Thai Law Insights

Legal Considerations in Brief for Employers in Handling Employment Termination

Jirapat Santichaianant

In the case of employment termination, employers may face the situation where the employee wants to dispute with the employer by claiming severance pay or other compensation. In Thailand, if an employer wants to terminate an employee immediately without the employee’s fault, the employer must pay the employee’s unpaid salary, severance pay (money to compensate the terminated employee as set out by law, depending on the terminated employee’s period of service), and damages for unfair termination (only the Labour Court has the power to determine the damages for unfair termination).

Unlike the situation mentioned above, if the employee is violating work rules or orders of the employer, the employer is not required to pay the severance pay and damages for unfair termination, provided that the employer must prove it in court with admissible evidence.

In many cases, the employer may fail in proving the above in court to avoid making severance pay or otherwise. To be prepared, the employer should set up safeguards by preparing and keeping the letter terminating the employee’s employment with clear grounds, i.e. violation(s) of the work rules or orders of the employee by the employee.

Alternatively, the employer may opt out from issuing a letter of termination by offering the employee in trouble to submit his/her resignation letter in place of the letter of termination, provided that the employer should offer a compensation package equivalent to the employee’s actual severance pay. Through this, the employer may be safeguarded from being sued by the employee in court, as the resignation letter can be treated as evidence that the employee in trouble waived his/her right to take action in court against the employer, according to the Thai Supreme Court’s previous decision (not binding legal precedent like under English law, but a guideline for other cases).

The employer may build up its internal legal team or HR team who are capable of handling the employment disputes to avoid or minimize legal battles between the employer and its employees in face of the long-standing confrontations between employers and employees.