Thailand EMPLOYMENT AND LABOUR LAW

COUNTRY

COMPARATIVE

GUIDES 2024

The Legal 500

Country Comparative Guides

Thailand

EMPLOYMENT AND LABOUR LAW

Contributor

Chandler MHM

Chandler

MHM

Waree Shinsirikul

Partner | [email protected]

Ratthai Kamolwarin

Counsel | [email protected]

Athiwuth Phanprechakij

Senior Associate | [email protected]

Norrapat Werajong

Senior Associate | [email protected]

This country-speciﬁc Q&A provides an overview of employment and labour laws and regulations applicable in Thailand.

For a full list of jurisdictional Q&As visit legal500.com/guides

Employment and Labour Law: Thailand

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THAILAND

EMPLOYMENT AND LABOUR

LAW

1. Does an employer need a reason to

lawfully terminate an employment

relationship? If so, state what reasons are

lawful in your jurisdiction?

An employer may terminate an employment relationship

for a variety of reasons as outlined in the Civil and

Commercial Code and the Labour Protection Act B.E.

2541 (1998) (as amended) (the “Labour Protection

Act”). The employer is obligated to provide severance

pay at a rate based on the terminated employee’s years

of service, regardless of the reason for termination.

However, if termination occurs without justiﬁable

grounds, it could be deemed as unfair treatment. In such

a case, the employer would be required to provide

additional compensation.

‘Reasonable and justiﬁable grounds’ for termination

include the employee’s incompetence, poor work quality,

retirement, chronic illness, employer’s ﬁnancial

diﬃculties (deﬁcit situation), or reduction of business

units, provided there is no discrimination or intended

persecution against any particular employee.

However, there are certain ‘serious grounds’ under the

Labour Protection Act that enable an employer to

terminate an employee without providing severance pay.

These include:

The employee’s dishonesty towards theiri.

duties or intentional criminal activity against

the employer;

The employee’s intentional action causing theii.

employer to suﬀer losses;

The employee’s negligence causing theiii.

employer to suﬀer severe losses;

The employee’s violation of work rules oriv.

regulations or orders that are legal and fair

(given a written warning has already been

provided), except in serious situations for

which the employer is not required to give a

warning;

The employee’s neglect of their duties for av.

period of three consecutive workdays without

a reasonable cause; and

The employee’s imprisonment due to a ﬁnalvi.

judgment for an oﬀence other than the

oﬀences arising out of negligent acts or petty

oﬀences, or for any oﬀence arising out of

negligent acts or any petty oﬀence that has

caused damage to the company.

Termination under these serious grounds is unlikely to

be considered unfair treatment, thus not requiring any

additional compensation. Furthermore, if termination is

based on reasonable and justiﬁable grounds, Supreme

Court precedents indicate that an employer is not liable

to pay any additional compensation beyond the

statutory severance pay.

2. What, if any, additional considerations

apply if large numbers of dismissals

(redundancies) are planned? How many

employees need to be aﬀected for the

additional considerations to apply?

When large-scale dismissals or redundancies are

planned due to improvements in organizational

structure, production processes, distribution, or service,

resulting from new technology or machinery adoption,

Thai labour law requires employers to give employees at

least 60 days’ notice prior to the intended termination

date. Outside these speciﬁc circumstances, the general

rule requires employers to give only one full pay period’s

notice before termination. It is important to note that

while there is no speciﬁc provision dealing with large-

scale redundancies, adherence to the general

termination and severance pay laws is mandatory.

Moreover, there are no additional statutory

considerations speciﬁcally for redundancy cases.

3. What, if any, additional considerations

apply if a worker’s employment is

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terminated in the context of a business

sale?

In the context of a business sale involving the intended

transfer of employees from the seller’s to the buyer’s

entity, Thai labour law requires that employees’ consent

must be obtained, and the terms and conditions of

employment must remain unchanged post-transfer.

Should the employees decline the transfer, the seller

retains legal responsibility as the employer. General

termination laws, including the obligation to provide

statutory severance pay and ensure fair termination

practices without discrimination or persecution, continue

to apply. There are no additional statutory

considerations speciﬁcally prescribed for terminations in

the context of a business sale.

4. What, if any, is the minimum notice

period to terminate employment? Are there

any categories of employee who typically

have a contractual notice entitlement in

excess of the minimum period?

