Services / Labour and employment
Severance pay: the rates and the exceptions
Severance follows from the dismissal itself and requires no finding of fault. The rate turns on length of service alone, and the statute sets it out in fixed bands.
The rates
Section 118 of the Labour Protection Act B.E. 2541 (1998) sets six bands. At least 120 days but under one year of continuous service: not less than 30 days at the final wage rate. One year but under three: 90 days. Three but under six: 180 days. Six but under ten: 240 days. Ten but under twenty: 300 days. Twenty years or more: 400 days.
What counts as a dismissal
Section 118 defines dismissal more broadly than most people expect: any act by which the employer stops letting the employee work and stops paying, whether because the contract has ended or for any other reason, and including cases where the employee is not working and not being paid because the employer can no longer carry on. An employer who quietly shuts up shop does not escape liability merely by never issuing a letter.
The six grounds where none is owed
Section 119 lists six: dishonesty in the performance of duties or an intentional criminal offence against the employer; wilfully causing the employer loss; gross negligence causing the employer serious loss; breach of lawful and fair work rules or orders after a written warning; absence without proper cause for three consecutive working days; and imprisonment under a final judgment.
The trap employers fall into
The final paragraph of section 119 provides that if the employer did not set out the facts constituting the ground in the letter of termination, or tell the employee the ground at the time of dismissal, it cannot raise that ground later. A letter saying vaguely that the employee failed an assessment, followed at trial by an allegation of dishonesty, is in difficulty from the start.
Special severance
Two situations attract more. Under section 120, where the employer relocates without posting notice at least thirty days beforehand, an employee who does not wish to move receives special severance in lieu of notice equal to 30 days' wages, plus special severance of not less than the section 118 rate. Under sections 121 and 122, where the dismissal follows the introduction of machinery or technology that reduces headcount, an employee with more than six years' service receives a further 15 days per completed year, capped at 360 days.
PREPARE
What to bring
- The dismissal letter and the reason stated in it
- Proof of the start date: the contract or a certificate of employment
- The most recent payslips, to establish the final wage rate
- Any written warnings, with their dates
- Anything you were asked to sign on the last day
QUESTIONS
Questions this raises
Do I get severance if I resign?
As a rule no, because section 118 severance attaches to dismissal rather than resignation. The facts matter more than the label on the document, though. Where a resignation letter was written under pressure, or the choice offered was resign or be sacked, whether it amounts to a dismissal is a question of evidence.
My contract had a fixed term. Is severance owed when it ends?
The third paragraph of section 118 excludes fixed-term employees dismissed at the end of the term, but the fourth paragraph confines that narrowly: only project work outside the employer's ordinary business with a definite start and finish, occasional work with a defined end, or seasonal work, in each case completed within two years and agreed in writing at the outset. A rolling annual contract covering ordinary duties will usually fall outside it.
LAW
The legislation
- Labour Protection Act B.E. 2541 (1998), sections 118, 119, 120, 121 and 122
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