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Notice period in Thailand
Employee termination in Thailand
Post-termination restraints in Thailand
Waivers in Thailand
Transfer of undertakings in Thailand
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Constructive dismissal in Thailand
Constructive dismissal occurs when an employee resigns because they are unable or unwilling to endure the working conditions or the employer’s behaviour. Typically, rather than firing outright, the employer has fostered an environment or conditions that force the employee to resign.
Some common situations that might be considered constructive dismissal in Thailand, include:
- Unilateral changes to employment terms: This occurs when an employer makes significant changes to the terms of employment, such as adjusting salary, working hours, or job responsibilities, without the employee’s consent, and these changes are considered unacceptable by the employee.
- Harassment or discrimination: An employer’s persistent harassment, discrimination, or a hostile work environment can lead an employee to resign.
- Non-payment of wages: Failure to pay wages or other contractual benefits can also constitute constructive dismissal.
- Unsafe working conditions: This happens when an employer fails to provide a safe working environment, and this failure is severe enough to make the employee’s continued work unreasonable.
Under Thailand’s Labour Protection Act (LPA), if employees believe they have experienced constructive dismissal, they can opt to file a complaint with the Department of Labour Protection and Welfare or pursue legal action. The employee would typically need to demonstrate that the employer’s actions were indeed the primary reason for their resignation and that they did not voluntarily leave the job. If the employer is proven to have committed constructive dismissal, they may be liable for statutory severance based on the employee’s length of service.
Unfair dismissal in Thailand
Unlike constructive dismissal, where an employee resigns due to the employer’s actions, unfair dismissal occurs when an employer initiates the termination.
Terminating an employee from their job without just cause or due process constitutes unfair dismissal. Under Thailand’s LPA, an employer must provide a legitimate reason for dismissal and follow proper procedures, including notice periods or compensation, unless the dismissal is for cause (e.g., serious misconduct).
For unfair dismissal, the employee has the right to file a complaint with the Labour Court. Employees can seek reinstatement or compensation for wrongful termination.
What is the compensation for unfair dismissal in Thailand?
Compensation for unfair dismissal from employment can depend on various factors, such as the circumstances of the dismissal and the length of service of the employee. As per Thailand’s LPA, termination without statutory cause, may entitle employees to receive severance pay that varies based on their length of service.
If the Labour Court finds that the dismissal was indeed unfair, it may order compensation in addition to severance pay or reinstatement of the employee under certain conditions.
Severance pay may also be due if an employee resigns due to a workplace change that affects their living or unlawful employer orders.
Severance pay in Thailand
Here is the general severance pay rate in Thailand:
- Less than 120 days of service: Not entitled to severance pay.
- At least 120 days, but less than one year of service: 30 days of wages.
- At least one year, but less than three years of service: 90 days of wages.
- At least three years, but less than six years of service: 180 days of wages.
- At least six years, but less than 10 years of service: 240 days of wages.
- 10 years of service and over: 300 days of wages.
- 20 years of service or more: 400 days of wages.
Employers are not required to provide severance pay when termination has a reasonable cause. According to the Labour Protection Act (LPA), an employer has the right to dismiss an employee immediately without severance pay for certain severe misconducts or breaches. These include:
- Dishonesty in the execution of duties.
- Intentionally committing a criminal offense against the employer.
- Causing serious harm to the employer.
- Negligence causing serious damage to the employer.
- Violation of the employer’s lawful work rules, orders, or instructions after a previous warning has been given.
- Absence from duty without just cause for three consecutive workdays regardless of whether there is a holiday in between.
Dismissal of an employee during probation period in Thailand
Employers have the right to dismiss an employee during their probationary period, but they must adhere to certain conditions and guidelines to ensure a fair process.
According to Thailand’s LPA, employers are not legally required to set a probationary period for an employee. However, if they choose to set one, the duration is subject to the employer’s discretion and should be agreed upon with the employee. Employers commonly use probation periods to evaluate the new hire’s suitability for the position.
A probationary period in Thailand cannot exceed 119 days. During this period, employers are allowed to terminate employment if the employee’s performance does not meet the expected standards or job requirements, or if the employee lacks the necessary skills or competence for the role.
Notice period in Thailand
The employee notice period for resignation in Thailand is at least 30 days. Some employers may provide longer notice periods as stated in the employment contract, which employees must agree with.
To ensure a smooth transition, the employee must submit the resignation notice before the upcoming payday. This will allow the resignation to formally take effect on the next payday. In addition, it is possible for employees to make a payment instead of serving the notice period.
Notice period during probation period in Thailand
For new employees undergoing probationary periods, the notice period typically follows the standard requirement, which is 30 days. However, this may vary depending on the employment contract or company policy, as some employers might require a longer notice period.
Can employees not be serving notice periods in Thailand?
In general, employees are obligated to serve their notice period when terminating their employment. However, there is an option for employees to not serve their notice period if the employer agrees to an immediate termination. Such cases include:
- Employee health issues: If continuing to work would seriously affect the employee’s health, immediate resignation may be permissible, although providing medical evidence is usually necessary.
- Unsafe working conditions: If the working environment is unsafe or violates legal standards, an employee may be able to resign without serving notice.
- Employer’s serious misconduct: If the employer has committed serious misconduct or breaches the employment contract significantly, an employee might be justified in resigning immediately without notice.
The employer may be able to deduct the equivalent of the notice period’s wages from the employee’s final settlement if the employee fails to serve the required notice period without a valid reason.
Probationary period in Thailand
Thailand does not require a minimum period or the addition of a probationary period to the employment contract. However, according to Thailand’s labour law, the maximum allowable duration for a probation cannot exceed 119 days.
