What you need to know before hiring in Thailand: A guide to terminations

As a global company, understanding local labor laws is vital to your remote workforce’s success. Whether hiring in Bangkok, Phuket, or anywhere else in Thailand, it’s important to know the hiring process end-to-end, from hiring and onboarding to termination.

While seeing an employee performing poorly and making tough decisions is already tricky, doing it blindly while not understanding Thai labor or dismissal laws can be dangerous for your company.

Keep reading to learn everything you need to know about advance notice, dismissal requirements, and how hiring through an Employer of Record (EOR) can help avoid any sanctions.

5 essential things to know before hiring in Thailand

• Your employment agreement must include a termination of employment clause. The employment contract must include an employee’s termination clause that clearly states the terms of possible termination. The terminated employee must receive at least 30 days advance written notice of termination and mandatory severance with additional wage payment based on length of service.
• At-will employment doesn’t exist in Thai labor law. You can only immediately terminate employees for just cause, and there are very limited just causes. Severance pay is not required for those dismissed with cause.
• Probationary periods last 90 days. In Thailand, probationary periods last three months up to a maximum of 119 days. Employees terminated during this period with a statutory cause are not entitled to severance pay.
• The terminated employee can file for a wrongful dismissal claim under the Labour Protection Act. If the employer violates their employee rights under the Act, they must submit proof of those violations. If the court finds the dismissal unfair, the employer will be ordered to reinstate the employee, or the court will determine an amount of compensation if they can no longer work together.
• The employer must pay in lieu of the advance notice. Along with wages, overtime pay, severance pay, and unused annual leave, the employer must also pay on dismissal day if without cause, and there’s no advance notice.

Termination rules in Thailand: What are acceptable grounds for firing an employee?

Thai employees may leave their place of employment at any time as long as they give advance notice of 30 days with a written resignation. Here are the reasons an employee can be terminated involuntarily in Thailand. 

• Termination during the probationary period. During the probationary period, the employee or employer can terminate the employment contract without penalty if it’s within the first 119 days. The employer must notify the employee before the end of the probationary period. At 120 days, the employee is now protected from Thai labor laws.
• Termination with just cause. An employee may be terminated if they commit negligent acts, violate the employment contract, commit a criminal act, miss three consecutive workdays without cause, or have serious damage or gross misconduct against the employer. The employer needs to give a 30-day advance notice of dismissal. Per section 119 of the Labour Protection Act, the employer is not required to provide severance pay for a terminated employee with reasonable cause.
• Termination without cause. Thai law sides with the employee if they’re terminated without cause, or there’s an unfair dismissal by the employer. To start the process, the employer must provide a dismissal notice with the reason and date of termination in advance.
  
  Per section 17 of the Labour Protection Act, the written warning must be delivered before the wage payment due date for the 30-day notice to take effect. As an employer, you must pay statutory payments, issue a withholding tax certificate, issue a job certification per civil and commercial code, and close their provident fund, a type of retirement account. The rate of severance payment will be determined by years of service, including unused sick leave.
• Fixed-term dismissal. If the employee works a fixed amount of time with a start and end date, severance pay is not required. Fixed-work employment can only go up to two years. Once the work is completed, the contract cannot be extended per employment law; otherwise, it will become a regular employee’s employment contract.

As Thailand’s termination requirements can differ from other countries, you must stay compliant with local laws when hiring an international workforce.

What are the mandatory notice periods and termination pay for Thai employees?

When working in Thailand, you must provide a 30-day written notice before dismissing an employee with their termination date the following month. You can also dismiss an employee immediately and pay their severance pay later.

Employees who have worked more than 120 days for the employer are entitled to severance pay. The months’ wage amount will be determined by years of service. Per the new Labour Protection Act that came into effect in May 2019, the rates of severance payment are the following:

The easiest way to comply with Thai termination requirements

Managing termination requirements for a global workforce can be challenging. Employers must navigate conflicting just-cause considerations, probationary and notice periods, and varying severance pay laws across different countries. It can quickly become overwhelming as you try to stay compliant abroad and avoid penalties or lawsuits.

An alternative is to hire through an EOR, which can monitor termination requirements for you.

Frequently asked questions about terminating employees in Thailand

Do you need a reason to terminate an employee in Thailand?

Yes, you can involuntarily dismiss a Thai employee without cause if you give a 30-day written advance notice with a clear explanation for the termination or pay in lieu of notice. Following the termination, you must follow the termination steps to comply with Thai labor laws, including severance pay.

What is considered just cause for terminating an employee in Thailand?

In Thailand, you can terminate an employee with just cause if they violated the orders of the employer or displayed gross misconduct. This can include:

• Miss three consecutive workdays without cause
• Violated work regulations and employment contract
• Committed a criminal or negligent act against the company
• Made serious damage to the employer
• Poor performance of duties

Before terminating an employee, employers must have strong evidence of any serious breach of conduct. Be sure to provide the employee written notice during working hours to alert them of the problem before landing on termination.

What qualifies as wrongful dismissal in Thailand?

For any wrongful dismissal of a Thai employee or violation of the Labour Protection Act, the employer can be fined THB 5,000 (USD 150) to THB 200,000 (USD 600) and/or imprisoned for up to one year. A lawsuit can occur if the employee is terminated:

• Without a full, clear explanation and the reason behind their termination
• Without a severance payment
• Without receiving payment for unused annual leave
• If there’s a claim that the employee violated work rules without a written warning, leading to an unfair termination.

Following the employee showing proof of unfair termination, if the final court judgment rules unfair dismissal, then the Labour Court can order the employee to be reinstated. If the court believes the employee and employer cannot work together, in that case, it will rule that the employer pays an amount of compensation based on the employee’s wages, working period, and more.

Employers should only terminate workers for valid reasons based on actual, reasonable cause without discrimination to avoid unfair dismissal claims.

What is always required when an employer terminates an employee in Thailand?

Thailand requires giving at least one month’s notice before termination. Once the employee is terminated in Thailand without cause, the employer is required to provide the following if they worked in the company for more than 120 days:

• Issue a written notice with the termination of employment details and the final date
• Notify the employee at least 30 days in advance
• Pay statutory payments, including unused annual leave
• Issue the withholding tax certificate and job certificate
• Close the provident fund

If you do not provide these, you may be penalized by the Labour Court.

What is the law for dismissing a contractor in Thailand?

Governed by the Thai Civil and Commercial Code, contractors in Thailand work independently, pay their own taxes and social security contributions, and set their working hours.

Since contractors work for a fixed time, they are not entitled to severance pay or contract extensions past a two-year period. The contractor may be dismissed at the end of the project per the agreement signed by both parties.

What are layoffs in Thailand?

Like in other countries, layoffs occur in Thailand. Employers can terminate employees due to redundancy or reorganization similar to the US. Layoffs may occur due to the company’s financial difficulties, but it will need to prove to the Labour Court that there was no alternative to the layoffs.

Any laid-off employees are subject to severance pay based on years of service at the company, payment in lieu of notice, and paid unused annual leave.

Employees with a consecutive tenure of 6-plus years are entitled to a special severance pay that equals 15 days of the employee's wages for each year of service that the employee has worked up to 365 days.

Manage the entire lifecycle of your international employees with Rippling

If you’re a foreign company hiring employees and contractors overseas, then Rippling will help you manage your entire employee lifecycle—from onboarding to offboarding your workers. See Rippling today.

Rippling and its affiliates do not provide tax, accounting or legal advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.