Generally, employees in Thailand have the right to claim severance pay from their employer if they are terminated.
“Termination” means under the Thailand Labor Protection Act means any action by which the employer does not allow the employee to continue to work and does not pay the salary to the employee.
Persuading an employee to sign a resignation letter is a common trick used by Thailand employers to avoid having to make severance payments to employees.
Employees should be aware that they will not be entitled to severance pay if they sign a resignation even if they were in fact terminated prior to signing the resignation letter.
The following is a schedule of the amount of severance payment an employee is entitled to is based on the amount of time they have worked for the employer:
Employees and employers alike are not often aware that the Thailand Revenue Code provides for a special rates of withholding tax and a 300,000 allowance on certain types of severance and wrongful termination payments.
Often employers will calculate the withholding tax on severance and wrongful termination payments incorrectly by applying the general personal income tax rate of 0 – 35% to such payments.
Application of the general personal income tax rate of 0 – 35% and failure to apply the 300,000 Baht allowance almost always leads to the employee being significantly overtaxed.
We highly recommend employees consult an accountant experienced in structuring and calculating termination payments especially in cases of large payments that include other income items such as stock options or pension payments.
Wrongful termination claims can also be made by employees in Thailand if you are terminated without a lawful reason.
Examples of lawful reasons for termination include the following:
Your employer will need to cite one of the above lawful reasons in the termination letter provided to you if they want to argue such defense at the Thailand Labor Court.
The general legal standard is that an employee that is wrongfully terminated in Thailand is eligible to receive approximately 1 month of salary for each 1 year worked at their employer.
Wrongful termination claims in Thailand are paid “in addition” to the severance pay required to be paid by the employer under the Thailand Labor Protection Act.
In practice, wrongful termination is often claimed as part of a a complaint with the labor court but rarely does the Labor Court aware wrong termination.
Wrongful termination would usually only be awarded by the Labor Court where there is strong evidence of very egregious misbehavior or crimes by the employer.
Our severance claim service includes the following: