Thailand Severance Pay & Labour Law 2025 — Section 118 Complete Guide

Thailand Severance Pay — Your Rights Under the Labour Protection Act

Being terminated from employment is stressful, but Thai law provides strong protections for employees. The Labour Protection Act B.E. 2541 (1998), amended in 2019, mandates severance pay for employees terminated without cause — and the amounts are generous compared to many countries.

This guide covers everything you need to know about your legal entitlements, how to calculate your severance, and additional benefits you can claim.

Severance Pay Entitlement Table (Section 118)

The Labour Protection Act mandates minimum severance based on continuous length of service:

Length of Service	Days’ Wages Entitled	Equivalent Months
120 days to < 1 year	30 days	1 month
1 year to < 3 years	90 days	3 months
3 years to < 6 years	180 days	6 months
6 years to < 10 years	240 days	8 months
10 years to < 20 years	300 days	10 months
20 years or more	400 days	13.3 months

Important: These are minimums. Employment contracts or company policies may provide more generous terms. The law guarantees the minimum regardless of what any contract says.

How to Calculate Your Severance Pay

What Counts as “Last Rate of Pay”

Your severance calculation includes:

• Base salary
• Regular fixed allowances (position allowance, housing allowance if consistently paid)
• Fixed monthly commissions

It does not include:

• Overtime pay
• Irregular bonuses
• Travel reimbursements
• One-time payments

Calculation Formula

Severance = Monthly Salary × (Days Entitled ÷ 30)

Or equivalently:

Severance = Daily Wage × Days Entitled

Where Daily Wage = Monthly Salary ÷ 30

Detailed Calculation Examples

Example 1: Mid-Level Employee

• Monthly salary: 45,000 THB
• Service: 4 years 8 months
• Entitlement: 180 days (falls in 3–6 year bracket)
• Severance: 45,000 × (180 ÷ 30) = 45,000 × 6 = 270,000 THB

Example 2: Senior Manager

• Monthly salary: 120,000 THB
• Service: 12 years 3 months
• Entitlement: 300 days (falls in 10–20 year bracket)
• Severance: 120,000 × (300 ÷ 30) = 120,000 × 10 = 1,200,000 THB

Example 3: Junior Employee

• Monthly salary: 18,000 THB
• Service: 8 months
• Entitlement: 30 days (falls in 120 days–1 year bracket)
• Severance: 18,000 × (30 ÷ 30) = 18,000 THB

Additional Payments Upon Termination

Beyond severance, terminated employees may be entitled to:

1. Payment in Lieu of Notice

If the employer terminates without giving advance notice, they must pay wages for the notice period (typically 1 pay cycle, or as specified in the contract).

Notice Method	Employer Obligation
Written notice given	Employee works through notice period
Immediate termination	Pay wages for the notice period
Typical notice period	30 days or 1 pay cycle

2. Unused Annual Leave

Employers must pay for accrued but unused vacation days:

Payment = (Monthly salary ÷ 30) × Unused leave days

Example: 50,000 THB salary, 8 unused days = (50,000 ÷ 30) × 8 = 13,333 THB

3. Special Severance for Long Service (Section 118/1)

Employees terminated due to business relocation who don’t wish to move receive special severance at the same rates as regular severance, in addition to regular severance.

4. Pro-Rated Bonus

If your employment contract guarantees an annual bonus, you may be entitled to a pro-rated amount. This depends on the contract terms and is not mandated by law.

When Severance is NOT Required

Under Section 119, employers are exempt from paying severance in cases of:

1. Dishonest performance of duty or intentional criminal acts against the employer
2. Intentionally causing damage to the employer
3. Violating work rules after receiving a written warning (except serious offenses)
4. Neglecting duties for 3 consecutive working days without justifiable reason
5. Being sentenced to imprisonment (except for negligence or minor offenses)

Note: The burden of proof is on the employer. If they cannot demonstrate one of these grounds, severance must be paid.

