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Thai Law Insights

A Foreign CEO's Comprehensive Solution to Tackle the Issue of Unfair Dismissal

Punthawat Ketmalasiri

punthawatk@csbc-law.com

As it is well known, Thailand is referred to as the land of smiles, but it should also be called the land of justice. This is especially true when analyzing the rights and protections of foreign CEO’s whose employment in Thailand is unfairly terminated. As is customary when foreign CEO's are let go, there is almost always a severance package involved for such CEO's untimely departure from the company, however, under the current Thai law there is another mode of compensation if it falls under the purview of unfair termination.

To be eligible for compensation upon termination of employment, it must first be established whether the person in question can be regarded as an employee and if such can be deemed as an employee of the company, such person will have full protection under the law. As for foreign CEO's, they are most certainly considered employees of their company due to the nature of their employment. Foreign CEO’s are deemed employees based on several factors such as a consistent salary paid out to them, abiding by the work rules which all employees must also comply with, and that there is a clear command chain where CEO's have to report to others within the company or to the parent company abroad (if any).

Upon establishing that the foreign CEO is an employee of his/her respective company, the terminated CEO may file a claim in the Thai Labor Court for unfair termination. Under Section 49 of the Act on Establishment of and Procedure of the Labor Court of 1979, the Court will take into consideration the foreign CEO's age, duration of employment, financial hardships faced because of the termination, and the cause for termination when calculating a fair compensation. An example of this can be found in a Thai Supreme Court Decision, which held that it is appropriate for a CEO to receive one month’s salary for each year of past employment as compensation for the unjust termination.

If you are a foreign CEO residing in Thailand, there is little reason to be distressed over financial compensation when dismissed, as you are fully protected under the Thai labor law. You will not be left holding the bag as the law will provide sufficient means for your return to your home country.