Severance Pay and Resignation: How It Works for Employees

Severance Pay and Resignation: How It Works for Employees

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Understanding your rights and benefits as an employee and recognizing your obligations as an employer are fundamental aspects of maintaining a harmonious and fair workplace.

Navigating severance pay in Thailand and resignation can be pivotal in an employee's career, shaping their financial and professional futures. This article will be helpful advice to successfully negotiate the complex world of severance packages and resignations, whether you're an employee looking for clarification or an employer trying to understand your obligations.

Severance Pay Regulations in Thailand

Severance pay Thailand’s regulations play a significant role in the employment landscape, providing a safety net for employees in the event of job termination. Understanding these regulations is essential for both employers and employees. Here are its key aspects and implications:


Severance pay regulations in Thailand typically apply to employees terminated by their employers without cause. This includes layoffs, downsizing, or dismissals for reasons other than employee misconduct.

Calculation of Severance Pay

The calculation of severance pay in Thailand is primarily based on an employee's length of service and their last drawn salary. The Labor Protection Act provides a formula for this calculation.

Severance pay is generally one month's salary for each year of service, with a cap on the total amount. The cap may change over time, so checking the most current regulations is crucial.

Minimum Service Requirement

Employees are usually required to have completed at least 120 days of service to be eligible for severance pay.

Voluntary Resignation

It's important to note that severance pay is not typically provided to employees who resign voluntarily. However, there may be exceptions based on the employment contract or mutual agreement.

Notice Period

Thai labor law mandates that employees who wish to resign or employers who wish to terminate an employee's contract must provide advance notice. The notice period is usually 30 days or as specified in the employment contract.

Payment in Lieu of Notice

Employers have the option to pay in lieu of notice, which means they can choose to compensate employees for the notice period rather than having them work during that time.

Mutual Agreement

Employees and employers may occasionally decide to end the job relationship mutually, which may include severance compensation terms that have been negotiated.

Non-Competition Clauses

Employment contracts in Thailand may contain non-competition clauses restricting employees from working for competing companies for a specified period after resignation or termination.

Legal Recourse

If disputes arise regarding severance pay or the terms of resignation, either party can seek resolution through the Thai labor courts.

Work Permits and Visas

Foreign employees should also consider the implications of resignation or termination on their work permits and visas, as these may be linked to their employment status.

Consultation with Legal Experts

Given the intricacies of Thai labor laws, looking for law firm in Thailand and consulting with labor experts is advisable for employees and employers to ensure compliance with regulations and address any potential issues.

Resignation Regulations in Thailand

Resignation regulations in Thailand are essential aspects of the employment framework, outlining the procedures and responsibilities for employees and employers when an individual voluntarily leaves their job. Here are the key elements and implications of resignation regulations in Thailand:

Notice Period

Thai labor law generally requires employees to provide advance notice when resigning. The notice period is typically 30 days unless otherwise specified in the employment contract. This requirement also binds employers.

Payment instead of Notice

Employers can pay in lieu of notice, allowing them to compensate employees for the notice period rather than having them work during that time. This practice is common in cases where immediate termination is necessary.

Mutual Agreement

Employees and employers can mutually agree to terminate the employment contract, even if it falls within the notice period. Such agreements can specify terms and conditions for the termination, including any severance pay or compensation.

Non-Competition Clauses

Employment contracts in Thailand may include non-competition clauses, restricting employees from working for competing companies for a specified period after resignation. These clauses must be clearly defined in the contract.

Return of Company Property

Upon resignation, employees are generally required to return all company property, including documents, equipment, and access cards. Employers should outline these expectations during the exit process.

Final Settlement

Employers must provide employees with a final settlement that includes unpaid wages, accrued leave balances, and other outstanding financial matters. This settlement should be provided promptly upon resignation.

Work Permits and Visas

Foreign employees in Thailand should consider the impact of resignation on their work permits and visas. Resignation might require the cancellation or transfer of these documents, depending on the circumstances.

Legal Recourse

Disputes related to resignation, such as issues with notice periods or final settlements, can be addressed through the Thai labor courts. Both parties have the option to seek legal recourse if necessary.

Clear Communication

Effective communication between the resigning employee and the employer is crucial to ensure a smooth transition. This includes clarifying any outstanding matters, providing necessary documentation, and coordinating the return of company property.

Exit Interviews

Some employers conduct exit interviews to gather feedback from resigning employees. These interviews can help identify areas for improvement within the organization.


Both parties should maintain detailed records of the resignation process, including copies of resignation letters, correspondence, and settlement agreements, to prevent potential disputes in the future.

