Yesterday, the company owners decided to terminate one of our Thai company’s employees. He started working with us in April 2010. Consulting our company lawyers, we thought he is entitled to receive a compensation payment of 3 months. However, he talked to his own lawyer who told him that he is entitled to receive 5 months’ monthly salary. Being in-between chairs, I would highly appreciate if you could find time to drop me a mail with a clear written step-by-step procedure regarding contract termination and payment of compensation.
When an employer company in Thailand wants to terminate an employee, they need to give an advance notice in writing before or on the date the salary payment is due for the termination to take effect on the next salary payment due date. In your case, you normally pay your employees on the 28th of the month, so the salary is due on 28th. You need to give him the advance notice within 28 June to take effect on the following salary payment due date, 28 July. If the employer terminates an employee and wants the termination to take effect right away, the employer has to pay the employee all the wages/salary that should have been owed if the termination would take effect on the following wage/salary payment due date. This is called payment in lieu of advance notice. In your employee’s case, you will have to pay him June and July salaries, plus 3 months’ severance payment. The total you have to pay him is 5 months. You can make him come to work until 31 July if you want but you need to give him the termination notice by 28 June which is today.
Need expert advice on Thai Labour Law? Contact MSNA for consultation.