Severance Pay

[krummi]

We have some staff whose contracts run out and will not be renewed due to poor performance. When the contracts run out, they will have worked 11 months and 24 days. The law says severance of 1 month basic pay must be paid for staff who has worked for at least 120 consecutive days but for less than 1 year and there is severance of 3 months basic pay for an employee who has worked continuously for more than 1 year. My HR feels we should be nice and give the 3 months severance, I am rather undecided and feel it could set a bad example/precedence (for example, if somebody has worked 2 years and 7 months, why not to pay 6 months severance as it is close to the 3-year threshold). Opinions welcome!

[Gsxrnz]

They're a week short of a year. It's up to you if you want to pay them more than their legal entitlement or not.

If you do pay the higher amount and are scared of future ramifications, set an internal HR rule that you will pay the higher severance in future only if time served is within say, 30 days of the next trigger point, and only at the company's discretion.

That way, a precedence is set but you have the policy documented to give you full control.

[DLock]

Pay the 1 month legal entitlement. Stay within the law. Thai companies would not pay 1baht more than they have to. Don't be soft.

My HR Managers (Thai) also recommend paying extra, but I'm convinced it's because they fear problems and want to be seen as the "good guy".

Don't set precedents that you live to regret...especially if they are being discontinued for poor performance.

[smutcakes]

Depending on how small your business field is and whether the staff care about their resume etc, we often ask poor performing staff to resign, rather than be terminated. You would be surprised how many staff prefer this option even though there is no severance.

[Indrid Cold]

This is lots of legal stuff i dont understand but if you can make it this simple.

good performans = bonus

bad performans = no extra

no need to rub bad performans in, i think they know and if you reward bad you say bad is ok.

But then this is i suspect far more complicated.

[wayned]

Why would you want to be the "good guy" and pay someone more than they are entitled to since they are being sacked for "poor performance". If they were good employees and were being let go because of a RIF then you might consider it!

[Wavefloater]

Since their contracts aren't being renewed because of poor performance, pay them what they are legally entitled to -- nothing more. If it was a case of redundancy or something being phased out -- i.e. something beyond their control, I would give them the 3 months. But in this case, if you pay them the 3 months severance, you're sending out a message that you reward incompetence.

[lemoncake]

They are not performing as you say, why reward them? Pay the 1 month and nothing more.

Of course HR feels its better to pay for 3 months, its not HR money, not to mention HR becomes a "buddy"

[lemoncake]

Since their contracts aren't being renewed because of poor performance, pay them what they are legally entitled to -- nothing more. If it was a case of redundancy or something being phased out -- i.e. something beyond their control, I would give them the 3 months. But in this case, if you pay them the 3 months severance, you're sending out a message that you reward incompetence.

Spot on, but not only a message of rewarding incompetence, but also a message of resigning few days earlier but still being paid 3 months, nice way to have a long paid holiday

[mogandave]

Actually, if you have not given them notice, I think you will have to pay then for that as well. 30-days’ notice + 30-days severance.

I don’t know what the make, but you can burn up a lot of time dicking with the labor department, and they always compromise.

Assuming they were not given notice, pay them the 60-days, and make them sign an agreement that they will not dispute.

The day after they leave, have a party for everyone that is still there.

[h90]

Pay the 1 month legal entitlement. Stay within the law. Thai companies would not pay 1baht more than they have to. Don't be soft.

My HR Managers (Thai) also recommend paying extra, but I'm convinced it's because they fear problems and want to be seen as the "good guy".

Don't set precedents that you live to regret...especially if they are being discontinued for poor performance.

Or he has already the agreement that he makes half half with the staff on the 2 extra month.

[krummi]

Just to clarify: Nobody is sacked! Their contracts won't be renewed at the end of the contractual stipulated period and that is after 11 months and 24 days. They will be informed 1 month before the end of their contract that there is no renewal for them.

[krummi]

Seems the feedback here is pretty clear on that issue. Solved! Maybe moderator can close it...?

[mca]

Depending on how small your business field is and whether the staff care about their resume etc, we often ask poor performing staff to resign, rather than be terminated. You would be surprised how many staff prefer this option even though there is no severance.

Unless it was something major the company I used to work for here always gave the staff this option. Unfortunately it was usually due to the member concerned liking the "sauce" a bit more than coming to work on time.

[Wavefloater]

Depending on how small your business field is and whether the staff care about their resume etc, we often ask poor performing staff to resign, rather than be terminated. You would be surprised how many staff prefer this option even though there is no severance.

I must have missed this one, but it's very true. Thais will often resign when asked to. I assume that it has much to do with the extreme importance of saving face, so it is worth your while to try that.

[teacherofwoe]

Why pay severance at the completion of contract?

[mca]

Depending on how small your business field is and whether the staff care about their resume etc, we often ask poor performing staff to resign, rather than be terminated. You would be surprised how many staff prefer this option even though there is no severance.

I must have missed this one, but it's very true. Thais will often resign when asked to. I assume that it has much to do with the extreme importance of saving face, so it is worth your while to try that.

It's more a case of you can tell your next employer that you decided to leave rather than you got kicked out.

[monkeycountry]

Why pay severance at the completion of contract?

Agreed, if the contract has a specific termination date, then no compensation is needed. However, previous court rulings have decided that an employer cannot simply continue to make new 1 year contracts or similar for the same staff, and thereby avoid paying severance for staff that has been employed for many years. I believe the courts ruled that contract employment beyond 2 years is to be considered permanent. I believe further details of these court rulings and general laws on the matter can be found elsewhere on TV. If not, then just google it.

[yourauntbob]

If performance was good, pay them the extra. If their performance was bad as you say, pay the min. Maybe even pick out the best of the bunch and give them the 3 months to show that good work is rewarded.