Unemployment Benefits from Social Security

In addition to severance from your employer, you can claim unemployment benefits from the Social Security Office:

Eligibility

• Contributed to social security for at least 6 months within the last 15 months
• Registered as unemployed at the Department of Employment within 30 days

Benefit Amounts

Termination Type	Benefit Rate	Duration	Maximum Monthly
Terminated by employer	50% of insured salary	Up to 180 days	7,500 THB
Voluntary resignation	30% of insured salary	Up to 90 days	4,500 THB

Maximum insured salary for calculation is 15,000 THB/month, so maximum benefit for termination is 7,500 THB/month.

How to Claim

1. Register at Department of Employment (online or in-person) within 30 days
2. Report in person every 30 days
3. Benefits are paid to your registered bank account
4. You must actively seek employment (attend job interviews, training)

Example: Total Compensation Package

Employee terminated after 8 years, salary 60,000 THB:

Component	Amount
Severance (240 days)	480,000 THB
Notice pay (30 days)	60,000 THB
Unused leave (10 days)	20,000 THB
Unemployment benefits (6 months × 7,500)	45,000 THB
Total	605,000 THB

Tax Treatment of Severance Pay

Tax Exemption

Under Royal Decree No. 470, severance pay (excluding payment in lieu of notice and unused leave pay) is partially tax-exempt:

• First 300,000 THB: Exempt from personal income tax
• Amount exceeding 300,000 THB: Taxable at your normal progressive rate

Tax Calculation Options

You have two options for paying tax on severance:

Option 1: Combine with Regular Income

• Add taxable severance to your annual income
• Pay tax at your marginal rate
• Better if terminated early in the year with low total income

Option 2: Separate Calculation (Section 48)

• Calculate tax on severance separately
• Average the severance over years of employment
• Often better for large severance amounts and long-tenured employees

Example Tax Calculation

Severance: 480,000 THB, employed 8 years:

Item	Amount
Total severance	480,000 THB
Tax-exempt portion	300,000 THB
Taxable portion	180,000 THB
Tax (separate method, averaged over 8 years)	~5,400 THB

Actual tax depends on your total income situation. Consult a tax advisor for optimization.

Dispute Resolution

If your employer refuses to pay severance or you disagree on the amount:

Step 1: File a Complaint

Submit a complaint to the Labour Inspector at the Department of Labour Protection and Welfare. This is free and you don’t need a lawyer.

Step 2: Labour Inspector Investigation

The inspector will investigate and issue an order within 60 days. During this time, they may mediate between parties.

Step 3: Labour Court

If either party disagrees with the inspector’s order, they can appeal to the Labour Court within 30 days. Labour Court proceedings are free for employees and designed to be accessible without lawyers.

Key Timeline: Employers must pay all final compensation within 3 days of termination. Failure to pay on time incurs a 15% per year penalty.

7 Important Things to Know

1. Minimum 120 Days Required

You must have worked at least 120 days to qualify for any severance. Employment under 120 days has no severance entitlement.

2. Probation Doesn’t Change Rights

Even during probation, if you work 120+ days and are terminated, you’re entitled to severance. Probation periods have no legal effect on this right.

3. Contract Expiry ≠ Termination

Fixed-term contracts that expire naturally don’t trigger severance. However, if the same type of work continues and a new contract isn’t offered, courts may rule it as termination.

4. Company Closure Counts

If the company closes permanently, all employees are entitled to full severance regardless of the reason for closure.

5. Keep Records

Maintain copies of your employment contract, pay slips, and any termination letter. These are essential for disputes.

6. 2019 Amendment Added 400-Day Tier

The 2019 amendment added the 400-day tier for 20+ years of service (previously capped at 300 days for 10+ years).

7. Foreigners Have Equal Rights

Work permit holders are covered equally under the Labour Protection Act. Nationality does not affect severance entitlements.

Calculate Your Severance Entitlement

Use our Severance Pay Calculator to instantly calculate your entitlement based on salary and tenure. Also check the Social Security Calculator for unemployment benefit estimates and the Salary Calculator for understanding your total compensation package.

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This guide reflects the Labour Protection Act B.E. 2541 (1998) as amended through 2019. While we strive for accuracy, employment situations can be complex. Consult a licensed Thai labor lawyer for specific legal advice regarding your situation.