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retirement severance pay in thailand

T: +66 2056 5588 The new Labor Protection Act (No. However, under Thai Law, only employees who have worked for 120 days or more are entitled to severance pay if they are terminated without cause. 2541 (A.D. 1998)), he or she is entitled to severance pay under Section 118. The content of this article is intended to provide a general If your Thai company has no retirement policy, we can It is not compulsory, but optional, for those employees who are 60 years of age or more to exercise their right of retirement. You have spent decades planning for retirement. You’ll only need to do it once, and readership information is just for authors and is never sold to third parties. Generally, in the case of voluntary resignation, the employee who resigns would not be entitled to severance pay. severance pay entitlements and help employers to establish a New amendments to Thailand’s Labor Protection Act have addressed this issue by introducing a retirement regime for the Thai private sector employees, placing severance obligations on employers, enhancing protection for employees, and creating a more effective framework for enforcement of labour laws. 6) B.E. Section 118/1 can be summarized as follows: Under Section 118/1, employers still have the freedom to unilaterally determine and implement their retirement polices, or alternatively, to negotiate and mutually agree on retirement with their employees. 2560 (2017), the law did not stipulate provisions pertaining to the retirement of employees in the private sector. The new amendments, among others, introduced a retirement provision in Section 118/1, which prescribes the rights and obligations of the employer and employees in respect to retirement. However, the law does not prohibit both parties from agreeing otherwise, such as an extension for retirement or a renewal of employment. retirement age for private sector employees in the country. Free, unlimited access to more than half a million articles (one-article limit removed) from the diverse perspectives of 5,000 leading law, accountancy and advisory firms, Articles tailored to your interests and optional alerts about important changes, Receive priority invitations to relevant webinars and events. Under the Thai Labor Protection Act of 1998, companies are required to pay legal severance payments (‘LSP’) to employees who leave employment at their retirement age, … imprisonment of the company director/s for up to six months. With respect to the termination of the employment on the basis of reorganising the T… to continue working. Previously, the law was silent on the issue and employers had discretion to set their own retirement policy. The Thai government has set a clear red line in that employers need to pay severance to their retiring employees. Employers who fail to pay severance pay to retirees shall be subject to a maximum six-month imprisonment or maximum fine of Bt100,000, or both. The amendment to the Labour Protection Act does not stipulate Employers with offices in Thailand should review their workplace Key revisions include the following: Employees with at least 20 years of service are entitled to 400 days of statutory severance, up from 300 days for employees with at least 10 years' service. 300 days' wages where the severance pay reserve fund, so they're never caught short. each country in which you operate, partnering with local HR and Extra Severance Pay Rate Prior to the draft amendment, the highest severance pay rate was 300 days’ wage for employees who worked for at least 10 years. resign, they were not entitled to severance pay. Severance pay in Thailand. This is the case in Thailand where both expats and residents are entitled to severance pay upon termination. THAILAND – Retirement regime for Thai private sector. Labor reforms in India have been a long-pending demand of foreign investors, a majority of which consider the country's labor and employment laws responsible for limiting investment interest by forcing private employers ... Sign Up for our free News Alerts - All the latest articles on your chosen topics condensed into a free bi-weekly email. Working for life could be beneficial for some employees, but conversely, this arrangement would be disadvantageous for those employees who wished to end their employment at a certain age. The Thai Cabinet has endorsed a proposal to amend the Labour Protection Act, setting a statutory retirement age for the first time and entitling retirees to statutory severance pay. 180 days' wages where the Mondaq uses cookies on this website. 3, if the employer has a retirement policy, whereby the age of retirement is set at more than 60 years of age, those employees who are 60 years of age or more, may inform the employers of their intention to retire. Benjamas Kullakattimas, a tax partner at KPMG in Thailand. This is because employers no longer permitted employees to work, and also halted payment of wages to employees. In cases where the retirement age has not been stipulated, or it has been stipulated so that it exceeds 60 years of age, the employee, who is 60 years old, may express their intention to retire to the employer. 