Thai Labor Law And Severance Pay

[wangsuda]

Here's the scenario: a person has worked for a private school continuously for five years. Each year, this person completes a contract and then renews the contract. This person has had a work permit and non-B visa during the entire time of employment. This person has paid taxes and filed tax returns. It has now come to the time for this person to move on. The big question is, does this person qualify for severance pay? According to Thai labor law

An employer shall pay severance pay to an employee whose employment is terminated, as follow:

1.An employee who has worked for at least 120 consecutive days, but for less than one year shall be paid basic pay for 30 days at the most recent rate of basic pay received by him

2.An employee who has worked continuously for at least one year but less than three years shall be paid basic pay for 90 days at the most recent rate of basic pay received by him.

3.An employee who has worked consecutively for three years but less than six years shall be paid basic pay for 180 days at the most recent rate of his basic pay.

4.An employee who has worked consecutively for at least six years but less than 10 years shall be paid basic pay for not less than 240 days at the most recent rate of his basic pay.

5.An employee who has worked for more than 10 years consecutively shall be paid basic pay for not less than 300 days at the most recent rate of his basic pay.

This person thinks that s/he is entitled to 180 days of severance pay as per Thai labor law. However, upon further reading, this person also finds:

An employer is not required to pay severance pay to an employee whose employment has been terminated for any of the following reasons:

1.Resignation

2.Dishonest performance of his duties or the intentional commission of a criminal act against the employer;

3.Intentionally causing loss to the employer;

4.Performance of gross negligence which result in severe loss to the employer;

5.Violation of the employer's work rules or regulations or order which are both lawful and equitable when the employer has already issued the employee with a prior written warning, except in a serious instance when the employer is not required to give a warning.

The written warning shall be effective for a period of one year as from the date of the commission of the violation by the employee;

6.Neglect of his duties for a period of three consecutive work days without reasonable cause, whether or not a holiday intervenes;

7.Imprisonment by reason of a final judgment.

8.An employment contract shall be terminated when the specified period in the employment contract expires, the works related are as follows:

8.1 Employment on a special project, which is not in the normal way of business or trade of the employer, where there is a fixed schedule for commencement and completion of work.

8.2 Work of a temporary nature with a fixed schedule for its commencement or completion.

8.3 Seasonal work in respect of which employees are only engaged during that season; provided that the work most be completed within a period of two years and the employer and employee have entered into a written agreement at or prior to the commencement of employment.

Now this is a new wrinkle; does finishing a contract and not signing a new one constitute “resignation,” and therefore no severance pay? Is teaching at a private school considered “temporary,” “seasonal,” or a “special project?” What is this person to do? Should s/he ask about the amount of severance with their current employer? How should this matter be brought up? And what recourses does this person have if the current school proves to be difficult in realizing that Thai labor law also applies to foreigners? And most important, do foreign, legal, private school teachers even stand a snowball's chance in hel_l of collecting severance pay? Your help in this matter would be appreciated.

Information about the Thai labor law came from http://www.thailabour.org/law/thai/code.html#no

[markg]

An excellent post and one which i have been wrestling with myself as some of our teachers have brought up the subject.

Your scenario is extremely realistic.

Our employer, as i suspect many others in the teaching game, has the staff sign a one year contract.

1. You'd have to ask a lawyer for advice, but do 2 or more one-year contracts equate to working for 2 or more years continuously?

I guess a very clever school would start employees one day after the end of the previous contract, thereby breaking any continuity.

2. I think that clause 8.2 is particularly pertinent, though again, legal advice needs to be sought. "work of a temporary nature with a fixed schedule for start and finish'

Couldnt it be argued that a one-year contract is a temporary arrangement with a fixed finish date?

Let's say a contract ends on March 30th and the school, for whatever reason, decides to not renew that teacher's contract. Couldnt it be argued that both parties have agreed to the terms of the contract in full, and that it ends on March 30th? If the answer to that question is 'yes', then wouldnt it be the same whether the teacher was on his 1st or 21st contract? They are all one-year temporary none-immigrant agreements.

Wangsuda, i know this doesnt answer your post in any way, in fact, it's probably thrown fuel on the fire, and i apologies for that. However, i'm genuinly interested in any answers, though i guess previous case history, if anyone can post them on here, as opposed to bar-room lawyerism, is what is needed.

[wolfmanjack]

I am an employer and am interested in this also. i have to have employee contracts on file but each one does not have an ending date. Should i make 1 year contracts with a couple of weeks off in between contracts ?

Personally if i was running a school i would date my contracts from the first day of school to the last day of school or there abouts. This would make at least a one month gap in between contracts. As far as resignations if anyone quits i do not pay them any severance pay.

[wangsuda]

I am an employer and am interested in this also. i have to have employee contracts on file but each one does not have an ending date. Should i make 1 year contracts with a couple of weeks off in between contracts ?