Severance Pay Calculation in Thailand

Knowledge of severance pay in Thailand, especially in calculations, empowers employees and employers to make informed decisions and reduces the potential for disputes and legal complications during employment transitions. Here's how your severance pay is being calculated in Thailand:

1. Formula for Severance Pay Calculation

The calculation of severance pay in Thailand is primarily determined by the Labor Protection Act and follows a specific formula.

The basic formula for calculating severance pay is as follows:

Severance Pay = [Last Drawn Monthly Wage] x [Number of Years Worked]

The "Last Drawn Monthly Wage" refers to the employee's average monthly wage during the last 3 months of employment.

The "Number of Years Worked" represents the duration of employment in completed years.

2. Factors Influencing Severance Pay

Several factors can influence the amount of severance pay an employee may receive in Thailand:

Length of Service: The longer an employee has worked for a company, the higher the severance pay they are entitled to. Each year of service contributes to the calculation.

Last Drawn Monthly Wage: The higher an employee's last drawn monthly wage, the larger their severance pay will be.

Caps and Limits: It's essential to note that there are caps on the total amount of severance pay, which can change over time. These caps may apply even if an employee's calculated severance pay exceeds the limit.

Mutual Agreements: In some cases, employees and employers may mutually agree to different terms for severance pay, which can be negotiated as part of the resignation or termination process.

Benefits of Seeking help from a law firm in Thailand

Seeking help from a law firm in Thailand can provide essential legal guidance, protect rights, and ensure that employees and employers navigate these critical aspects of employment per Thai labor laws and regulations. This can truly be highly beneficial for several reasons:

Thai labor laws and regulations regarding severance pay in Thailand and resignation can be complex and subject to change. Legal professionals are well-versed in these laws and can provide accurate guidance, ensuring that both employers and employees are in compliance.

Employees can benefit from legal advice to ensure they receive the severance pay and benefits they are entitled to under Thai law. Legal experts can help employees understand their rights and protect them from unfair treatment.

Law firms in Thailand can assist in negotiations between employers and employees, especially in cases where the terms of severance pay or resignation are subject to mutual agreement. This can help ensure fair and equitable settlements.

Legal guidance can help prevent disputes and misunderstandings between employers and employees. By providing clarity on the legal requirements and rights, law firms can contribute to smoother transitions.

They can tailor their advice to suit specific circumstances of each case. Legal experts can provide customized solutions, whether it's a complex employment contract, a dispute over severance pay, or a non-compete clause.

In disputes or legal challenges, law firms can represent their clients in Thai labor courts, providing legal representation and advocating for their interests.

Employers seeking to terminate employees or navigate the resignation process must ensure compliance with Thai labor laws to avoid legal liabilities. Legal guidance can help employers make informed decisions that align with legal requirements.

For businesses, law firms can assist in strategic planning related to workforce management, including considerations for layoffs, downsizing, or restructuring that may involve severance packages.

By seeking legal professionals' advice, employees and employers can mitigate the risks of mishandling severance pay and resignation matters.

Working with a legal firm in Thailand encourages openness and justice in hiring procedures, which can enhance the work atmosphere and safeguard a company's reputation.

Law Firms in Thailand

Thailand is home to numerous law firms that offer a range of various legal services to both individuals and businesses. They are available for consultations on severance pay and resignation rules. The following are a few well-known legal firms in Thailand:

  • Kudun & Partners

A reputable law company with roots in Thailand, Kudun & Partners is renowned for its knowledge in a range of legal fields, including mergers and acquisitions, corporate and commercial law, and dispute resolution. The business is dedicated to offering top-notch legal services and individualized solutions to satisfy the various demands of its clients.

  • Baker McKenzie Thailand

An international law firm with a presence in Thailand is Baker McKenzie. They provide a range of legal services, such as those related to intellectual property law, corporate and commercial law, and dispute resolution.

  • Tilleke & Gibbins

A well-known law firm in Thailand, Tilleke & Gibbins, offers legal services in a variety of fields, intellectual property, including corporate and commercial law, and regulatory compliance.

Be Guided in Severance Pay and Resignation Regulations with Kudun & Partners

Understanding the intricacies of severance pay and resignation regulations in Thailand is paramount for employees and employers. These regulations serve as a vital framework for maintaining a fair and compliant work environment. Remember that collaborating with a knowledgeable law firm in Thailand can empower individuals and organizations to navigate the intricate landscape of labor laws effectively and confidently.

In your pursuit of legal assistance or guidance, Kudun & Partners stands as a beacon of professionalism and expertise. Visit us at to learn more about our services and how we can assist you with your legal needs. Whether you require support in corporate matters, mergers and acquisitions, dispute resolution, or other legal areas, Kudun & Partners is ready to provide you with the legal solutions you seek.

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