6), B.E. policies and employment contacts. Even if you can file the taxes on your own, everything is in Thai. If you lost your job through no fault of your own, such as the phasing out of your particular functions or a layoff due to economic downturn, you may receive a severance or retirement package offer. New Retirement Regime for Private Sector Employees. 2560 (2017) seems to be a codification of the Supreme Court’s judgements and states the following: “Retirement, according to the agreement between the employer and the employee, or as predetermined by the employer, shall be deemed as a termination of employment, in accordance with Section 118, paragraph 2. This is the case in Thailand where both expats and residents are entitled to severance pay upon termination. Prior to the draft amendment, the highest severance pay rate was … Severance pay is taxed by the IRS the same as wages—you’ll have to pay employment (FICA) tax and income tax withholding at your usual rate. Published On - 30 October, 2019. Specialist advice should be sought Discover how we help our global clients adapt to foreign rules and As employment regulation can be fast-changing and is specific to Hours Of Work Taking care of your staff is just as important as Prior to the draft amendment, the highest severance pay rate was 300 days’ wage for employees who worked for at least 10 years. years. Just when you think you have everything figured out and a concrete retirement plan in place, you’re thrown a curveball – Your employer has offered you an early retirement or voluntary separation package. Increased from 90 days to 98 days (with 45-day pay) for each female employee. provide consultancy on how to add this to your existing We know that every situation is unique, therefore it is essential to seek a consultation with someone who is specialized in Thai Labor Law to fully underst… employment period is at least one year but less than three years. taking care of your business. © 2018 Tilleke & Gibbins International Ltd. All rights reserved. - Retirement to be treated as employment termination: Under the amended Act, the retirement shall be treated as a case of the employment termination which an employer shall pay a severance pay to a retiring employee. employment period is at least 120 days but less than one year. All Rights Reserved. THAILAND – Retirement regime for Thai private sector. The Thai Cabinet has endorsed a proposal to amend the Labour Protection Act, setting a statutory retirement age for the first time and entitling retirees to statutory severance pay. The maximum severance pay rate is set at 400 days of the employee’s latest wage rate for an employee who has worked for 20 consecutive years or more. At this point, the employee can choose Significantly, employees are no longer faced with the possibility that they may need to work for life without the right to severance pay, as under the new amendments, they are entitled to conclude their professional lives, with the comfort of knowing that they have the right to severance pay simply by exercising their right to retire under the employers’ retirement policies, and in accordance with the law. The employee who reaches the age agreed between the employer and employee, or as prescribed by the employer as being eligible for retirement, is entitled to receive the severance pay. Albert Hui Orbis News, Thailand. Therefore, if retirement policies were not implemented by the employer, this meant that  employees could potentially work for life, unless and until they voluntarily resigned or were terminated. 6) B.E. Your best bet is to work with a tax accountant to file your taxes. An employee who has served 20 years or more will be compensated at a rate equivalent to 400 days of pay. E: [email protected], T: +66 2056 5510 We need this to enable us to match you with other users from the same organisation, it is also part of the information that we share to our content providers ("Contributors") who contribute Content for free for your use. 2541 (A.D. 1998)), he or she is entitled to severance pay under Section 118. 2560 (2017) was published in the Government Gazette on August 31, 2017, and came into effect on September 1, 2017, amending the previous Act. 60 they'd like to continue working. in Thailand in September 2017, there was no law stipulating the The Thai government's changes to the 15% interest . Employers who fail to pay severance pay to retirees shall be subject to a maximum six-month imprisonment or maximum fine of Bt100,000, or both. The Labor Protection Act (LPA) requires all employers in Thailand to pay severance pay to employees whose employment is “terminated” without cause of serious misconduct. Failure to notify the employee may result in a special severance payment in lieu of the advance notice of 30 days. Whereas the Employer terminates the employment of