For assessment purposes, many employers in Thailand opt to maximise the full 119-day period.
Employee termination in Thailand
Under Thailand’s labour law, an employer has the right to terminate employment for “just cause.” This covers various grave circumstances, including:
- Engaging in criminal activities
- Intentional damage to the employer’s property
Negligence resulting in significant harm or risk - Breaching workplace rules and regulations
- Violating orders despite receiving a formal warning
- Unjustified absence for three consecutive days
- Employee receives a prison sentence.
However, if the termination is without just cause, the employer is required to provide compensation to the employee, which might include statutory severance pay, notice pay, and other entitlements depending on the situation. The dismissed employee, on the other hand, may pursue a claim for unfair dismissal through the labour court.
Upon termination of employment, the employer must notify the Social Security Office. In cases involving foreign employees, additional notifications to the Immigration Bureau and the Department of Employment at the Ministry of Labour are required.
Moreover, the employee must receive termination-related payments, such as the current month’s salary, compensation for unused annual leave, and severance pay, within three days of the termination date.
Wrongful termination in Thailand
This refers to the firing of an employee without just cause or by violating the prescribed legal procedures outlined in Thailand’s labour laws.
Just causes for termination can include misconduct, incompetence, or breach of contract. Under Thailand’s law, terminating an employee without one of these validated reasons may be considered wrongful.
If an employer dismisses an employee without a valid reason or fails to follow the correct termination procedures, the terminated employee may claim unfair dismissal and could potentially win a favourable judgement from the labour court. The company could then be held liable for the dismissed employee’s statutory payments.
The law mandates compensation for wrongful termination to protect employees against unjust dismissal practices.
Post-termination restraints in Thailand
To protect the employer’s legitimate business interests, post-termination restrictions are enforceable, provided that the employee’s continuing activities could potentially harm the employer’s business.
However, the enforcement of post-termination restrictions still depends on the case, such as the employee’s job responsibilities and the scope of the restrictions. Courts have accepted restriction periods ranging between 1 and 2 years, given that the scope must be restricted, for example, within Thailand only.
Non-compete clauses in Thailand
This is enforceable, but with strict conditions. Typically, courts in Thailand are known to enforce non-compete clauses for up to 24 months and not more than two years within a geographic score, such as Thailand.
Customer and employee non-solicitation in Thailand
Non-solicitation clauses are enforceable, but they must be deemed reasonable in relation to the interests of the parties concerned and the public. Courts will take into consideration factors such as the nature of the trade or occupation, the geographic area over which the restraint is imposed, and the length of time for which it is applied.
In general, non-solicitation can be enforceable for a period of no more than 2 years within a restricted area, such as Thailand.
What are the consequences of breaking a post termination restraint in Thailand?
If an employee breaches a post-termination restraint, such as a non-compete or non-solicitation clause, the employer may take legal action against the employee. This could potentially result in the former employer seeking damages for any losses incurred due to the breach or obtaining an injunction to prevent the former employee from continuing the prohibited activities.
On the other hand, if the employee breaches the restraint clause while still employed (e.g., by starting a side business in competition with their current employer), this could result in immediate termination and further legal consequences.
The nature and enforcement of any legal recourse will heavily depend on the reasonableness and specific terms of the contract, as well as Thailand’s labour law and judicial discretion. To handle these matters properly, you can consult with Thai legal experts or contact our team of compliance experts here.
Waivers in Thailand
There are specific stipulations under Thailand’s Labour Protection Act that cannot be waived because they are considered to be public policy or are set to protect the welfare of the employees. Any such waivers that attempt to diminish statutory rights below the minimum standard are likely to be deemed invalid or unenforceable.
Under the principle of ‘Freedom of Contract’, parties in Thailand can generally agree to the terms of their contract, as long as the terms are not against public order or good morals. An employment contract in Thailand can be both written and verbal, but regardless of its form, it must not include conditions that provide the employee with less benefit than those stipulated by labour laws. Any such disadvantageous conditions would likely be unenforceable.
Nonetheless, it’s still possible to agree on waiving rights that are based on the contract itself or other legal grounds. This includes, for example, agreeing not to pursue a claim against an employer for unfair dismissal.
Transfer of undertakings in Thailand
In terms of continuity of employment, there is no automatic transfer to a new company. To ensure compliance, employers must understand the following two clear processes to handle such a transition properly:
- Transfer with consent: With an explicit written agreement from the employee, the new company—known as the transferee—can take over the existing employment terms. This includes acknowledgement of the employee’s service duration and continuation of all previous rights and benefits. To formalise this, a three-way agreement can be created between the old employer (transferor), the new employer (transferee), and the employee, securing a seamless transition.
- New employment contract: Alternatively, the old company may fully terminate the employee’s employment, ensuring they receive their due severance pay and any other rightful compensation as mandated by the LPA. The new company can then offer a brand-new employment contract, potentially with different terms, to start afresh. Employees should discuss changes in job roles or responsibilities to ensure they align with the terms of the original employment contract or reach an agreement through negotiation. During this process, the employee must understand that the new terms might not be as favourable, and they won’t acknowledge their previous service length unless they explicitly agree upon it.
If employees believe the merger and acquisition process is violating their rights, they have the right to seek legal recourse. They can file complaints with the Department of Labour Protection and Welfare or pursue claims in labour court.
On the other hand, employers are required to notify the Ministry of Labour about certain changes related to mergers and acquisitions, particularly if they affect a significant number of employees or involve large-scale redundancies.
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