The Labour Protection Act requires that a statutory

notice period of at least one full pay period must be

given for an intended employment termination, i.e.,

before or on the wage payment date to take eﬀect on

the subsequent wage payment date. However, if an

employer and an employee agree to a period longer than

the statutory notice period (i.e., 2-, 3- or 6-months’

notice in advance), usually speciﬁed in an employment

agreement, such contractual notice period will prevail.

There is a special provision for terminations due to

improvements in the working unit, production process,

distribution, or service resulting from the use of

machinery or a change in machinery or technology,

which stipulates that the employer must notify the

employee at least 60 days prior to the intended

termination date.

5. Is it possible to pay monies out to a

worker to end the employment relationship

instead of giving notice?

According to the Labour Protection Act, an employer can

terminate the employment with immediate eﬀect by

paying wages in lieu of advance notice. This amount will

be equal to the employee’s wages for the statutory or

contractual notice period, whichever is longer.

6. Can an employer require a worker to be

on garden leave, that is, continue to

employ and pay a worker during his notice

period but require him to stay at home and

not participate in any work?

An employer can place a worker on ‘garden leave’ during

the applicable notice period. This means the employer

continues to pay the worker’s wages and other beneﬁts,

but the worker is required to stay at home and refrain

from performing any duties.

7. Does an employer have to follow a

prescribed procedure to achieve an

eﬀective termination of the employment

relationship? If yes, describe the

requirements of that procedure or

procedures.

A proper termination procedure is prescribed by Thai

law. The employer must (i) observe either statutory or

contractual notice periods, whichever is longer, or make

a payment in lieu thereof for immediate termination; (ii)

pay ﬁnal wages, any unused annual leave and any other

contractual beneﬁts (e.g., a guaranteed bonus); (iii)

make statutory severance payment; and (iv) provide the

employee with a certiﬁcate of employment. Employers

are advised to thoroughly document the termination

details, with a key focus on the reasons for the

termination. This is a requirement of procedural law, as

suﬃcient documentation strengthens the employer’s

contention if the terminated employee ﬁles a claim.

Although not speciﬁed by law, it may also be helpful to

record any monetary entitlements paid to the employee

for complete record-keeping and tax purposes.

8. If the employer does not follow any

prescribed procedure as described in

response to question 7, what are the

consequences for the employer?

Failing to adhere to either statutory or contractual notice

periods, not making severance payments or delaying the

payment of wages beyond three days from the

employment termination date, is punishable with

imprisonment for up to six months and a ﬁne up to THB

100,000, or both. The employer may also be held liable

for default interest at the rate of 15% per annum on any

payments where it is proven that the employer intends

to withhold and avoid any statutory payment.

9. How, if at all, are collective agreements

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relevant to the termination of

employment?

Collective agreements may impose additional

requirements for termination, such as conducting pre-

termination investigations, appointing investigation

committee members from a Labour Union, or oﬀering

additional compensation packages. Employers must

comply with these stipulations if they exist.

10. Does the employer have to obtain the

permission of or inform a third party (e.g

local labour authorities or court) before

being able to validly terminate the

employment relationship? If yes, what are

the sanctions for breach of this

requirement?

If an employer intends to terminate an employee who is

a member of an employees’ committee, permission from

a labour court is required. Non-compliance with this

requirement may lead to imprisonment for up to a

month or a ﬁne of up to THB 1,000 or both. Furthermore,

if terminations result from improvements in the working

unit, production process, distribution, or service, or are

due to the use of machinery or technological

advancements that reduce the need for labour,

employers must notify a labour oﬃcial 60 days in

advance of the intended termination date, reason for

termination, and a list of aﬀected employees.

11. What protection from discrimination or

harassment are workers entitled to in

respect of the termination of employment?

As mentioned in the response to item 1, the Labour

Protection Act prohibits discrimination and harassment

in all employment contexts, including termination. This

protection implies that termination must not be made on

the basis of race, colour, sex, religion, political opinion,

nationality, social origin, or any other status.

12. What are the possible consequences

for the employer if a worker has suﬀered

discrimination or harassment in the

context of termination of employment?

An employee who has suﬀered discrimination or

harassment in the context of termination has the right to

ﬁle a lawsuit against the employer with the labour court.

The labour court may deem such termination unfair and

consequently order the employer to reinstate the

employee or award compensation for unfair termination

if it is determined that both parties cannot continue to

work together.

13. Are any categories of worker (for

example, ﬁxed-term workers or workers on

family leave) entitled to speciﬁc

protection, other than protection from

discrimination or harassment, on the

termination of employment?

Additional protections are provided for certain categories

of workers. For instance, the law protects pregnant

female workers from termination due to their condition.

