Termination of Employment in Thailand: Legal Framework and Employer Considerations

Termination of employment in Thailand is a matter governed primarily by the Labor Protection Act B.E. 2541 (1998) (“LPA”) and relevant provisions of the Thai Civil and Commercial Code. While employers have broad discretion to manage their workforce, any termination must strictly comply with statutory requirements. A failure to do so may expose the employer to claims for unpaid entitlements or allegations of unfair dismissal before the Thai Labor Court.

Termination with Cause

Under Section 119 of the LPA, an employer may lawfully terminate an employee without advance notice or severance pay only when there is justifiable cause under the following grounds:

• Dishonest performance of duties or the intentional commission of a criminal offence against the employer

• Intentionally causing harm to the employer

• Performance of an act of negligence causing serious harm to the employer

• Violating work rules or orders of the employer for which a written warning has been issued to the employee during the previous 12 months (serious violations might not require a warning)

• Neglecting the employee's duties for three consecutive work days without justifiable cause

• Being sentenced to imprisonment by final court judgment, except for an offence committed through negligence or a petty offence which has not resulted in any damage or loss to the employer.

These grounds are interpreted narrowly and must be supported by factual evidence. The employer bears the burden of proving the misconduct. Accordingly, employers are strongly advised to maintain detailed records of any disciplinary investigation, employee warnings, and witness statements before invoking termination "for cause". In the absence of clear proof, the termination will be presumed to be "without cause", triggering the statutory obligations to provide notice and severance pay.

Termination without Cause

Any termination not falling under Section 119 will be deemed without cause. This includes dismissals due to business restructuring, redundancy, performance issues, or changes in management policy. In such cases, the employer must provide advance written notice at least one pay period in advance or make payment in lieu thereof and pay statutory severance in accordance with the employee’s length of continuous service:

• At least 120 days, but less than one year: 30 days of wages or salary

• At least one year, but less than three years: 90 days of wages or salary

• At least three years, but less than six years: 180 days of wages or salary

• At least six years, but less than ten years: 240 days of wages or salary

• At least ten years, but less than twenty years: 300 days of wages or salary

• Twenty years or more: 400 days of wages or salary

All accrued but unused annual leave, outstanding salary, and contractual benefits must also be paid upon termination. Employers should be mindful of the timing of the termination notice, as the Thai Supreme Court has ruled that notice given after the regular payday is ineffective for that month, resulting in an additional payment obligation.

Unfair Termination and Risk Management

Even where statutory payments are made, an employee may still claim unfair termination if the dismissal is considered unreasonable or discriminatory. The Labor Court has wide discretion to order reinstatement or compensation depending on the circumstances. Terminations carried out in bad faith, such as those motivated by personal conflict or retaliation, are particularly vulnerable to challenge.

To mitigate these risks, employers should ensure that any dismissal decision is supported by objective business rationale and properly documented. In practice, many employers choose to negotiate a mutual separation agreement under which the employee voluntarily resigns in exchange for an ex-gratia payment and release of claims. This approach reduces reputational risk and promotes a more amicable separation.

Conclusion

Termination of employment in Thailand requires careful adherence to legal formalities and fair process. Employers should not view termination merely as a managerial decision but as a legal act subject to statutory protection of employees. Before taking action, it is prudent to seek professional advice to confirm that the proposed termination, whether for cause or without cause, complies with Thai labor law and minimizes potential exposure to litigation. A well-planned, documented, and transparent process remains the best safeguard against future disputes.