Thailand employee termination and severance 2025 guide for SMEs

gentlelawlawfirm
4 days ago
5 min read

Introduction

Ending employment in Thailand affects legal timelines, cash flow, and litigation risk. This guide explains the statutory framework for Thailand employee termination and severance 2025 using the Labour Protection Act and recent practice. You will find the severance table, when no severance is due, how much notice is needed, the deadline for final payroll, special severance for relocation and redundancy, and the 2025 Social Security unemployment update. All statements are tied to official sources you can verify.

The legal backbone you must follow

Severance pay entitlement and table sit in Chapter 11 of the Labour Protection Act, Section 118. The section sets six tiers by continuous service, including the top tier of 400 days for employees with 20 or more years of service under the 2019 amendment.
Dismissal without severance is strictly limited to the grounds in Section 119, such as dishonesty, serious damage, absence for three consecutive working days without justification, or final imprisonment in qualifying cases. Failure to state the cause at termination prevents relying on it later.
Final payroll timeline is mandatory. Wages, overtime, holiday pay and holiday overtime must be paid within 3 days after termination. Interest at 15 percent per year applies on late payments of wages and severance related sums.
Annual leave payout is required for the year of termination and for accumulated leave.

Severance pay table at a glance

Section 118 requires the employer to pay severance as follows when terminating for reasons other than Section 119:

120 days to less than 1 year: 30 days of last wage
1 year to less than 3 years: 90 days
3 years to less than 6 years: 180 days
6 years to less than 10 years: 240 days
10 years to less than 20 years: 300 days
20 years or more: 400 days The law defines termination and confirms that genuine fixed term contracts ending on time are excluded from severance if they meet strict conditions.

Fixed term contract conditions The fixed term must be for a specific project outside normal business or seasonal or occasional work, must have a definite start and end, cannot exceed two years, and must be in a written contract from the start.

Thailand employee termination and severance 2025 notice rules

Standard advance notice The Labour Protection Act provides that if you give advance notice, termination takes effect on the next wage payment date. If you do not give advance notice where required, you must pay wages in lieu of notice on the termination date.
Final payroll contents and timing Pay wages, overtime, holiday pay and holiday overtime within 3 days after termination, and pay severance and any special severance when due. Interest at 15 percent per year applies during default. Keep payroll records for at least 2 years after termination.

When no severance is payable

Section 119 lists the only grounds to terminate without severance, including: dishonesty or a criminal offense against the employer, willful or grossly negligent serious damage, serious violation of lawful work rules after a valid written warning, three consecutive working days of unjustified absence, or qualifying imprisonment. The employer should state the ground at termination to rely on it.

Special cases you must plan for

Relocation that harms ordinary life

If the employer relocates the workplace and it significantly affects the employee or family, the employee can refuse and resign within 30 days. The employee is entitled to special severance not less than the rate under Section 118. If the employer fails to give 30 days advance relocation notice, a special severance in lieu of advance notice equal to 30 days wages applies. Payment of this special severance must be made within 7 days from the employee’s resignation.

Redundancy due to reorganization or technology

For termination resulting from reorganization or adoption or change of machinery or technology that reduces headcount, the employer must notify both the Labour Inspector and the affected employees at least 60 days in advance, giving reasons and a name list. If the employer gives less than 60 days notice, a special severance in lieu of advance notice equal to 60 days wages is owed in addition to Section 118 severance. Employees with more than 6 years of service also receive special severance of at least 15 days per year of service, capped at 360 days.

Final payroll and documents checklist

On or before the termination date and within the next 3 days, make sure to:

Pay wages in lieu of notice if no valid advance notice was given. The payment is due on the dismissal date.
Pay wages, overtime, holiday pay and holiday overtime within 3 days of termination.
Pay severance and any special severance required by Sections 118 to 122, noting interest of 15 percent per year on late payment.
Pay annual leave for the year of termination and accumulated leave.
Issue the employee their withholding tax certificate for any compensation paid so the individual can file personal income tax.
Retain payroll records and proofs for at least 2 years after termination.

Practical scenarios for controllers

1) Ending a 9 month fixed term project on schedule If the written contract meets the fixed term requirements and ends on time, severance does not apply. Pay final wages and leave within 3 days.

2) Redundancy due to automation Give 60 days notice to employees and the Labour Inspector with reasons and a name list. If you give less than 60 days, pay 60 days special severance in lieu of advance notice. Employees also receive Section 118 severance, plus the extra tenure based special severance for over 6 years of service, capped at 360 days.

3) Dismissal for dishonesty If facts meet Section 119, severance is not due. Document the ground in the termination letter at the time of dismissal. Pay earned wages and leave within 3 days.

Social Security unemployment update for 2025

A Ministerial Regulation in 2025 increased unemployment benefits under the Social Security Fund. Eligible terminated employees can receive up to 60 percent of wages for a maximum of 180 days per year, subject to the wage cap used by the SSO. This affects employee expectations and exit communications.

How GENTLE LAW IBL reduces risk and cost

We map facts to the correct Section 118 tier, Section 119 grounds, and any Section 120 to 122 special severance.
We build a termination pack that meets 3 day payroll and tax certificate requirements with evidence for audits.
We handle redundancy notice to the Labour Inspector and design communications to avoid unfair termination claims.

Call to action

If you are planning a reduction in force or a single termination and want to meet Thailand employee termination and severance 2025 timelines while reducing disputes, contact GENTLE LAW IBL. We prepare letters, notices to the Labour Inspector, final payroll packs, and litigation ready files.

Book a consultation: https://www.gentlelawibl.com