How to Terminate an Employee in Thailand: Severance, Notice, and Legal Grounds

Thai labour courts take a protective stance toward employees. Therefore every step of a termination has to follow the Labour Protection Act closely. Unlike the US, Thailand does not recognize at-will employment. That means, every dismissal needs a legal basis, the correct notice, and the correct payments.

If a termination does not follow these rules, the employee can challenge it. Such disputes tend to drag on for months and the Labour Court can order back pay or even reinstatement. The safest approach here is knowing what you owe, and on what grounds, before the conversation with the employee ever happens.

The Different Ways Employment Can End in Thailand

The Labour Protection Act (LPA) in Thailand recognizes several ways an employment relationship can end. However, each of these paths carries different entitlements: 

• Resignation: The employee ends the contract voluntarily, typically with 30 days' written notice or one full pay cycle, whichever the contract specifies.
• Mutual agreement: Both sides agree to part ways, often with negotiated terms around final pay or a release of claims.
• Retirement: Thai law treats retirement as a form of termination, and it comes with its own severance rules (more on this below).
• Natural expiry of a fixed-term contract: When a properly structured fixed-term contract reaches its end date, the relationship closes without severance obligations.
• Dismissal by the employer, with or without cause: This is the scenario most employers need guidance on, and it is the focus of the rest of this guide.

Employee Termination Framework in Thailand

Thai labour law splits terminations into two categories: termination with cause (dismissals based on employee misconduct) and termination without just cause (employer-led decisions e.g. performance concerns, restructuring, or changes to the business). 

Termination With Cause (Misconduct Under Section 119)

A "with cause" termination is only valid when the employee's conduct meets the Labour Protection Act's definition of serious misconduct under Section 119. This includes performance issues, skill gaps, low output, or a poor team fit that does not qualify on their own. The law recognizes six specific grounds:

1. Performing duties dishonestly or committing a criminal offense against the employer
2. Wilfully causing damage to the employer
3. Committing negligent acts that cause serious damage to the employer
4. Violating lawful and reasonable work rules after already receiving a written warning (the warning is only valid for one year from the offense)
5. Being absent without justification for three consecutive working days, holidays included
6. Being sentenced to imprisonment by a final court judgment

If the behavior fits one of these grounds and is documented properly, you may terminate without notice or severance. The law also requires you to state the specific cause in the termination letter or communicate it to the employee at the time of dismissal. You should always have proper documentation and communication with the said employee, otherwise, you lose the right to claim that cause even if the misconduct is proven. 

Termination Without Cause (Most Common Route)

This route covers restructuring, redundancy, role changes, or performance concerns that fall short of the legal threshold for misconduct. You do not need to prove wrongdoing, but you do need to follow the correct sequence and pay everything owed.

You must give at least one full pay cycle of written notice, or pay salary in lieu. If salaries are paid on the 30th and you want the employee's last working day to be June 30, the notice must go out by May 30.

Severance pay is then calculated by the length of service:

The final pay out covers everything owed through the last day, including severance, notice pay, unused annual leave, and any guaranteed contractual allowances.

We will discuss severance pay in detail in the next section. 

Severance Pay Rules for Employers

Restructuring, Redundancy, or New Technology

If you are reducing headcount because of streamlined operations, a changed production process, or new machinery or technology, the law treats this differently from an ordinary "without cause" dismissal. You must notify both the Labour Inspector and the affected employees at least 60 days before the termination date, or pay 60 days' wages in lieu of that notice.

On top of standard severance, employees who have worked for more than six consecutive years are entitled to special severance pay of 15 days' wages for every full year of service. This starts from their 7th year and is capped at a total of 360 days' wages. 

For example, you are automating a production line and letting go of a machine operator. The said employee has worked at the company for 9 years, earning THB 25,000 a month. Their severance pay calculation will be: 

• Standard severance (6 to under 10 years of service): 240 days' wages, which comes to roughly THB 200,000
• Special severance for redundancy: 15 days' wages for each full year from year seven onward. At 9 years of service, that is 3 qualifying years (year 7, 8, and 9), so 45 days' wages, or roughly THB 37,500
• Notice pay: if the 60-day advance notice to the Labour Inspector and employee was not given another 60 days' wages is added or roughly THB 50,000

In total, that would sum up to THB 287,500 not including unused leave payout. It’s a significant amount if you’re considering laying off multiple individuals for a restructuring and can easily throw any employer off guard. 

Relocation of the Business

If you relocate your business to a location that would significantly affect an employee's normal living situation, the employee has the right to refuse the move. They can terminate their own contract while still collecting special severance pay at the same rate as standard severance. You are required to give 30 days' notice of the relocation. If you skip that notice, you need to pay out an additional 30 days wages on top of the calculated severance package. 

