Severance Pay and Termination in Thailand: What You Are Entitled to Receive

Short Answer

If a Thai employer dismisses you through no fault of your own, the law requires the employer to pay severance, the amount of which increases with length of service. If you were dismissed without adequate advance notice, a separate payment is added (payment in lieu of notice). These rules apply regardless of your nationality: a foreign national holding a valid work permit is protected in exactly the same way as a Thai citizen.

Who Is Protected

Thailand's Labour Protection Act covers employees in the private sector. The key principle is that protection depends not on the passport you hold, but on the fact that you are lawfully employed. If you hold a work permit and are employed by a Thai company, you are entitled to the same guarantees as local employees.

It is important to distinguish between two statuses:

• Employee under an employment contract - severance pay, protection against unfair dismissal, and other guarantees apply to you.
• Contractor or self-employed person under a civil-law services agreement - these rules generally do not apply. Many disputes arise precisely because the actual relationship was one of employment but was structured as a services arrangement. Thai courts look at the real substance of the relationship (subordination, schedule, control) and not merely at the label given to the contract.

Severance Pay: The Scale Based on Length of Service

The central idea of the law is this: the longer your continuous service, the greater your severance pay. It is calculated as a specified number of days (or months) of your most recent wage and is payable when the employer dismisses you through no fault of your own (for example, redundancy, closure of a division, or restructuring).

The scale is built around service-length brackets: each successive threshold entitles you to a higher payment. The general logic of the progression is set out below (precise thresholds should be verified against the current version of the statute and with a lawyer):

The principle to remember is that severance increases in steps as service length grows, reaching a ceiling after many years of employment. Do not try to calculate the exact figure from memory: check your length of service against the current statutory table.

Severance pay is generally not payable when:

• you resign voluntarily;
• you are dismissed for serious misconduct (gross violation of rules, dishonesty, intentional damage to the employer, wilful neglect of duties, and similar grounds expressly provided for in the statute).

That said, an employer cannot retrospectively invent a 'misconduct' ground in order to avoid paying. If the employer relies on fault on your part, the employer must substantiate it, and serious grounds ordinarily need to be recorded in writing.

Notice of Termination and Payment in Lieu of Notice

Separate from severance pay, there is a distinct rule on advance notice. An employer terminating an open-ended contract is required to notify the employee in advance (generally no later than one pay period before termination, which in practice often means approximately one month's notice).

If the employer did not give you timely notice and wishes you to leave immediately, the employer must pay compensation in lieu of notice (payment in lieu of notice): in essence, the wages for the period during which notice should have been given.

These are two separate payments:

• severance pay depends on length of service and compensates for the loss of employment itself;
• payment in lieu of notice compensates for the absence of adequate advance warning.

If you are dismissed through no fault of your own and without notice, you may be entitled to both.

Unfair (Unjustified) Dismissal

Thai law recognises the concept of unfair dismissal. Even if the employer has formally paid severance, the dismissal may still be found unfair if there was no reasonable and sufficient ground for it.

If the Labour Court finds the dismissal unfair, it may:

• award additional compensation on top of severance pay (the amount is determined by the court taking into account length of service, age, the hardship of finding new employment, and the reason for dismissal);
• in certain cases, consider reinstatement, although in practice a monetary award is more common.

This is a distinct mechanism: severance pay is due in almost every case of dismissal through no fault of the employee, whereas compensation for unfairness is an additional remedy available when the dismissal had no genuine substantive ground at all.

What Else Must Be Paid on Termination

Upon the end of employment, in addition to severance and payment in lieu of notice, the employer is generally required to settle all accrued entitlements:

• unpaid wages for time actually worked;
• compensation for unused annual leave to which you were entitled;
• any other accrued but unpaid amounts provided for under the contract or internal company rules.

A separate matter to bear in mind concerns your visa and work permit: both are tied to your employer. After dismissal, the right to lawful residence under a work visa ordinarily lapses within a short period, so immigration status must be addressed immediately, in parallel with any dispute over payments.

What to Do

1. Gather your documents: the employment contract, pay slips, correspondence relating to the dismissal, and the company's internal rules. Record the date your employment began and your most recent salary, as both are needed for the calculation.
2. Request written grounds for dismissal. If the employer alleges fault on your part, ask for that to be set out in writing: verbal accusations are difficult to challenge in court.
3. Calculate the payments you expect across three lines: severance pay (based on length of service), payment in lieu of notice, and accrued wages together with unused leave.
4. Do not sign a waiver without reading it carefully. Sometimes on dismissal you may be asked to sign a document stating that you have no further claims. First make sure the amount offered corresponds to what the law requires.
5. Contact the labour authorities or a lawyer. Thailand has a dedicated labour protection authority and labour courts; bringing a claim there is usually free or low-cost, but time limits for filing apply, so delay is not advisable.
6. Resolve your immigration status immediately after dismissal, so that a dispute over money does not compound into a problem with an overstayed visa.