Since 2023, we’ve been flooded with news about retrenchment and layoffs from multiple companies, and there seem to be no signs of this stopping anytime soon. Whether you’re an employer or an employee in Thailand, having a basic understanding of how retrenchment should be carried out and the benefits retrenched workers are entitled to under Thailand’s Labour Protection Act B.E. 2541 (1998) will help ensure both parties are treated fairly.
So, who’s covered under the Labour Protection Act?
“All employees working under a contract of service — whether full-time, part-time, or fixed-term — are protected under Thailand’s Labour Protection Act B.E. 2541.”
This covers local and foreign employees alike. Exceptions include government officials, who are governed by separate civil service regulations. If the Labour Protection Act does not fully apply to your employment arrangement, the terms of your contract will govern your rights.
Under the Labour Protection Act, an employer who terminates employment due to redundancy, business reorganisation, or reduction in workforce is required to pay statutory severance. With the amendments introduced under the Labour Protection Act (No. 7) B.E. 2562 (2019), employees with longer service periods are entitled to enhanced severance pay.
As the employer, you are required to give advance notice of termination equal to at least one wage payment cycle (typically 30 days), or pay wages in lieu of notice. For large-scale retrenchments, the Department of Labour Protection and Welfare (DLPW) under the Ministry of Labour should be notified in advance.
How do I manage a retrenchment in Thailand?
“Employers must provide advance notice of termination of at least one wage cycle, or pay wages in lieu of notice.”
For retrenchments affecting multiple employees, best practice is to notify the Department of Labour Protection and Welfare (DLPW) and consult with employee representatives or the company’s labour union (if applicable) in advance. Employees who are members of the Social Security system are entitled to apply for unemployment benefits through the Social Security Office (SSO) after separation.
How are retrenched employees compensated under the Labour Protection Act?
“Employees who have worked for at least 120 days are entitled to statutory severance pay.”
Severance pay rates are as follows (based on the Labour Protection Act No. 7 B.E. 2562):
- 120 days to less than 1 year: 30 days’ wages
- 1 year to less than 3 years: 90 days’ wages
- 3 years to less than 6 years: 180 days’ wages
- 6 years to less than 10 years: 240 days’ wages
- 10 years to less than 20 years: 300 days’ wages
- 20 years or more: 400 days’ wages
In addition, if a retrenchment is not due to the employee’s fault, an employer who fails to give advance notice must pay wages in lieu of notice (special severance). Retrenched employees who are registered with the Social Security Office (SSO) may also claim unemployment benefits for up to 90 days at a rate of 50% of their wage (capped at the SSO contribution ceiling).
How can I get help if I think I’ve been unfairly retrenched?
Try speaking to your employer first. If you believe your retrenchment was unlawful — for example, if you were not given proper notice, were not paid statutory severance, or if the retrenchment was used as a pretext for unfair dismissal — you can:
- File a complaint with the Department of Labour Protection and Welfare (DLPW) at your provincial Labour Protection and Welfare Office
- Pursue a claim through the Labour Court (ฤาลแรงงาน) for severance, notice pay, or wrongful dismissal compensation
- Apply for Social Security unemployment benefits through the Social Security Office (SSO)
If you are part of a registered labour union, you may also involve the union in negotiations with your employer for fairer terms of separation.
Ultimately, your retrenchment rights are shaped both by the law and by your employment contract. Ensure that any agreed retrenchment package is documented clearly before signing. If you’ve been retrenched and are looking for your next opportunity, our experienced consultants at People Profilers Thailand are here to help you find a role that fits your skills.
