related to the change of circumstances or professional development of the employee.
According to Article 119 of the Occupational Health and Safety Act, a company is not obliged to compensate the resignation of an employee for the following reasons.
- Improper performance of duties or intentional commission of a crime against the Company.
- Intentionally causing damage to the Company
- Negligently causing substantial damage to the Company
- Violation of lawful and fair Company rules or work orders (when the Company has given prior written notice of the employee’s dismissal)
- Neglecting to work for three consecutive working days without just cause, whether or not that day is a public holiday.
- A final sentence of imprisonment.
There are several important laws and regulations that regulate employment termination in Thailand. The key legislative sources that should be considered by both employers and employees are the following:
- Labor Protection Act : the primary law governing labor rights and protection in Thailand. Among other sections, the LPA contains provisions related to termination, such as notice periods, severance pay calculation, termination for reasons, dispute settlement, and others.
- Civil and Commercial Code : containing general rules governing contracts, including employment contracts. The CCC generally defines the rights and obligations of parties regarding employment relationships and offers guidelines on how to terminate employment contracts and may have provisions regulating the termination process, including notice periods, and dispute resolution.
- Ministerial Regulations : that supplement basic legislative acts and provide detailed clarification on how to implement them. Applicable to labor laws, ministerial regulations often contain guidelines on termination process details, severance pay calculation, and other related matters.
Both employers and employees should be aware of these laws and regulations to ensure their rights are protected and complied with. If needed, legal assistance or consultation with the Ministry of Labor may be required for more specific information.
The termination of employment contract procedure in Thailand is as follows:
- Firstly, written notice should be given. Both employers and employees are obligated to give written notice that they intend to end employment. The notice period should be indicated in the employment agreement, labor laws, or collective agreement, where applicable and generally accepted, and varies according to the employee’s past service, rank, and contract terms.
- Secondly, if the termination occurs for appropriate cause, the employer must give employees written notice of the reasons for such dismissal. In other words, such termination can result from driving fraud, repetitive departures, and criminal activity. Employers must keep a record of why employees are fired.
- Thirdly, if the firing is for a sufficient reason, the employee has the option of presenting evidence in response to the allegations. This may permit the employee to give their story or display evidence to help their argument. This assures due procedure and imparts justice.
- Fourthly, when the firing is valid, exit formalities should be completed. This involves doing all that is ethically reasonable to payout for salary owed to employees and bonuses and benefits or absences from vacations. The other property of the business should be taken back from the officer.
- Apart from when the incident involves cause dismissal, the worker is eligible to severance payment to be made. Employers need to guarantee that this duty has been met.
In Thailand, when an employee is dismissed and believes it to be wrongful, they have grounds for making a claim. The reasons for a claim are called wrongful dismissal, if an employee feels that he has been wronged in his dismissal the following are some areas for grievance:
- Internally : initially the employee can voice his concern internally within the employer’s workplace. Specifically, this can be done by talking with human resources and their line manager to receive clarification and hopefully reinstatement. During this process ensure all relevant conversation and evidential email is documented
- Mediation : if the employee is not satisfied at the internal resolution, the employer and employee can seek mediation. Mediation is facilitated by a neutral third party to discuss the options of an acceptable institution. States where mediation can be provided are through the Ministry of Labor or labor courts or privatized institutions.
- Labor Court : If the above has failed, the employee has the option of submitting a complaint to the labor court. The court will look into the case and conduct hearings, receiving relevant evidence from the employee and witnesses from the employer. A judgment will be made at the end, either upholding dismissal or found wrongful. In the instance that the court finds that the termination was unlawful, the court can award reinstatement and some form of compensation.
- Ministry of Labor : An employee has the right to submit a “complaint” to the Ministry of Labor. They have the right, under Thai laws, to mediation, arbitration, and conciliation. In the event that the matter is not solved through these mediums, the employer and employee may refer their case to the labor court for adjudication. Employee who feels he has been wrongfully dismissed should gather the evidential support to argue his case. It includes but is not limited to employment contracts, respective documents, emails, and witness statements. Finally, hiring competent legal representation in the form of employment lawyer can have the greatest influence on ensuring that all of the above is met in a timely manner.
Severance pays, in other words, termination compensation, are payments made to the employees at the end of their employment in Thailand. The measure aims to provide the workers who are losing their jobs with some financial support for the transition period. The exact regulations and proper calculation methods are provided in the Labor Protection Act and the respective regulations. The following are the core points of severance pay in Thailand:
- Eligibility : Generally, the conditions for granting severance pay is the completion of a specific period of continuous work with the same employer. The employee who has worked 120 days or longer is eligible to severance pay . There can be some further exemptions or conditions based on the particular terms of the employment agreement, collective agreement, or conditions presented in the work permit for foreign workers.
- Calculation : The amount of money paid as severance pay depends on the duration of the employment. According to the Labour Protection Act, the following can be distinguished: :
- less than 120 days of service : no months of wages
- between 120 days and 1 year of work : 30 days of wages
- between 1 year and 3 years of work : 90 days of wages
- between 3 and 6 years of work : 180 days of wages
- more than 6 years of work : 300 days of wages
- Exceptions : An employer may not be obliged to pay severance pay in specific circumstances. For instance, when the employee is fired for a just cause based on the employee’s severe misconduct or when the employment agreement is for a particular term that expires without renewing, the severance pay is not granted. Moreover, the collective agreement or specific individual work agreements can provide for different provisions for the severance pay as long as they are not less favorable than the statutory requirements.
It is essential for employers to be aware of their obligations and requirements for the frameworks of the severance pay. Employees should also know their rights and obligations to make sure they obtain the proper severance claims and seek the legal assistance when they feel like the rules were not properly applied.
- Written Resignation Letter: write a resignation letter to your employer or immediate supervisor. The letter should exhibit the following details:
Your decision to resign
Your resignation date
Your token of appreciation and honor for working with your company
- Notice Period: read your employment contract or labor laws on the period of notice required before the voluntary resignation of an employee . A period of 30-90 days to the resignation is set depending on the length of service and the position. Compose the resignation letter ensuring that the notice period is covered within the letter.
- Submission of Resignation: hand the letter to the employer or immediate supervisor in person and give him/her the printed copy for documentation purposes. Alternatively, you can attach and send a digital copy through email or other communication channels to inform them of the resignation.
- Exit Formalities: after willing your resignation, it may be obligatory to fulfill certain exits normalities. Such may include turning in any company property, or returning assets and coordinating with the finance and human resource departments to ensure that your final payment, benefits, and leave are settled.
- Smooth Transition: during the notice period, ensure the smooth transition of employer and colleagues. Make plans on how you can help in handing over your work and avail all relevant documents for the long-term plans equitable division of job Enterprise and responsibilities.
- Maintain Professionalism: maintain an excellent working relationship at the workplace. Complete all duties and responsibilities.