Severance paid, unfair dismissal unsettled
An employee dismissed in a restructuring usually receives a payment and a letter saying everything due under the law has been paid. Whether that is so depends on what the payment actually was.
Phenhnung Thabthimthong
Partner · YACT Association
Published 6 August 2026 · Updated 14 August 2026
Three payments resting on different statutes
Severance comes from section 118 of the Labour Protection Act B.E. 2541 (1998) and is calculated on length of service. Pay in lieu of notice comes from section 17/1 and is calculated on the wage cycle. Damages for unfair dismissal come from section 49 of the Establishment of Labour Courts and Labour Court Procedure Act B.E. 2522 (1979), a different statute altogether. The first two follow from figures; the third the court fixes on the circumstances.
The Supreme Court has answered this directly
Supreme Court judgment 1392/2544 puts it directly: even where the employer has paid severance, pay in lieu of notice and special severance in full under the labour protection law and the work rules, those are sums payable on an ordinary dismissal and are not payment of damages for an unfair act. Paying everything due under the protection statute therefore does not close the question of whether the dismissal was fair.
Restructuring to compete is not an unavoidable necessity
In the same case the employer brought in a new computer system and reduced headcount. The Court found that at the time of the dismissals the business was operating normally and was not in losses that prevented it continuing. Dismissing in order to compete more efficiently was therefore not a necessity that could not be avoided or remedied if the business was to survive. The line is not whether there was a business reason but whether it was avoidable.
The employer may raise other grounds in its defence
Judgment 4440/2547 holds that the bar on an employer later relying on a section 119 ground it did not state in the termination letter does not extend to defending a claim that the dismissal was unfair, because deciding that under section 49 requires the court to consider whether there was reasonable cause, which need not be a section 119 ground. An employee should therefore not rest their case on the wording of the letter alone.
The point that loses a good claim
Because the two sets of money are separate as a matter of entitlement, many assume they can be claimed separately. The authorities do not bear that out. Suing for severance and pay in lieu to a final judgment, and only then bringing a second action for unfair dismissal damages, is treated as suing on the same dismissal on a ground that could have been raised in the first case, and so as a duplicate action. A good claim is then lost on procedure rather than on its merits.
The order to work in
What follows in practice is that the decision about unfair dismissal damages belongs before the claim for the protection-statute money is filed, not after. Accepting what the employer paid is a different matter from suing, and under judgment 1392/2544 it does not extinguish the section 49 right. But choosing what to include in the first statement of claim is a decision that cannot be revisited.
AUTHORITY
The judgments this rests on
Supreme Court judgment 1392/2544
Sums paid under the labour protection law are those payable on an ordinary dismissal, not damages for an unfair act; and restructuring to compete more effectively is not a necessity incapable of being avoided or remedied.
Supreme Court judgment 4440/2547
The bar on later relying on an unstated section 119 ground does not extend to defending a claim that the dismissal was unfair.
Supreme Court judgment 7683-7693/2548
Cutting production steps by buying in a semi-finished input is not restructuring due to the introduction of machinery under the first paragraph of section 121.
QUESTIONS
Questions this raises
I signed for the money and signed a release.
Receiving money and giving up a right are different things, and judgment 1392/2544 indicates that the protection-statute money was payable on an ordinary dismissal in any event. What matters is what the document signed actually covers and the circumstances in which it was signed, which are facts to be examined case by case.
The company really was losing money. Is there still a claim?
Judgment 1392/2544 distinguishes an employer in losses that prevent it continuing normally from one restructuring to compete better. What has to be established is therefore the state of the business at the time of the dismissals, rather than the explanation given in the letter.
LAW
The legislation
- Labour Protection Act B.E. 2541 (1998), section 118
- Labour Protection Act B.E. 2541 (1998), section 121
- Labour Court Procedure Act B.E. 2522 (1979), section 49
ENQUIRIES
