Employee Benefits and Severance Pay in Thailand: A Legal Guide

Are you dealing with employment law in Thailand and uncertain about what benefits your staff are due? Are you restructuring or planning to terminate employees and wish to remain compliant with Thai labour laws? At PD Legal, we have witnessed how minor misinterpretations of staff entitlements may result in expensive disputes. That is why we exist to simplify the necessity of employee benefits and termination pay in Thailand—obviously and legally.

Basic Employee Benefits in Thailand

Thai labour law mandates that employees receive certain employment benefits, regardless of the industry or company size. These are not optional and must be consistently provided.

The main employee benefits include:

• Annual Leave – Employees are entitled to at least 6 paid vacation days per year after one year of service.
• Public Holidays – A minimum of 13 paid public holidays is required by law.
• Sick Leave – Up to 30 working days of paid sick leave per year, with a medical certificate required after 3 days.
• Maternity Leave – Up to 98 days of leave, with 45 days paid by the employer and the rest covered by social security.
• Personal Business Leave – Employees are entitled to at least 3 days of paid personal leave annually.
• Social Security Contributions – Employers must register employees and contribute monthly to the Social Security Fund.

These benefits should be clearly outlined in written employment contracts and consistently implemented across all levels of the organization.

Severance Pay According to Thai Labour Law

Under the Labour Protection Act, employees who are terminated without cause are entitled to severance pay. The amount is calculated based on their length of continuous service.

Severance pay entitlement:

• 120 days – less than 1 year: 30 days’ wages
• 1 year – less than 3 years: 90 days’ wages
• 3 years – less than 6 years: 180 days’ wages
• 6 years – less than 10 years: 240 days’ wages
• 10 years – less than 20 years: 300 days’ wages
• 20 years or more: 400 days’ wages

This compensation is intended to provide employees with financial support during the transition out of employment. Employers must pay this promptly upon termination, unless the employee is dismissed for cause.

Termination Without Severance Pay

There are specific situations where severance pay is not required. Thai law identifies certain acts of serious misconduct that justify termination without compensation:

• Intentional harm or dishonesty toward the employer
• Criminal acts committed at work
• Serious violation of company rules after written warning
• Gross negligence causing significant damage
• Abandonment of duty for 3 consecutive working days without reason

However, even in such cases, employers must be able to document the incident clearly. Termination without severance must follow due process to avoid legal consequences.

Importance of Written Employment Contracts

Written employment agreements are essential in Thailand. Although oral contracts are recognized, written agreements provide clarity on rights and responsibilities for both parties.

Key clauses to include:

• Position and job responsibilities
• Working hours and overtime conditions
• Salary and payment schedule
• Entitlements to leave and benefits
• Termination notice period
• Disciplinary procedures

It’s also good practice to include policies aligned with Thai labour laws to prevent misunderstandings or disputes in the future.

Final Payments and Termination Procedure

When terminating employment, employers are required to provide:

• Unused annual leave payments
• Any outstanding wages
• Severance pay (if applicable)
• Return of employee documents (e.g., tax form, work certificate)

Termination must be handled with transparency. Any disputes over final pay can be escalated to the Labour Protection Office or Labour Court, where documentation will be critical.

Risks of Non-Compliance

Non-compliance with Thai employment laws can lead to legal challenges, financial penalties, or reputational damage. Even unintentional errors—such as late severance payments or unclear contracts—can trigger disputes.

Risks include:

• Labour inspection audits
• Employee complaints to authorities
• Court-ordered compensation
• Penalties for late payment of severance or benefits

Employers are encouraged to stay informed of regulatory changes and review their policies regularly to ensure ongoing compliance.

Why Choose PD Legal in Thailand?

We understand Thai employment law inside and out. Our team at PD Legal offers practical, localized advice to help you manage your workforce confidently. Whether you’re drafting contracts, planning a restructuring, or responding to labour disputes—we’re with you.

We offer:

• Clear, professional guidance on Thai labour laws
• Employment contract drafting and review
• Support with employee termination and severance pay
• Representation in labour disputes, if necessary

Conclusion

Understanding employee benefits and severance pay in Thailand is essential for any employer. Adhering to local labour laws not only protects the rights of employees but also safeguards the business from avoidable legal issues. Employment policies should be clear, well-documented, and aligned with current legal standards.

At PD Legal, we’ve seen firsthand how proactive legal compliance creates a smoother and safer working environment for both employers and employees. Reach out to us and make your employment practices legally sound and future-ready!

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