Key Takeaways
- Thai severance pay ranges from 30 to 400 days’ wages based on length of service; the maximum was raised in the 2019 amendment
- Notice must generally be given one full wage payment period in advance; immediate dismissal requires payment of wages in lieu of notice
- All amounts must be paid within 3 days of the termination date; a 15% per day surcharge applies to late payments
Introduction
Part 1 of this series covered the overall framework of Thai dismissal law and the fundamental differences from Japan. Part 2 focuses on the practical essentials: the specific procedures for ordinary dismissal and how to calculate severance pay.
1. Notice Requirements
The General Rule: One Wage Payment Period in Advance
Section 17 of the Labour Protection Act requires that when terminating an employment contract, written notice must be given effective from the next or the following wage payment date. In practice, since most companies pay monthly, this typically means giving written notice at least one month in advance.
Example:
- Monthly payroll on the last day of each month; target termination date is 30 September → Notice must be given by 31 August (or earlier)
Immediate Dismissal (Without Notice)
If an employer dismisses without giving the required notice period, wages in lieu of notice (payment in lieu) must be paid. The amount equals the wages the employee would have earned during the notice period.
Note: “Wages in lieu of notice” and “severance pay” are separate payments. Both are required when dismissing immediately without notice.
2. Severance Pay Calculation
What Changed in the 2019 Amendment
The 2019 amendment (B.E. 2562) to the Labour Protection Act raised the maximum severance pay cap. Previously, the maximum was 300 days for employees with 10 or more years of service. The amendment added a new tier: 400 days for employees with 20 or more years of service.
Severance Pay Calculation Table
| Length of Service | Severance Pay (Days of Wages) |
|---|---|
| 120 days – less than 1 year | 30 days |
| 1 year – less than 3 years | 90 days |
| 3 years – less than 6 years | 180 days |
| 6 years – less than 10 years | 240 days |
| 10 years – less than 20 years | 300 days |
| 20 years or more | 400 days (added by 2019 amendment) |
What counts as “wages”: The last rate of wages is used as the basis for calculation. This generally includes base salary and any fixed allowances (e.g., housing allowance, position allowance). For commission-based employees, the average daily wage over the last 90 days is used. Please consult a professional for your specific situation.
Calculation Example
[Case] Monthly salary: 100,000 THB; length of service: 7 years; ordinary dismissal
- Daily wage: 100,000 ÷ 30 ≈ 3,333 THB
- 7 years of service falls in the “6 years – less than 10 years” bracket → 240 days
- Severance pay: 3,333 × 240 = approx. 800,000 THB
3. Mandatory Payment of Unused Annual Leave
Upon dismissal, the employer is obligated to pay out any remaining unused annual leave (Labour Protection Act, Section 67). The amount is calculated as the daily wage multiplied by the number of unused leave days.
4. The 3-Day Payment Deadline
Section 70 of the Labour Protection Act requires employers to pay all outstanding amounts — accrued wages, severance pay, and compensation for unused annual leave — within 3 days of the date of termination.
Penalty for late payment: If the deadline is missed, the employee is entitled to a surcharge of 15% per day on the outstanding amount (Section 9). Given this extremely high rate, prompt payment is essential.
5. Ordinary Dismissal Procedure: Step-by-Step
flowchart TD
A[Decision to Dismiss] --> B["Calculate Severance<br/>and Notice Pay"]
B --> C["Prepare Written<br/>Dismissal Notice<br/>(Thai language recommended)"]
C --> D{With Notice?}
D -- Yes --> E["Employee works or<br/>is placed on garden leave<br/>during notice period"]
D -- No --> F["Calculate<br/>Wages in Lieu of Notice"]
F --> G["Pay all amounts<br/>within 3 days<br/>of termination date"]
E --> G
G --> H["Complete HR formalities:<br/>Social security, work permit, etc."]
H --> I[Done]6. Special Considerations When Dismissing Japanese Expatriates
When dismissing foreign employees such as Japanese expatriates, additional steps apply beyond the standard procedure.
Work Permit Cancellation
When a foreign employee’s employment ends, the employer must apply to cancel the work permit at the relevant Department of Employment within 15 days of the termination date (please verify the exact deadline with the relevant authority). Failure to apply for cancellation may result in penalties for the employer.
Visa Implications
Cancellation of the work permit affects the associated Non-Immigrant B visa. It is important to communicate with the employee about timing, to allow them adequate time to arrange departure or a change of visa status.
Social Security Reporting
The employer is also required to notify the Social Security Office (สำนักงานประกันสังคม) of the termination. Please verify the applicable deadline with the relevant authority.
Summary
| Item | Deadline / Requirement |
|---|---|
| Advance notice | One wage payment period before termination (written) |
| Wages in lieu of notice | Equivalent to wages during the notice period |
| Severance pay | 30–400 days depending on length of service |
| Unused leave payout | Unused days × daily wage |
| Payment deadline | Within 3 days of termination |
| Late payment surcharge | 15% per day on outstanding amount |
| Work permit cancellation (foreign employees) | Within 15 days of termination (please verify) |
Ordinary dismissal is possible as long as severance is paid — but calculation errors or late payments can create new problems. Once the decision to dismiss has been made, start by calculating the correct severance amount and confirming the payment procedure.
Next: Part 3 — “Disciplinary Dismissal: The Six Grounds for Termination Without Severance and the Pitfalls to Avoid”
For individual inquiries about dismissal procedures or severance calculations, please feel free to contact us.
This article is for general informational purposes about Thailand’s legal system and does not constitute legal advice under Thai law. For specific matters, please consult a Thai-qualified legal professional. Our firm works in collaboration with JTJB International Lawyers’ Thai-qualified attorneys.