Severance Pay Conditions
An employee who has been working for 120 days is entitled to severance pay, except in the following cases:
• Performing his duty dishonestly or intentionally committing a criminal offence against the employer
• Willfully causing damage to the employer
• Committing gross negligent acts causing serious damage to the employer
• Violating work rules, regulations, or orders of the employer which are lawful and just and after written warning has been given by the employer, except in serious cases with no requirement for the employer to give warning
• Being absent from duty without justifiable reason for 3 consecutive working days
• Being sentenced to imprisonment by a final court judgment
If the employment is terminated due to one of the aforementioned cases, the cause of termination will be specified in the letter of termination or the employee will be informed about it at the time of termination.
Severance Pay Rates
Severance payment varies from 30 days to 400 days depending on the length of the employee’s working with the employer, as following:
• 30 days’ wages where the employment is at least 120 days but less than one year
• 90 days’ wages where the employment is at least one year but less than three years
• 180 days’ wages where the employment is at least three years but less than six years
• 240 days’ wages where the employment is at least six years but less than ten years
• 300 days’ wages where the employment is at least ten years but less than twenty years
• 400 days’ wages where the employment is twenty years or more
Special Severance Pay
If the employer relocates its place of business to a new location or to other existing location, the employer must notify the employee at least 30 days before the proposed relocation date. A notification must be visibly posted in the current place of business and must clearly specify the new business premises and the date on which the relocation will actually take place.
If the employer fails to notify the employee, he must pay him 30 days’ wages.
If the employee determines that the relocation will materially affect his ordinary course of living or his family’ course of living, he has the right to refuse to be relocated. The employee must notify the employer in writing of his refusal within 30 days of the date the employer’s notification has been posted.
As a result of such notification, his employment contract will be considered terminated as of the date of relocation and the employee will be entitled to receive a special severance pay. The special severance pay is equal to the rate offered in case of normal termination.
In addition, the employer shall pay the employee wages for annual holidays in the year of termination equal to the proportion of annual holidays to which the employee is entitled. Also, overtime pay and holiday overtime pay to which the employee is entitled shall be paid within 3 days from the date of termination.
Failure to disburse such payments could subject the employer and its responsible directors to a maximum of 6 months’ imprisonment and/or a fine of 100,000 Baht plus 15% interest of the outstanding payment until it is fully paid.
If the employer terminates employment as a consequence of streamlining work units, production process, and distribution service, introducing or changing the machinery or technology that involves reducing the number of employees, the employer must notify the Labor Inspector and the employee concerned with at least 60 days in advance. If the employer fails to notify the employee, the employer must pay to the dismissed employee 60 days’ wages. An employee in a probation period must be given the same notice period as a full-time employee.
The terminated employee is entitled to receive the prescribed severance pay and special severance pay, if he worked consecutively for more than 6 years. The rate of the additional severance pay must be not less than 15 days’ wages for each full year of service, calculated from the year seven onwards, without exceeding the equivalent of 360 days’ wages.
The termination of employment contract due to retirement will immediately trigger the employer’s severance pay obligation towards the retiring employee.
The employer shall pay to the retiring employee the following compensations:
• 6 months of the last salary for employees who have been working for more than 3 years but less than 6 years
• 8 months of the last salary for employees who have been working for more than 6 years but less than 10 years
• 10 months of the last salary for employees who have been working for 10 years
The employer who fails to give the severance pay to the retiring employee may be subject to a maximum of six-months imprisonment or a maximum fine of 100,000 Baht, or both.