Personally if i was running a school i would date my contracts from the first day of school to the last day of school or there abouts. This would make at least a one month gap in between contracts. As far as resignations if anyone quits i do not pay them any severance pay.

Remind me not to work for you.

[markg]

As far as i'm aware, and please tell me if you think i'm wrong, 'resignation' and 'severance' are two different things.

Resignation is where the individual, for what ever reason, resigns his position before the end of the contract, and therefore breaks the contract. I dont think they are entitled to any severance pay because their contract hasnt been severed!

Wolfman - the difficulty in having a 'couple of months off' between contracts is that you would in effect be offering only 10 month contracts, and not one year contracts. Whilst this is not unusual in the teaching game, it certainly is not the norm. This makes your contract unnattractive! You may have trouble recruiting.

[wangsuda]

BUMP

[Ijustwannateach]

Every legal employee qualifies for severance pay. Even if they say you are a 'temporary hire,' this doesn't hold water after the first year or so (or else no one would ever have any 'permanent employees')- Thai labour law is strong, and if the paperwork has been correct the MOL (Ministry of Labour) will back you up. Insist on your rights, and if that doesn't work hire a lawyer to inform the school you know your rights. They will cave in. Then post their name in our 'schools you don't recommend thread,' as if by coincidence.

[markg]

Every legal employee qualifies for severance pay. Even if they say you are a 'temporary hire,' this doesn't hold water after the first year or so (or else no one would ever have any 'permanent employees')- Thai labour law is strong, and if the paperwork has been correct the MOL (Ministry of Labour) will back you up. Insist on your rights, and if that doesn't work hire a lawyer to inform the school you know your rights. They will cave in. Then post their name in our 'schools you don't recommend thread,' as if by coincidence.

IJWT - i'm certainly not trying to pick any holes in your post, but can you post links to any success stories etc. Maybe in newspapers/ajarn.com or indeed on here?

It's just that i'm trying to separate fact from heresay.

Coincidentally, i am pretty much in exactly the scenario that Wangsuda described in his opening post...........

This could be a bit arkward.........

[donna]

i can point you to my own story on this forum!

http://www.thaivisa.com/forum/Compensation...ng-t129026.html

to cut a long story short, i was 'fired' a couple of days before my contract ended, and i took the company to court and won.

[markg]

Good post Donna, and good to get the link in this thread - it may help someone searching in the future, however, it's quite different from Wangsuda's scenario wherby the employee isnt fired, but just doesnt get his contract renewed after 5 years. The final contract in Wang's case just runs its course and finishes on the correct date.

[wangsuda]

however, it's quite different from Wangsuda's scenario wherby the employee isnt fired, but just doesnt get his contract renewed after 5 years. The final contract in Wang's case just runs its course and finishes on the correct date.

Actually, the scenario is that a sixth contract is offered, it just isn't accepted. Everyone parts on good terms . . . until the mention of severance pay!

[TerryLH]

If you leave on your own accord, no severance pay is due.

If you are not offered a new contract, and the job is one that will continue with another employee, you are due severance pay. The exception here is when someone is let go for 'cause'. In that case, no severance pay is due.

All time counts towards the total. The Labor Act is written to close loopholes where employers would take advantage of employees by having a period of time where there was no contract in place.

The end of a project refers to short time work that has a definite ending. Teachers with one year contracts do not fall under this. The teaching position continues, even though it may be with a new employee.

Take a look at the info in the link provided in post #1.

Edited February 3, 2009 by TerryLH

[wangsuda]

So the person in my scenario is screwed. Ok, thanks for clearing that up, TerryLH. I appreciate that.

[desertrat]

I'm not a teacher, but in 13 years with major company have never had a contract...wonder how I stand?

[donna]

to the OP, if you are the one deciding not to renew your contract, then you shouldnt be due for any severance pay as it is your decision. what makes you think that you are due for severance pay?

to desertrat, as long as you can prove you have been working there, the fact that you dont have a contract shouldnt make a difference, i think. i COULD be wrong on this point, but i dont think i am.

[wangsuda]

to the OP, if you are the one deciding not to renew your contract, then you shouldnt be due for any severance pay as it is your decision. what makes you think that you are due for severance pay?

It's called gathering information. Where I come from, that's a good thing and generally not treated with disdain. FYI, I am not the one in the scenario I posted. I am resigning for a sixth time at my current company.

[Ijustwannateach]

Oops- my face is red. I admit I simply read the first part of your OP, Wangsuda, and assumed the situation was a standard "teacher being fired or laid off and they won't pay severance." Actually, if you resign, then as Donna says they don't owe you jack. Sorry- them's the rules.

As to the teacher with no contract- it's going to be awful hard going proving you were employed, etc.- but in fact you ARE covered by labour law- even illegal immigrant labour would be. However, you would also be guilty of a number of other offenses and you would have to take responsibility for those in claiming severance pay.

