Services / Labour and employment
Pay in lieu of notice, how it is calculated
This is not severance and it is not calculated from length of service. It is calculated from the pay cycle, which is where most people go wrong from the start.
How notice works
Section 17 of the Labour Protection Act B.E. 2541 (1998) provides that where the contract has no fixed term, the party ending it must give written notice at or before one pay date, so as to take effect at the next pay date following. Notice need never exceed three months. The section states expressly that a probationary contract counts as one without a fixed term.
Why it is not always thirty days
Because the reference point is the pay date, not a number of days. Where wages are paid at the end of each month and the employer gives notice mid-month, that notice misses the coming date and takes effect at the one after, so the real period runs beyond thirty days. Where wages are paid twice a month, the period is correspondingly shorter.
Paying instead of working the notice out
This sits in two provisions and the two are often spoken of as one. In the first, the employer has given proper notice, and the third paragraph of section 17 lets it pay the wages falling due up to the date the notice would have taken effect and release the employee at once. In the second, no notice was given at all, and that is the subject of section 17/1. On either route the sum equals the wages for the period that should have been worked, not a fixed figure.
Section 17/1, and the day it falls due
Where the employer terminates without giving the notice the second paragraph of section 17 requires, section 17/1 requires it to pay a sum equal to the wages the employee would have received from the day they are made to leave until the day the termination would have taken effect under that paragraph, and to pay it on the day the employee leaves. That last clause is the most useful part in practice, because it fixes the due date at the day of departure, not the next payroll run or whenever a handover is finished. Section 9 then places a failure to pay that sum alongside a failure to pay wages or severance: interest at fifteen per cent a year during the default, and a further fifteen per cent of the outstanding amount every seven days where the refusal is intentional and without reasonable cause.
When no notice is required
The closing paragraph of section 17 provides that the notice requirement does not apply to dismissals under section 119 of the Labour Protection Act B.E. 2541 (1998) or section 583 of the Civil and Commercial Code. In short, where the employee has committed one of the serious defaults the law specifies, the employer may end the contract at once without notice and without this payment.
Redundancy driven by technology
Section 121 stands apart. Where the employer dismisses because it is reorganising a unit, a production process, distribution or a service following the introduction or change of machinery or technology, and headcount must fall as a result, it must notify the labour inspector and the employees of the dismissal date, the reason and the names at least sixty days beforehand. Fail to do so, or do it late, and special severance in lieu of notice equal to sixty days' wages at the final rate becomes payable.
PREPARE
What to bring
- The notice or dismissal letter, with the date you received it
- The pay cycle: which day of the month wages arrive
- A payslip showing the final wage rate
- The contract, particularly its termination clause
QUESTIONS
Questions this raises
I was still on probation. Is notice pay owed?
The second paragraph of section 17 states expressly that a probationary contract is treated as one without a fixed term. The notice requirement therefore applies to probationers as it does to anyone else, unless one of the serious-default exceptions applies.
Does verbal notice count?
The second paragraph of section 17 requires notice in writing. Verbal notice is therefore problematic as to form, and in practice it also makes the date hard to prove, which is the date the whole calculation runs from.
LAW
The legislation
- Labour Protection Act B.E. 2541 (1998), sections 17 and 17/1
- Labour Protection Act B.E. 2541 (1998), sections 9, 119 and 121
- Civil and Commercial Code, section 583
ENQUIRIES
