The termination of an employee needs to start from the day the Company considers hiring an employee in Thailand. The first step it needs to take in order to hire an employee is to draw up the right Application Form and an Offer of Employment. Next, the Employment Contract will require some special attention. We also suggest that Companies prepare a Personal Data Protection Agreement, and a DNC/NDA. Also it is imperative that you have a compliant Employee Handbook and have submitted your Company Work Rules to the Labor Department.

Thai Labor Protection Act (LBA)

The LBA empowers employees. This means that companies wanting to hire employees need to ensure that they do not cross the line and violate the employee's rights, so the labor experts at PCS suggest that Employers should use the Law against the employee.

Employee Handbook & Company Work Rules

Allow us to explain; by following the law, employers protect themselves. Start with a carefully written and detailed Employee Handbook and define the Company Work Rules. Also make sure you define the penalties for any violations of the Employee Handbook and Company Work Rules. We suggest you have these documents prepared by labor experts who will make sure that they do not violate Thai Labor Law.

Personal Data Protection Agreement and a Do Not Compete / Non Disclosure Agreement
It is also very important that you prepare a Personal Data Protection Agreement and a Do Not Compete / Non Disclosure Agreement. One defines how the employee's personal data will be handled and the other protects the Employer from the employee who may consider stealing company technology. The four (4) documents will be presented to the prospective employee on the day he signs his Employment Contract.

Do Your Homework
The interview is essential so is the Application Form, so make sure you screen the prospective employees carefully. The Application Form is the first document in the Employee's Employment Record. Make sure that you add the interviewer's notes.

Offer Of Employment
Before signing an Employment Agreement, make the prospective employee an Offer of Employment. Outline the renumeration package and define the job. It must also suggest a start date. Insure the prospective employee signs this offer, accepting its rather simple terms.

Employment Agreement / Contract

Most employers beleive this to be an important document. We agree that it is but it is not as important as the documents it will refer to, like the Employee Handbook and the Company Work Rules. Those documents set out how a company can terminate its employees. The Employment Contract sets out the conditions of employment. Now you understand the difference. A well prepared Employment Contract written in simple words can win the Company its fair share of labor cases.

These two (2) documents must be presented to the Employee once he has signed his Employment Contract. The employee must sign that they have received the Employee Handbook and the Company Work Rules and will review them as soon as possible. Once the employee signs the acknowledgement, Thai Labor Law changes sides.

To further complicate the signing process ask the prospective employee to sign the Personal Data Protection Agreement and a Do Not Compete / Non Disclosure Agreement. It is important to file the Reception Documents in the employee's Employment Record.

Preparing To Terminate An Employee - Performance Evaluations

It is imperative that your Employee Handbook states the need for work Performance Evaluations and their frequency. These evaluations can be used later if needed. These evaluations also become a part of the Employee's Employment Record. A Performance Evaluation must be done by the employee's direct supervisor. The evaluation should be presented to the employee. There should be at least 2 company representatives in the room with the Employee, the supervisor and a collegue. Please make sure that the employee signs the Performance Evaluation. If they refuse to sign, no problem, add a hand written note explaining that the employee refused to sign the evaluation and have the collegue sign that the employee refused to sign. In some cases this refusal is also a violation of company rules.

Warning Letters

We continue to stress the need for an Employee Handbook and Company Work Rules, as these documents will outline under what pretense Warning Letters can be issued. Warning Letters are official company documents and go into the Employee's Employment Record. In some cases after a small offense a simple meeting with an employee sets the grounds for the Warning Letter, but we suggest a more subtle approach.

First a face to face meeting, then an email, then the company's Warning Letter. Define clearly how many Warning Letters are required before a Termination Letter is issued. Make sure that at least 2 company representatives are in the room when the the employee is asked to a meeting where the employee will receive the Warning Letter. Ask the employee to sign confirmation that they received the Warning Letter. If the employee does not wish to sign the Warning Letter please do not force them to sign just follow the same procedure as per Performance Evaluations.