Markg, if your situation is exactly the same as OP, you don't have any recourse, either. You decided to leave; from a labour law point of view it was your problem to plan for what happens next. Severance is to give you a benefit when you didn't get to decide when to leave and didn't plan for a period of potential unemployment.

On the other hand, if you are asking if I know of cases where people have successfully claimed severance, there are many- even one or two somewhere on threads on this forum (don't remember offhand; will try to look over the next few days but very busy right now).

Good luck to the person in the OP- it's better to give them a really good reason to fire you and THEN claim severance...

[paully]

Actually, the scenario is that a sixth contract is offered, it just isn't accepted. Everyone parts on good terms . . . until the mention of severance pay!

Yes, as already said, if the employee 'severs' the contract - or effectively severs it by not re-signing - there would be no recourse to severance pay, unless the employee's contract specifically allows for this or if constructive dismissal could be argued, ie: the employee was forced out by the unreasonable behaviour and and unreasonable practices of the employer.

[wangsuda]

Actually, the scenario is that a sixth contract is offered, it just isn't accepted. Everyone parts on good terms . . . until the mention of severance pay!

Yes, as already said, if the employee 'severs' the contract - or effectively severs it by not re-signing - there would be no recourse to severance pay, unless the employee's contract specifically allows for this or if constructive dismissal could be argued, ie: the employee was forced out by the unreasonable behaviour and and unreasonable practices of the employer.

Thank you. That information dovetails nicely with TerryLH's information.

[markg]

I wonder what would happen in the OP's case, if the 6th contract significantly differed from the preceding contracts.

for example, the basic terms and conditions of work, or salary were changed.

If a teacher is used to working for (say) 40k a month, doing 20 hours a week, working from 7.45 to 4.30pm.

What if they (say) offered in the new contract, 38k a month, 22 hours a week, working from 7.30 to 5pm.

The teacher may then decide to not sign the new contract due to it not being the same as the previous ones.

His job still exists, and they'd have to get a new teacher in to do it...........so would he be able to claim severence pay?

I think in the UK the above might be construed as 'constructive dismissal' and you could claim against that........they basically made you an offer that forced you to refuse it. (Yes i know we are not in the UK now, i'm just giving it as an example)

I have a friend in a similar situation to the OP. Worked full time in a school for 3 years, though via an outside agency. That agency has now lost the contract and the staffing of the English dept will be done directly by the school. The new contract differs from the agency contract in salary and hours of work.

Has my friend severed his contract? No.

The contract will expire on April 1st and that is that........isnt it?

If he doesnt sign the new school (technically new employer) contract, would he have a claim agains the agency? Surely the agency made no agreement or promise other than to pay him up to and including April 1st.

[donna]

to the OP, if you are the one deciding not to renew your contract, then you shouldnt be due for any severance pay as it is your decision. what makes you think that you are due for severance pay?

It's called gathering information. Where I come from, that's a good thing and generally not treated with disdain. FYI, I am not the one in the scenario I posted. I am resigning for a sixth time at my current company.

sorry, wangsuda. my post was not meant to come across as agressive. apologies if it was taken the wrong way.

[Loaded]

If you look at Thai Labour law the word termination is always used with severance. IE when a contract reaches the end of it's contractual period, that is it as there was no termination. Termination means in this context terminating employnment before the end of the contractual period. IMO

[thaicbr]

And also people......yearly contracts are exactly that, a contract for one year. if the school or company want to change your salary or conditions then they can. you have no recourse other than to find another job/contract that is better.

Of course most employers like to keep their employees relatively happy. at my school a lot of the teachers are grumbling that the annual pay rise is less this year (300 baht a month less). and some can't comprehend that a 12 month contract is exactly that. a contract for 12 months.

[paully]

I have a friend in a similar situation to the OP. Worked full time in a school for 3 years, though via an outside agency. That agency has now lost the contract and the staffing of the English dept will be done directly by the school. The new contract differs from the agency contract in salary and hours of work.

Has my friend severed his contract? No.

The contract will expire on April 1st and that is that........isnt it?

If he doesnt sign the new school (technically new employer) contract, would he have a claim agains the agency? Surely the agency made no agreement or promise other than to pay him up to and including April 1st.

Only possible claim (not easy) would be redundancy, against the agency as they lost the contract with the school.

[Ijustwannateach]

If you look at Thai Labour law the word termination is always used with severance. IE when a contract reaches the end of it's contractual period, that is it as there was no termination. Termination means in this context terminating employnment before the end of the contractual period. IMO

I would disagree with you, Loaded, and have seen cases here to back up my opinion. If multiple past contracts didn't mean some increasing obligation on the part of the employer, once again there would be no reason for any employer to have real 'full time employees' with benefits, and no one would ever have to pay severance. Thai law is just as liberal as Japanese law when it comes to labour, and the general interpretation of a repeated contract is that the employee is a full-time employee and due benefits. Thus, if the contract is not renewed after many years, it is interpreted as 'termination.' You will note that non-renewal of contract is *not* listed as an exception to severance pay in the law.