Additionally, employees involved in labour union

activities or associated with a collective bargaining

agreement are protected unless exceptions such as

dishonest behaviour or intentional harm to the employer

apply.

14. Are workers who have made

disclosures in the public interest

(whistleblowers) entitled to any special

protection from termination of

employment?

Speciﬁc protection from termination for whistle-blowers

is not mandated under labour law unless stated in the

company’s work rules. However, protections may exist

under legislation separate from labour law, which can

protect whistle-blowers from termination or other forms

of retaliation if they assist or provide information to

authorities investigating alleged violations by their

employer.

15. In the event of ﬁnancial diﬃculties, can

an employer lawfully terminate an

employee’s contract of employment and

oﬀer re-engagement on new less

favourable terms?

While an employer can legally terminate an employee’s

contract due to ﬁnancial diﬃculties, and oﬀer re-

engagement on less favourable terms, this ‘ﬁre-and-

rehire’ approach may not be practical due to statutory

severance pay obligations and the risk of unfair

termination claims. Instead, employers are advised to

negotiate changes in employment terms with the

employee’s consent during the course of employment.

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16. What, if any, risks are associated with

the use of artiﬁcial intelligence in an

employer’s recruitment or termination

decisions? Have any court or tribunal

claims been brought regarding an

employer’s use of AI or automated

decision-making in the termination

process?

The use of AI in recruitment or termination decisions

may risk unintentional discrimination or bias, violating

the principles of Thai labour law. If AI is trained on biased

data, it could perpetuate these biases, potentially

favouring certain genders or ethnicities over others.

Furthermore, an AI approach might depersonalize the

process, treating candidates as numbers rather than

individuals. Over-reliance on AI might also make it

diﬃcult for employers to justify their decisions in legal

contexts.

17. What ﬁnancial compensation is

required under law or custom to terminate

the employment relationship? How is such

compensation calculated?

Financial compensation legally required include:

(i) Statutory severance pay (as mentioned in item 1.

above) is stipulated at the following rates:

Length of Service

Rate of Severance Pay

(equivalent to the last

wage rate per day)

At least 120 days but less than 1 year 30 days

At least 1 year but less than 3 years 90 days

At least 3 years but less than 6 years 180 days

At least 6 years but less than 10 years 240 days

At least 10 years but less than 20

years

300 days

20 years or more 400 days

Note that this amount is calculated based on the latest

wage rates together with the length of service. With

regard to the calculation of wages, ﬁxed allowances

payable to an employee, which lack a clear written

purpose of payment as welfare, are regarded as wages,

for instance, living allowances, position allowances, fuel

allowances, etc. Without being speciﬁcally stipulated as

welfare, these allowances should be included in wages

for the computation of severance pay.

Note that severance pay is not required to be made if

employment is terminated due to any one of the serious

grounds (as described in item 1 above).

(ii) Payment in lieu of unused annual leave entitlement

and accumulated unused annual leave entitlement (if

any).

If the termination of employment is not based on any of

the serious grounds (as described in item 1 above), an

employer must pay an employee’s wages for unused

annual leave entitlement for the year in which the

employment is terminated in proportion to the number

of days of the employee’s annual leave entitlement. If

the employee is entitled to accumulate days of annual

leave to the following year, the accumulated unused

annual leave must also be paid to the employee (if any).

However, if the employment is terminated for a cause

based on any of the serious grounds, the employer is not

required to make a payment in lieu of any unused

annual leave entitlement for the year in which the

employment is terminated. Note that in such case, the

employee will be entitled to a payment in lieu of

accumulated unused annual leave days only (if any).

(iii) Payment in lieu of advance notice

Instead of observing the statutory or contractual notice

periods (as described in item 4. above), an employer

may choose to make payment in lieu thereof.

Note that in the case of any of the serious grounds (as

described in items 1. above), termination may be made

with immediate eﬀect without any advance notice or

payment in lieu thereof.

(iv) Other contractual beneﬁts (if there are any

agreement made during the employment period).

(v) Cost of the return journey.

If an employee has been brought from elsewhere at the

employer’s expenses, the employer is obliged to pay the

cost of the return journey when an employment contract

comes to an end, unless otherwise stipulated in the

contract, provided that the employment has not been

terminated because of the fault of the employee and the

cost is for the employee’s return to the original location.

18. Can an employer reach agreement with

a worker on the termination of

employment in which the employee validly

waives his rights in return for a payment?

If yes, in what form, should the agreement

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be documented? Describe any limitations

that apply, including in respect of non-

disclosure or conﬁdentiality clauses.

