Terminating an Employee: What Must Employers Pay?

Terminating an Employee: What Must Employers Pay?

Terminating an employee is not just about informing them to leave; employers have legal obligations under the Labor Protection Act B.E. 2541 (1998). Failure to comply may result in lawsuits or penalties.

1. Unpaid Wages

🔹 Employers must pay any outstanding wages owed to the employee, including the final paycheck, overtime pay, and commissions (if applicable).

✅ Must be paid within 3 days from the termination date (Section 70).

2. Severance Pay

🔹 If an employee is terminated without serious misconduct, they are entitled to severance pay based on their length of service:

📌 Exceptions (No Severance Pay Required)

❌ If the employee commits serious misconduct, such as fraud, violence, or severe violations of company rules.

3. Payment in Lieu of Notice

🔹 If an employer terminates an employee immediately without prior notice at least one full pay cycle in advance, they must compensate the employee with an additional month’s salary instead.

✅ Exception: Not required if the termination is due to serious misconduct.

4. Special Compensation (For Unfair Dismissal)

🔹 If the Labor Court determines that the termination was unfair, the employer may be required to pay additional compensation as deemed appropriate.

📌 Examples:

• An employer dismisses an employee without a valid legal reason → Additional compensation may be required.

• An employer terminates employees for cost-cutting without proper notice → Backpay may be ordered.

5. Other Payments Required

🔹 Unused annual leave compensation

🔹 Bonus (if specified in the employment contract)

🔹 Employer’s contribution to the provident fund (if applicable)

Summary

💡 When terminating an employee, employers must pay:

✅ Unpaid wages

✅ Severance pay (if no serious misconduct)

✅ Payment in lieu of notice (if termination is immediate)

✅ Special compensation (if termination is deemed unfair)

✅ Compensation for unused annual leave

🔹 Do you think severance pay in Thailand is fair? Share your thoughts in the comments!