[Loaded]

If you look at Thai Labour law the word termination is always used with severance. IE when a contract reaches the end of it's contractual period, that is it as there was no termination. Termination means in this context terminating employnment before the end of the contractual period. IMO

I would disagree with you, Loaded, and have seen cases here to back up my opinion. If multiple past contracts didn't mean some increasing obligation on the part of the employer, once again there would be no reason for any employer to have real 'full time employees' with benefits, and no one would ever have to pay severance. Thai law is just as liberal as Japanese law when it comes to labour, and the general interpretation of a repeated contract is that the employee is a full-time employee and due benefits. Thus, if the contract is not renewed after many years, it is interpreted as 'termination.' You will note that non-renewal of contract is *not* listed as an exception to severance pay in the law.

My 'boss' just phoned the Chiang Mai labour office and they said there's been a recent law change so if it's a teacher matter, contact the education office. They said if they are contracted as teachers, severance is not payable. The labour office also said that if a teacher signs a 1-year contract, they understand their employment ends in 1-year at the end of the contract and hence they accept the fact financial obligations of the employer end as well. That's Chiang Mai but as you know IJWT this afternoon they may have a different opinion.

[Ijustwannateach]

A very notorious Christian school here in Bangkok (one of the worst) is notorious for making this same 'teachers rules are different' argument- they've been trying it on for a few years now. Doesn't work. They've also been forced to pay severance very recently under standard labour law rules.

Basically, don't use management sources for employee-favourable information! Get a lawyer on the case and they'll pay. The fines they incur if the MOL have to get involved are considerable. These are national laws, so if a local office isn't obeying them, you could probably report them, too.

[Loaded]

A very notorious Christian school here in Bangkok (one of the worst) is notorious for making this same 'teachers rules are different' argument- they've been trying it on for a few years now. Doesn't work. They've also been forced to pay severance very recently under standard labour law rules.

Basically, don't use management sources for employee-favourable information! Get a lawyer on the case and they'll pay. The fines they incur if the MOL have to get involved are considerable. These are national laws, so if a local office isn't obeying them, you could probably report them, too.

The normal procedure at the labour office in Chiang Mai is that the teacher goes to the office and makes a complaint. The officer handling your case will contact the school to confirm the school's version of events. There is then a meeting at the labour office when both sides need to show the office their evidence (witness or documentary). The officer will try to negotiate a compromise. If one of the two sides refuses to compromise, the teacher has the right to request the case is transferred to the labour court. The labour court will supply a court lawyer to help prepare the complaint free of charge, although the lawyer won't attend court. In the court, the 3 judges only really want to hear from the teacher and the representative of the school. The judges won't allow any irrelevant diatribe - 'they promised me...', 'he said...' that sort of stuff. Evidence, direct testimony and labour law will be used to judge the case. Labour law strongly supports the employee.

I've been to the labour court as a teacher and as an employer. I've seen the labour court strongly support teachers regarding infringement, or breaking, of contracts but I have never heard of severance pay for a teacher whose contract expired. It might be possible. Has anyone ever heard of this sort of case before?

[Ijustwannateach]

^I have, actually, though for obvious reasons I can't give details. Let's just say I'm familiar with organisations that voluntarily dot all the i's and cross all the t's. I'll try to locate and link the thread re. the Christian school (which I think was crossposted here, though it is a very long time ago).

The interpretation is that as long as the JOB ITSELF still exists, a teacher who is not allowed to remain in the position has effectively been terminated; thus, he is eligible for severance. This is why a distinction is made for truly 'temporary' contract jobs- not temporary employees!!! Otherwise, as I previously mentioned, there would be no full-time employees and no benefit obligations for any employer- which is why labour law is necessary.

[mopenyang]

^I have, actually, though for obvious reasons I can't give details. Let's just say I'm familiar with organisations that voluntarily dot all the i's and cross all the t's. I'll try to locate and link the thread re. the Christian school (which I think was crossposted here, though it is a very long time ago).

The interpretation is that as long as the JOB ITSELF still exists, a teacher who is not allowed to remain in the position has effectively been terminated; thus, he is eligible for severance. This is why a distinction is made for truly 'temporary' contract jobs- not temporary employees!!! Otherwise, as I previously mentioned, there would be no full-time employees and no benefit obligations for any employer- which is why labour law is necessary.

I agree and this is an interesting read which seems to state that severance can actually kick in earlier than a full year of employment with non-renewal of a contract by the employer:

http://www.worldwideconsulting.com/thailand.htm