An employer and an employee can reach an agreement

to validly waive the employee’s rights in return for a

payment. For example, a mutual separation agreement

may be concluded for a mutual and amicable

termination of employment. This kind of agreement is

enforceable, allowing the parties to include clauses on

mutual release of claims and non-disclosure or

conﬁdentiality. According to the Supreme Court’s rulings,

a mutual separation agreement is not regarded as a

unilateral termination of employment. The compensation

package typically includes a monetary component for

unilateral termination of employment and an ex gratia

payment, which is negotiable. However, during

negotiations, there must be no actions that could be

interpreted as coercing an employee to sign or conclude

the agreement. If coercion is perceived, such agreement

would be deemed as a unilateral termination of

employment, potentially leading to an unfair termination

claim.

19. Is it possible to restrict a worker from

working for competitors after the

termination of employment? If yes,

describe any relevant requirements or

limitations.

An employer does not have supervising authority over a

worker after the termination of employment. Thus, there

are typically no restrictions preventing the worker from

working for the employer’s competitor after the

termination of employment, unless the employee has

agreed to such restrictions with the employer.

Note that it is possible to restrict a worker from working

for the employer’s business competitors after the

termination of employment, through a contract duly

signed by the employee to that eﬀect while the

employment relationship is valid.

The Supreme Court has ruled that a non-competition

clause, aimed at protecting an employer’s legitimate

rights to operate its business is enforceable and not

regarded as contrary to public order and good morals.

This is provided that such clause does not absolutely

prohibit an employee from working in other ﬁelds and

does not impose unreasonable obligations on the

employee.

20. Can an employer require a worker to

keep information relating to the employer

conﬁdential after the termination of

employment?

Conﬁdentiality requirements should be made in a form of

a contractual obligation, binding an employee to keep

information related to the employer, acquired during

employment, conﬁdential. This conﬁdentiality clause will

protect the legitimate rights of the employer’s business.

In addition to these post-contractual obligations,

unauthorized disclosure of trade secrets may result in

violations of the Trade Secret Act B.E. 2545 (2002) and

the Penal Code.

21. Are employers obliged to provide

references to new employers if these are

requested? If so, what information must

the reference include?

An employer is obliged to provide a certiﬁcate of

employment upon the end of employment, regardless of

the reason for termination of employment, according to

the Civil and Commercial Code. The certiﬁcate of

employment must stipulate the length of service and

description of the work performed by the worker. A

Supreme Court judgment has set a precedent,

establishing that an employer is not entitled to include

any statement unfavourable to the employee, e.g., the

termination of employment for cause, in the certiﬁcate

of employment.

22. What, in your opinion, are the most

common diﬃculties faced by employers in

your jurisdiction when terminating

employment and how do you consider

employers can mitigate these?

Many employers might believe that they are free of legal

risks if all statutory payments (as listed item 17. above)

are made upon an employment termination. However,

any employer who fails to establish ‘reasonable grounds’

(see item 1. above) could ﬁnd themselves embroiled in a

lawsuit initiated by the employee for an unfair or

wrongful termination claim against the employer and its

directors. Therefore, employers must assess whether the

reason for termination of employment is just and

proportionate to the employee’s misconduct or violation

of any discipline. Also, seeking advice on preparing for

termination of employment and associated legal risks is

advisable.

In cases of employment termination, whether on

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reasonable grounds or for any other reasons (where

severance pay must be made), considering an

agreement for mutual separation of employment could

be an option that helps mitigate the risk of a lawsuit for

unfair termination. Mutual separation of employment is

not considered a unilateral termination by the employer

that would trigger liability for compensation. It is

strongly advisable that an agreement for mutual

separation includes the parties’ mutual releases or

discharges of obligations between the parties. In

practice, successfully concluding a mutual separation

agreement requires careful and insightful preparation of

relevant documentation and thoughtful dialogue for

conducting a separation meeting.

23. Are any legal changes planned that are

likely to impact the way employers in your

jurisdiction approach termination of

employment? If so, please describe what

impact you foresee from such changes and

how employers can prepare for them?

There have been no recent legal changes in Thailand

regarding the termination of employment that would

impact employers. Employers should continue to monitor

any proposed changes in legislation to ensure

compliance with Thai labour laws.

Contributors

Waree Shinsirikul

Partner

[email protected]

Ratthai Kamolwarin

Counsel

[email protected]

Athiwuth Phanprechakij

Senior Associate

[email protected]

Norrapat Werajong

Senior Associate

[email protected]