Statutory Termination Payments and their Due Dates

According to Section 118, paragraph 2 of the Labour Protection Act B.E. 2541 (1998) (“LPA”), termination of employment shall mean any act of an employer which prevents an employee from continuing to work and receiving his or her wages thereof. Once the employee is terminated in accordance with said Section 118, paragraph 2 of the LPA, it will trigger the employer’s liability and obligation to pay statutory termination payments to the employee in full. Therefore, the employer must consider whether or not the subject employee is entitled to any of the following statutory termination payments upon the cessation of the employment relationship, on a case-by-case basis:

(1) Money to be paid on the date of termination:
• Severance pay (Section 118 of the LPA)*
• Payment in lieu of advance notice of termination (Section 17/1 of the LPA)
*Remark: Strictly speaking, severance pay should be required to be paid within three days as from the date of termination, according to the text of the amended Section 70, paragraph 3 of the LPA. However, since such amendment, there hasn’t been any court precedent as of yet; and it appears that the Department of Labour Protection and Welfare still follows court precedents rendered before such amendment. Consequently, the employer is recommended to pay severance on the termination date to be on the safe side.

(2) Money to be paid within three days of the termination date:
• Outstanding or unpaid wages, overtime pay, holiday pay, holiday overtime pay and any money the employer is obliged to pay under the LPA (Section 70 Paragraph 2 of the LPA)

(3) Money to be paid or returned, as the case may be within seven days of the termination date:
• Special severance pay in lieu of advance notice or special severance pay in the event of termination of employment resulting from the reorganisation of an undertaking, production line, sale or service due to the adoption of machinery, or the change of machinery or technology which causes a reduction of the number of employees; or termination/end of employment due to relocation of place of business (Sections 120, 120/1, 121 and 122 of the LPA)
• Security or guarantee deposit (Section 10 paragraph 2 of the LPA)

If the employer violates or fails to comply with the employee’s entitlement to receive the abovementioned statutory termination payments within the said due dates of payment, the employee can immediately submit a complaint to the Department of Labour Protection and Welfare in the area where the employer’s business premises or domicile is located, or the competent labour court, as the case may be. However, the employee cannot submit a compliant to both authorities for the same ground since it will be considered as double jeopardy and thus is not allowed under Thai law.

The employer shall be liable to pay interest of 15 percent per annum to the employee during the time of default, pursuant to Section 9 of the LPA. However, if it can be proved that the employer wilfully refuses to pay (or return) the statutory termination payments without reasonable cause, the employer must be liable to pay the employee a surcharge of 15 percent of the outstanding amount payable for every seven day-period (in addition to said default interest), commencing upon the expiration of seven days after the due date of the return of guarantee payment or payment of statutory termination money, as the case may be.

Moreover, the employer, as well as its managing director or any person who is responsible for carrying out the business of the employer, in case the employer is a juristic person, may also be subject to penalties specified under Section 144 of the LPA, which are a term of imprisonment for not more than six months or a fine of not more than Baht 100,000, or both.

This is intended merely to provide a regulatory overview and not to be comprehensive; it is NOT a provision of legal advice. Should you have any questions on this or on other areas of law, please do not hesitate to contact the following:

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