Termination Letter

This letter has gotten Employers into more trouble than anyone can imagine. So this Termination Letter must be very carefully worded and contain essential clauses to ensure compliance with Thai Labor Law. Here is what it should include;

  1. Effective Date Of Termination
  2. Effective Duration Of Employment - Start of Employment - End of Employment - Define clearly number of Years - Months - Days of employment
  3. Reason For Termination:
    • There needs to be a very clear reason for the termination. You don't need to supply the employee with the details at this time. Just a clear reason. If the reason is Redundency, the employer should be prepared to pay the employee the full array of Severance.
  4. Termination / Severance Pay:
    • The Thai Labor Act has a set of standard articles related to severance pay and the employer must respect those and not offer less but if there is an Employment Contract and it offers more than Thai Law provides for, the Employer must respect the contract. Severance Pay should include;
      • The employee's notice period;
      • The payment in Lieu of Notice
      • The payment of the severance pay;
      • The payment of commissions and bonuses if they are due;
      • The payment of unused paid vacations days;
      • The payment of any fixed bonus
    • Conditions of Termination;
      • This section usually outlines any conditions related to the termination for example; The Employer can make a request to the employee to return company property, and or request that the employee takes garden leave until the effective date of the termination, the conditions are set by the employer.
    • Signatures & Acceptance

Severance Table as per Labor Protection Act

Employers need to be aware of the following;

Employment Period - Less Than 120 days - No Severance Pay
Employment Period - 120 days to 1 year - 30 days pay
Employment Period - 1 year to 3 years - 90 days pay
Employment Period - 3 years to 6 years - 180 days pay
Employment Period - 6 years to 10 years - 240 days pay
Employment Period - 10 years to 20 years - 300 days pay
Employment Period - 20 years or more - 400 days pay

How To Terminate An Employee - Properly

There is no easy way to terminate an employee that has been good. Therefore we suggest negotiation. If the employee agrees to the terms of their release from employment a Deed Of Release should be prepared outlining the terms & conditions. If both parties agree and sign the Deed of Release no further action can be taken by either party. This is normally the way things are done by professionals. Please allow the employee to consult with an attorney. If the offer is good the employee will release the company.

Termination with Cause is where problems begin, but if a Company follows these instructions and our directions carefully there will be no reprecussions;

  • Step 1 - Document everything an employee does
  • Step 2 - Make sure every instance of violation is recorded
  • Step 3 - Ensure at least 3 warning letters have been given to the employee. If the company does this correctly it will mean the employee was warned 5 times. This is very powerful.
  • Step 4 - Consult with a Labor Law expert. Let them review your case.
  • Step 5 - Listen to the labor experts
  • Step 6 - Issue the Termination Letter as suggested by the labor team

A word of Caution: The employee can sue for Wrongful Termination if the company's facts are not solid. Here is the explanation from Section 119 of the Labor Protection Act:

Section 119 of the Labor Protection Act states that an employee will not be entitled to severance pay if his/her employment is terminated on the following grounds:

  • The employee performs his/her duties dishonestly or intentionally commits a criminal offence against the employer.
  • The employee willfully caused damage to the employer.
  • The employee committed negligent acts which caused serious damage to the employer.
  • The employee violated work rules, regulations or orders of the employer which are lawful and just, and after a written warning was given by the employer, except for in serious cases with no requirement for the employer to give warning. The written warning shall be valid for one year from the date when the employee committed the offence. After 1 (one) year the written warning is no longer valid.
  • The employee was absent from duty without justifiable reason for three consecutive working days
  • The employee was sentenced to imprisonment by a final court judgment. BUT the imprisonment is for offences committed by negligence which causes damage to the employer.

Termination Without Cause - Redundancy

If the company is fighting to survive and it can prove that cutting jobs will enable it to restructure and be more effective and profitable Redundancy is a solid reason BUT the company is still obligated to pay Severance. In this case the company can negotiate a payment plan with the employee. The employee is the one who would decide if they accept the offer or they will fight for more in Thai Labor Court. In most cases Thai Labor Court will side with the Employers offer if it is fair and reasonable.

Summary - How To Terminate An Employee in Thailand

As you can clearly see a Company should engage the services of Thai Labor experts to help them prepare all the required documentation. Doing so saves the company a lot of money later on. We also strongly suggest to employers that in the event they want to terminate an employee they should contact Thai Labor Law experts before they issue any letters.

Professional Corporate Services (PCS) has extensive knowledge of the Thai Labor Protection Act and can help employers with any labor or employment issues. At PCS your 1st consultation is always totally FREE of charge so don't hesitate to contact us. Please use the contact form below. We are looking forward to hearing from you!

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