Thailand Severance Pay Calculator

Severance pay (เงินชดเชย) in Thailand is a legally mandated payment that employers must provide to employees upon termination without cause. This obligation is established under the Labor Protection Act B.E. 2541 (1998), specifically Section 118, which is the primary legislation protecting employee rights in Thailand.

The purpose of severance pay is to provide a financial safety net for employees who lose their jobs through no fault of their own, giving them time to find new employment. The amount increases with the length of service, reflecting the employee's dedication and loyalty to the organization. The longer you have worked for an employer, the more severance compensation you are entitled to receive.

Both Thai nationals and foreign workers with valid work permits are protected under this law. The severance pay obligation applies to all employers in Thailand, regardless of the size of the business, and cannot be waived by any agreement between the employer and employee.

The Thai Labor Protection Act Section 118 establishes the following severance pay rates based on years of continuous service:

The highest tier of 400 days (13.33 months) for employees with 20 or more years of service was added by the Labor Protection Act (No. 7) B.E. 2562 (2019), which came into effect on May 5, 2019. Prior to this amendment, the maximum severance was 10 months for employees with 10 or more years of service.

Total termination compensation in Thailand consists of three main components:

The last rate of wages used in the calculation includes the base salary plus any regular monthly allowances (such as cost of living allowance and position allowance), but excludes overtime pay, bonuses, or irregular special payments.

Under Section 119 of the Labor Protection Act, an employer is not required to pay severance in the following circumstances:

1. Dishonesty in the performance of duties — Acts of dishonesty such as embezzlement of company assets, forgery of documents, or theft of trade secrets.
2. Intentionally causing damage to the employer — Deliberate actions that cause harm to the employer's property, reputation, or business.
3. Gross negligence causing serious damage — Not ordinary negligence, but severe carelessness that results in significant damage to the employer.
4. Violating work rules after written warning — Continuing to violate lawful work regulations or orders after receiving a formal written warning (the warning is valid for 1 year from the date of the offense).
5. Abandonment of duties for 3 consecutive working days — Absence from work without reasonable cause for 3 consecutive working days, regardless of whether there are holidays in between.
6. Imprisonment by final court judgment — Being sentenced to imprisonment by a final court judgment, except for petty offenses or offenses committed by negligence.

It is important to note that the burden of proof lies with the employer. If the employer cannot prove that the employee committed an offense under Section 119, the employer must still pay severance compensation.

In addition to severance pay, terminated employees in Thailand are entitled to the following:

• Outstanding wages — All wages earned up to the last day of work must be paid on the date of termination.
• Advance notice pay — If the employer did not provide at least one pay period of advance notice, they must pay wages in lieu of notice.
• Unused annual leave pay — Compensation for any unused annual leave days that have been accrued.
• Special severance for relocation (Section 120) — If termination occurs due to workplace relocation, employees who choose not to relocate receive an additional 50% of the regular severance pay.
• Social security unemployment benefits — Terminated employees can receive unemployment insurance from social security at 50% of wages (up to 7,500 baht/month) for up to 6 months.
• Certificate of employment — Employees have the right to request a work certificate stating their position, duration of employment, and job description.

If your employer refuses to pay severance compensation, you can take the following steps:

1. Negotiate directly with your employer

   Before taking legal action, try to resolve the matter directly. Send a formal written request and keep a copy for your records.

2. File a complaint with the Labor Inspection Officer

   Submit your complaint at the local Labor Protection and Welfare Office in the area where you work. The officer will issue an order within 60 days. This process is free of charge. You must file within 2 years from the date your rights were violated.

3. File a lawsuit with the Labor Court

   You can file directly with the Labor Court without going through the Labor Inspection Officer. There are no court fees for labor cases. You can represent yourself or hire a lawyer.

4. Gather evidence

   Important documents to keep: employment contract, pay slips, termination letter, employee ID card, attendance records, and any related correspondence.

• Salary used for calculation — The last rate of wages before termination is used, including regular monthly allowances but excluding OT, bonuses, or irregular payments.
• Probationary employees — Even probationary employees are entitled to severance pay if they have worked for 120 days or more. Thai law does not distinguish between probationary and regular employees for severance purposes.
• Fixed-term contracts — Employment contracts with a fixed duration that expire naturally are not considered termination and do not require severance pay, but only for temporary or seasonal work as defined by law.
• Payment deadline — The employer must pay severance on the date of termination. Late payments are subject to 15% annual interest.
• Statute of limitations — The right to claim severance pay has a 10-year statute of limitations from the date of termination. (Outstanding wages have a 2-year statute of limitations.)
• Tax treatment — Severance pay up to the last 300 days of wages, or 300,000 baht (whichever is less), is exempt from personal income tax. Any amount exceeding this threshold is taxable.