Other Considerations to Be Aware Of

Termination for Fixed-Term Contracts

Thai law only recognizes a fixed-term contract as valid when it covers one of two narrow scenarios:

• A specific project that falls outside the employer's normal business or trade, with a clear start and completion date
• Seasonal work, where the employment period matches the season

These contracts cannot run longer than two years. If you end one before its agreed end date, Thai law treats it the same as terminating a permanent employee. This means you owe proper notice, severance (unless misconduct is proven), and any unused leave payout. If the contract runs its full course and ends on schedule, you typically owe nothing extra, as long as the role genuinely fits one of the two permitted categories.

Termination During Probation

Thai law does not create a separate legal category for "probationary employees." Probation is a contractual arrangement, usually running 90 to 119 days, and it exists mainly so employers can assess fit before an employee crosses the 120-day threshold. 

Once an employee passes 120 days of continuous service, they become entitled to severance pay if let go without cause, regardless of what the contract calls them. Ending employment at day 90 with cause and proper documentation avoids severance. Waiting until day 121 without a clear reason does not.

Retirements are Considered Terminations

Under Section 118/1 of the Labour Protection Act, retirement (whether agreed between employer and employee or set by the employer) is legally classified as termination of employment. That means the retiring employee is entitled to severance pay at the standard rate based on years of service.

Employees who reach 60 years old can formally express their intent to retire, and the retirement takes effect 30 days after that notice. If your company has no stated retirement age in its policies or contracts, an employee can still trigger this right once they turn 60. 

Employees that Cannot be Dismissed

Certain groups of employees carry extra legal protection, including:

• Employee Committee members: Once 50 or more employees at a single workplace request it, they can form an Employee Committee under the Labour Relations Act. Dismissing a member of this committee requires a court order. Terminating one without going through the court first is a direct violation, regardless of how strong your underlying reason is.
• Employees engaged in protected activities: This includes filing a labour complaint, participating in union organizing, or testifying in a labour dispute. Dismissals that appear connected to these activities draw close scrutiny.
• Pregnant employees: Termination connected to pregnancy is prohibited and will almost always be treated as unlawful.

Termination for Foreign Employees

Termination rules under the Labour Protection Act apply equally to foreign and Thai employees, including severance, notice, and access to the Labour Court. Once employment ends, the work permit is cancelled, and the employee typically has a limited window to secure new employment or leave the country. 

If your company maintains the standard four-Thai-to-one-foreign employee ratio, losing a foreign hire can also affect your compliance position on that ratio. 

Understanding Wrongful Dismissals

An employee can still challenge whether the dismissal itself was fair, even when every payment was correct through a wrongful dismissal claim. 

If an employee does file a wrongful dismissal, the Labour Court will weigh whether the termination was reasonable or fair overall even if you paid severance. Courts will often look at whether the reason given matches what was documented, whether the process fits the seriousness of the issue, or whether the outcome looks proportionate. 

Here’s how Thai courts often look at wrongful dismissal cases: 

What Happens If a Dismissal Is Ruled Wrongful

The court has two main options:

1. Reinstatement with back pay: If the employer alleged misconduct or poor performance without solid records, the court can order the employee reinstated and back wages paid from the termination date to the judgment date. A case that takes ten months to resolve could mean ten months of back wages, even though the employee was not working during that period.
2. Monetary compensation: Used when reinstatement is impractical due to a breakdown in trust or a restructured role. This includes statutory severance if unpaid, salary in lieu of notice, and additional compensation reflecting the employee's tenure, seniority, and hardship caused by the dismissal. Courts often calculate this at roughly one month's wages per year of service, though the exact figure is at the court's discretion.

How Disputes Get Resolved

An employee who disputes a termination usually starts with a complaint to the Department of Labour Protection and Welfare (DLPW). A Labour Inspector or Labour Relations Officer will review your documentation, check whether statutory requirements were met, and attempt an informal resolution between both sides. This functions as early conciliation rather than formal mediation. If it does not resolve the dispute, the employee can escalate to the Labour Court.

It is worth knowing that Thai law also allows class actions. A group of employees with the same claim can file a single petition together, which means a poorly handled group layoff can turn into a coordinated legal challenge rather than a series of isolated complaints.

Streamline Employee Management with RecruitGo

Instead of hiring directly, RecruitGo’s Employer of Record in Thailand can act as the legal employer of your staff. This means, compliance obligations from hiring to termination, is managed through us. 

As your partner, we will help you with calculating payroll including severance, notice pay, and unused leave. We will also handle all the paperwork from contracts to termination letters. Because we are the legal employer, if a terminated employee files a complaint or takes matters to the Labour court, our team manages the response and represents the employment relationship. 

With RecruitGo, you can hire and talent in Thailand without setting up a local entity. You can keep control of who joins and leaves your team while the legal and administrative weight sits with us. 

Talk to RecruitGo about your workforce plans in Thailand, and we can walk through how an EOR arrangement would handle your next termination before you need it.