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MBMG Law Brief Update July 2010

Labour Laws with regards to termination of Employment

Termination of employment is a serious dispute between the employee and employer, which may result in a lawsuit in the Labour Court. The major disputes are: • Issuance of employment termination • Unfair dismissal • Compensation claims Therefore, we will specify the basic rights of both the employer and employee who are involved in a termination of employment according to the Labour Protection Act 1998 and The Act Establishing the Labor Court and Labor Court Procedure 1979.

Who are protected under Thai Labour Laws All individuals (whether Thai or foreign employees) working for remuneration in Thai or international companies doing business in Thailand are protected by this Law.

Termination or dismissal of the employee and the severance claim The difference between “Termination” and “Dismissal” “Termination” means end of employment between the employer and the employee by - Resignation - Mutual Agreement - Dismissal “Dismissal” 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 whether due to the termination of the employment agreement or for any other reason. Generally, when employees are dismissed, they are entitled to claim for severance payment from their employers and 30 days salary in lieu of 30 days notice except when the dismissal has been done for any of the following reasons: 1. Crime committed against employer 2. Intentional act causing the employer to suffer damage(s) 3. Negligent act causing the employer to suffer damage(s) 4. Violation of work rules after a written warning has been issued 5. Absence for 3 (three) consecutive working days without a reasonable cause 6. Having been sentenced to imprisonment

MBMG Law Brief Update July 2010

Rate of severance benefit is varied and dependent on the duration of employment: Duration of employment

Rate of Severance Payment

More than 120 days but not exceeding 1 year

30 days

More than 1 year but less than 3 years

90 days

More than 3 years but less than 6 years

180 days

More than 6 years but less than 10 years

240 days

More than 10 years

300 days

Note: Employees have no right to claim for severance payment when the termination is based on mutual agreement and/or a resignation letter with a full wages paid by the employers.

Claim for unfair dismissal Under The Act Establishing the Labor Court and Labor Court Procedure 1979, event that employees are unfairly dismissed by the employer they are entitled to claim for compensation in addition to severance benefit. “Unfair Dismissal” means any action which may cause difficulties for the employee(s) to continue working or will not allow them to fulfill their new jobs or the employed(s) were discharged by the employers for unfair reasons such as gender, colour, age, disability, religion, culture, language, marital status etc. Unfair Dismissal cases can be filed to a Labour Court and the compensation will be considered from various conditions such as nature of work, age of employees, employment duration, and wages etc. Therefore, employers must ensure to settle termination compensation with the employee(s) and always request for employee to sign a letter of receipt and agree to release the employers from further claims.

MBMG Law Office Co., Ltd.

In a foreign country where the language and laws are unfamiliar, unpredictable situations and problems can arise, especially when dealing with cross-border jurisdictions. As well as having its own in-house law firm which can assist in the resolution of legal, contractual or employment disputes, MBMG has developed professional associations and relationships with a number of specialist legal practices in Bangkok, throughout Asia and globally. Through utilization of these partnerships, we can provide a comprehensive range of personal, corporate, local and international legal assistance. These include, but are not limited to, the following: • Draft and Review Legal Arrangements • Company Registrations • BOI & FBA Applications • Will and Trusts • Contract Law • Thai Visa and Work Permit Applications • Structure of business • Joint Venture and other ownership structures • Merger & Acquisitions • Government concessions and licensing • Property ownership and mortgages • Litigation


Mr. Thammarat Sangchan Attorney - at - Law Tel: +66(0)2 665 2534-9 ext. 111 E-mail: Ms. Suchada Faharoon Attorney - at - Law Tel: +66(0)2 665 2534-9 ext. 112 E-mail:




This publication has been prepared for general information only. MBMG Law Office Co., Ltd. make no warranty, representation or undertaking whether expressed or implied, nor does it assume any legal liability, whether direct or indirect, or responsibility for the accuracy, completeness, or usefulness of any information. All right is reserved.

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