Thread: Terminating employment in Thailand

I would have thought severence should have been spelled out in the original contract.

^ You ever read a Thai-based contract? Despite the English version, you can never trust their tricks - with Thai being legal.

I'm really more interested in getting to the nitty-gritty of the Thai Labour Law & discussing things amicably, before getting too irate. Everything is resolvable in some way, shape, or form.

I think they've got themselves in a spot of long-term bother & are probably a little cash-strapped, or over-extended. Even though they are a large group - Chinese-Thai - this USD-THB devaluation has eaten their export business. In the long-term, I'll be glad to be moving on. I don't ever want to work for another Chinese-Thai company - their management style is ridiculous.

Originally Posted by DrB0b

I notice that it said in William's link that severance pay only applies to people on permanent contract. As my work permit is issued on a yearly basis my contract is also renewed yearly and it would seem to me that people on a yearly work permit can't be considered permanent employees under that section of the law. Is that true? Also, compensation payments are based on the number of years employed, would 3 consecutive one year contracts be considered three years employment or would only the last yearly contract count towards compensation?

This is the part that's unclear to me:

Chapter 11 - Compensation Payments
Section 118.

....The provisions in paragraph one shall not apply to employees who have a fixed term of employment and whose employment is terminated in accordance at the end of the specified term.

Fixed term employment under paragraph three may be effected in respect of employment for work in specific projects which are not the normal work of the boss's business or trade, and which must have a definite beginning and end of employment, or for seasonal work for which employment is effected during the period of such seasons, to the extent that the work must be completed within a period of not more than two years, and that the boss and the employee had made a written agreement as such upon commencement of employment.

Basically what this says is that you can only do a fixed term contract for 2 years, after that you become a full time employee.

So, if I hire you on a fixed term contract for 2 years, terminate your employment and then re-hire you on another 2 year fixed term contract, that doesn't work, because as soon as you start the second 2 year fixed term contract, you would be a full-time employee entitled to all compensation benefits under the Labour Law in the event that the contract is later terminated.

Originally Posted by Texpat

I would have thought severence should have been spelled out in the original contract.

Most Thai work contracts I saw or worked on stated that compensation/severance was paid in accordance with Thai law, so it is not reeally that much help.

Originally Posted by watterinja

^ You ever read a Thai-based contract? Despite the English version, you can never trust their tricks - with Thai being legal.

I'm really more interested in getting to the nitty-gritty of the Thai Labour Law & discussing things amicably, before getting too irate. Everything is resolvable in some way, shape, or form.

I think they've got themselves in a spot of long-term bother & are probably a little cash-strapped, or over-extended. Even though they are a large group - Chinese-Thai - this USD-THB devaluation has eaten their export business. In the long-term, I'll be glad to be moving on. I don't ever want to work for another Chinese-Thai company - their management style is ridiculous.

Although your contract states that it till Sept. 2008, I'll bet it has a provision that states either side can terminate the agreement with the giving of 30 days notice, or one pay cycle if you are paid more often than once a month. At least, this is what the law allows.

So, you'll like be entitled to 180 days or so, you may be able to budge this up a little. IKf they are willing to work the notice period, then that'll be it. Otherwise Thai law does allow for the notice period to be foregone on the payment of a sum equal to the sum you would have been paid had the notice period been adhered to.

Unfortunately, Thai law does not, as a general rule, acknowledge the concept of "economic loss", so there would be no way you could argue that had the contract gone full-term, you would have earnt more.

One note of caution though, I see you are stating that the company will let you out of the contract due to economic needs. In fact this is one area of the law where a company could argue they don't need to pay compensation. Under the law, a company that can prove it is restructuring due to economic short-fall may be able to claim that it cannot honour any compensation package. So if I were you, I'd not play that card too heavy, if at all.

If memory serves me right, there was a case of a garments factory that tried this on earlier this year. Indeed, I may have posted a thread where the "women" (brrr) protested naked in front of parliament because the comapny was refusing to pay compensation on these grounds.

Once terminated you have three weeks to hand in your Wp and your visa, and then you have 24 hours to leave the country. Happened to me after 7 years with a company.
If you have a Thai wife or family you can ask for extra time, no big deal, they gave me 6 months as I was waiting for my Thai Residency.
William is correct that once you pass the 2 year mark (I thought it was 12 months) you are entitled to severence pay, provided you are not dismissed for not honouring the contract ie abandoment, theft etc.
If the company refuses to pay you can go to the local thao labour department who will help you get it. Only problem is that your visa might need changing while you wait.
Most contracts have a clause that allows for one months notice, but once you get past the 1-2 years they must pay you the severence if you have done nothing to desrvce the notice ie theft etc.

Thanks very much everyone for your wisdom - it is very much appreciated. William, your insights are fantastic.

I had a chat with the MD & Deputy this morning. They've promised to work to the Thai Labour rules & I'll have feedback in the next few days. It all went down rather amicably. I will however, be consulting with a Thai lawyer as backup in this matter, so that we can press if needs be.

What actually appears to have gone down is rather interesting. With my involvement, they began to gain a lot of new western-based interest & inquiries. Their Japanese main customer - who, until then had not cared too much about the group trying to diversify its interests - suddenly put the screws on them & basically promised to pull the plug on their contracts unless they jumped promptly onto the Japanese system. It seems that we'd been a little too successful.

So basically, they are stuck in-between a rock & a hard place - it seems. The Japs gave them 10 years to develop home-grown technology. They diddled for 3 years, I came along & pulled them up for 3-odd years, but now, they are within the remaining 4-year period. Essentially, in 4 years the Japs will pull the plug anyway & they will have no fall-back position.

Not much else I can do, really.

They were rather worried today when they heard that I may be moving away from Thailand as it has suddenly dawned on them that they have absolutely no-one who will be able to help them commercialize a new process which is set to be commissioned during next year.

Odd people - talk before thinking.

Great advisory thread, lots of useful information to digest, Thanks..

Originally Posted by watterinja

They were rather worried today when they heard that I may be moving away from Thailand as it has suddenly dawned on them that they have absolutely no-one who will be able to help them commercialize a new process which is set to be commissioned during next year.

Odd people - talk before thinking.

Perhaps its time to convince them to spin off new products into a new startup company.


Period of Employment Amount of Severance Pay
More than 120 days but less than 1 year 30 days wages or salary
At least 1 year but less than 3 years 90 days wages or salary
At least 3 years but less than 6 years 180 days wages or salary
At least 6 years but less than 10 years 240 days wages or salary
At least 10 years 300 days wages or salary