Severance Pay Procedures

[krummi]

Hi,

I wonder if some members here are able to clarify some questions regarding severance pay procedures:

- If an employee resigns, no severance is due, is this correct?

- Our staff work on fixed term employment contracts that are linked to the general nature of the business. From a supreme court ruling I do understand that in this case severance payment is due if a staff is terminated. However, what if the contract comes to an end and is not renewed? Is severance pay due? Also, say the contract comes to an end and we offer the staff a contract renewal for a further year but the staff rejects the renewal - is severance due at the end of the contract despite an offer for renewal?

[realfunster]

1) Correct. Although in Thailand employees are sometimes encouraged and happy to resign to keep face and a negotiated settlement of a % of due severance is paid along with a reference letter.

2) Fixed term contracts are usually viewed by the Labour Law as an employer trying to evade severance, so are typically not exempt from severance - especially in your case as you mention they are in the general course of business. Only exception I am aware of is for a very specific fixed term project with commensurate employment contract. In your case, if the contract comes to an end and not renewed by employer - severance will be due. Not sure what happens if a new contract is rejected by the employee- however, if this was offered on lower terms it would likely be viewed dimly by the Labour Court.

[Soutpeel]

If someone resigns serverance is not due

on your other points be careful with that one, this one year contract thing has been through the courts recently, as i understand the case as follows:

Large MNC employed contract workers on 12 month renewable contracts, some of the contract workers had worked for same company 10 years plus, MNC terminated their contracts and used the 12 month contract rule as a basis for not paying serverance, this was taken to court and the MNC lost, courts opinion in this case the contract workers would be treated the same as permanent employees of MNC and serverance is due...this case is now on appeal in the higher court

On the question of contract renewal which is declined by the employee, I would say this is same as resignation, therefore severance is not due

In my opinion, if your running a business facing things like this, and large number of contract workers, seek legal advice before doing anything..as if you get it wrong could cost you a lot of money

[Ludacris]

1. If an employee resigns then no severance is due.

2. According to Thai labor law an employer is not allowed to turn a permanent position into a temporary one just by put the employee on renewable contracts. The litmus test is if the position the employee held continues after the employee is let go. For example, if it's a construction project, seasonal work, or a project that has a specific duration, then the employee is a temporary employee. If the employee is a teacher, lawyer, etc and the company has to then hire a new employee to fill the vacant position, then the position is permanent. If the employee is considered permanent, then not renewing the contract is the same as termination and the employee is due proper severance.

3. If the employee rejects a new contract because the working conditions have substantively changed for the worse, the employer is in breach of labor law because substantive changes to working conditions must be agreed to in advance by the employee. If the working conditions in the new contract have not changed substantively (you can look up the legal definition of substantive) and the employee rejects the contract, then it should be deemed the same as resigning.

Very soon many posters will come out the woodwork and start posting how Thailand is like the wild west and anything goes, but the reality is Thai labor law is very strong in favor of employees. It's up to the parties involved to determine if pursuing severance is actually worth it in a given situation.