BANGKOK, THAILAND – A forum dispute over a possible dismissal showed how strongly Thai labour law protected long‑serving staff in 2025, including foreign workers.
Expat’s forum plea exposes legal uncertainty
An online user writing under the name “PoorSucker” reported facing possible termination after some 20 years with a Thai-registered company owned by a Swedish national and serving Scandinavian clients. He questioned whether Thai law applied at all, and what would happen to unpaid leave and any severance money. The case reflected a common fear among expats who believed they worked in a legal grey zone because their boss was foreign and customers were overseas.
Thai Co. Ltd status brings full protection
The discussion made clear that anyone with an employment contract at a Thai “Co., Ltd.” who paid into the local social security system was treated like any Thai employee. Under the updated Labour Protection Act (LPA) in 2025, severance entitlements were strictly regulated and could not be negotiated downward, unlike in many Western countries with at‑will employment. Length of service was the decisive factor: the longer the tenure, the more expensive a dismissal became for the employer.
Who qualified for severance and the 120‑day rule
Employees working in Thailand on open‑ended contracts with locally registered firms, regardless of nationality or valid work permit, generally had a statutory right to severance. There was no obligation to pay severance if a genuine fixed‑term contract expired regularly, though individual situations could require legal review. A key threshold was 120 consecutive days of employment; below that, no statutory severance claim arose.
Scaled payouts and illustrative examples
The LPA set minimum severance levels based on the last monthly wage, with higher tiers for longer service. Examples used in the debate included 30 days of pay after nine months, 90 days after 2.5 years, 240 days after seven years and 400 days after 25 years. In practice, probation was not explicitly defined in law, but severance claims typically only started after the 120‑day mark.
New tax exemption up to 600,000 baht
For the 2025 tax year, a change under Ministerial Regulation No. 394 (B.E. 2567) introduced a new tax‑free limit for severance. Severance payments were exempt up to the amount corresponding to 400 days’ wages, but capped at THB 600,000; any sum above that had to be taxed. The rule applied retroactively to severance paid for dismissals from 1 January 2023 onward.
Dismissal “with” or “without cause”
Statutory severance became due only when an employee was dismissed “without cause”, which covered typical business reasons such as restructuring or a management decision to replace staff. In contrast, dismissal “with cause” was reserved for serious misconduct like theft, refusal to work or intentional damage to the company. In such cases no severance was owed, and the burden of proof lay with the employer.
Notice pay, unused leave and sick days
In addition to severance, employers had to observe notice periods, most commonly one pay period of about 30 days, or compensate staff through payment in lieu of notice if they were released immediately. Thai law also required that unused annual leave at the end of employment be paid out in cash. In the case described by “PoorSucker”, who said he had never been granted vacation, that could translate into a substantial additional payment, while unused paid sick leave of up to 30 days per year was not compensable on exit.
How severance was calculated
Severance was calculated from the final wage, with fixed allowances counted if they were part of the regular package. Variable bonuses usually did not form part of the base for the calculation. One example given used a salary of 50,000 THB (around 1,360 euros), with the formula 50,000 divided by 30, multiplied by the relevant number of entitlement days.
Social security, unemployment and retirement
After termination, rights under the Social Security Office (SSO) continued for a limited period. Former employees remained covered by health insurance for six months if they did not switch to voluntary contributions, and could receive unemployment benefits at 50% of their wage, capped at a base of 15,000 THB, for up to 180 days. Reaching retirement age, often 60, was legally treated as termination by the employer, which meant workers became entitled to their full severance at retirement, up to the maximum 400 days.
Foreign firms without a Thai entity
The forum thread also addressed expatriates working remotely for overseas companies with no Thai branch. In such situations, the Thai labour law regime generally did not apply to the employment relationship. For “PoorSucker”, however, this concern proved unfounded because his company was clearly registered in Thailand and he was paying into social security.
Labour Court and unfair dismissal claims
The Labour Court in Thailand was described as highly employee‑friendly, often free of charge and not necessarily requiring expensive lawyers at first instance. Mediators frequently sought settlements before a formal judgment. Beyond statutory severance, workers could bring separate claims for “unfair dismissal” to seek additional damages for loss of employment, with the sums left to the court’s discretion.
Deadlines, documentation and the forum worker’s outlook
Observers warned that employees should not wait too long to file dismissal protection claims, even though some entitlements could be asserted over extended periods. They were advised to collect contracts, payslips and emails as evidence. In the forum case, the fact that “PoorSucker” had a Thai employer and social security contributions meant his prospects for claiming full legal entitlements in the event of termination were described as excellent.
Strong protections behind Thailand’s easygoing image
Commentators noted that the relaxed “mai pen rai” image of Thai culture ended abruptly when labour law was at stake. Employers who tried to avoid legally mandated payments often ended up in court and were ordered to pay, including interest. Readers were urged to know their statutory value and to avoid signing termination agreements that left them worse off than the law allowed.
“This article is intended for general information only and does not replace legal advice.”
said the editorial team.
“Exchange rates were based on late 2024 and early 2025 levels, and laws may change.”
said the editorial note.