an Employee under Section 121 and such Employee has worked for uninterrupted period of more than six years, the Employer shall pay Special Severance Pay in addition to Severance Pay under Section 118 of not less than the Employee’s last rate of Wages for fifteen days for each year of employment or of not less than the Employee’s Wages for the last fifteen … Exemption for severance pay not exceeding 300,000 Baht and not exceeding ‘10 months’ salary If an employee is terminated by his or her employer without any grounds (as provided under Section 119 of the Labour Protection Act B.E. Thailand has applied the same rate of severance pay since promulgation of the LPA in 1998 until this was adjusted on 5 May 2019. Shortly, a new severance pay rate will be introduced for employees with 20 or more years of service at the rate of 400 days’ wage. Shortly, a new severance pay rate will be introduced for employees with 20 or more years of service at the rate of 400 days’ wage. 2. The definition of ‘wages' varies across labour legislations in India. Thailand has applied the same rate of severance pay since promulgation of the LPA in 1998 until this was adjusted on 5 May 2019. Those who do not employment period is at least three years but less than six Thai Law does not specifically address trials or probationary periods. Published On - 30 October, 2019. This TMF Thailand helps companies navigate the country's labour Whether you are an employer or an employee, Juslaws & Consultinforms you about your rights regarding termination of employment in Thailand. Contact us today. Hours Of Work 2560 came into force SEVERANCE PAY/RETIREMENT INCENTIVE. As mentioned above, If the company has included the retirement age in the regulation of the company, when the employees reach the retirement age, the Employer shall pay Severance Pay to them according to the rated specified in Section 118: 30 days’ wages where the employment period is at least 120 days but is less than one year. previous law mean that the retirement age of any employee in the Section 118/1 of the new Labor Protection Act (No. The employee who reaches the age agreed between the employer and employee, or as prescribed by the employer as being eligible for retirement, is entitled to receive the severance pay. In contrast, the previous Labour Protection Act B.E. If employed more than one year, but less than three years, employees are entitled to severance pay equal to three months' salary. The NLA voted 179 in favour with five abstentions to pass the bill to increase the severance pay from 300 days to 400 days for workers serving … The following retirement severance pay rates now apply to all Severance Pay and FERS Disability Retirement If you are currently in the process of applying for FDR, then you are probably aware of the time frames involved. Traditionally, retirement regimes have only been formally set out for public sector employees. The intention of the employee to retire will become effective 30 days after the date on which the employee informs their employer. regulations and other business requirements through our HR and However, under Thai Law, only employees who have worked for 120 days or more are entitled to severance pay if they are terminated without cause. Albert Hui Orbis News, Thailand. Consequently, retirement policies may be agreed on and remain incorporated in the employment agreement or work rules of the employer. Even though Thailand’s labour law does not set the retirement age of employees, the interpretation of the Thai Labour Protection Act B.E. But awareness of this still For severance pay under the LSA, severance pay will be equal to one month of average wages for each year of service for an employee who has been continuously employed by the same entity. In the case where an employer relocates the place of business in Thailand which affects the normal living of an employee or his/her family, the employer shall notify the employee at least 30 days before the date of relocation. Thai law allows the employee to refuse to move and become entitled to receive severance pay. The Social Security Code, 2020 ("SS Code") has been passed by both houses of the Parliament and received Presidential assent on September 28, 2020. Relocation of Several Supreme Court judgments havelong treated retirement – whether stipulated in the employers’ work rules or in employment agreements – to be termination of employment without cause. The NLA voted 179 in favour with five abstentions to pass the bill to increase the severance pay from 300 days to 400 days for workers serving … The same goes for other taxable income on your final paycheck, including unused vacation time, commissions, bonuses, etc. Employers should see if their retirement policy, work rules, employment contracts and any other document related to retirement needs to be drawn up and/or amended to comply with this new law. Similar to no. Licensed to do business in Cambodia, Indonesia, Laos, Myanmar, Thailand, and Vietnam. payroll experts is recommended. Employment transfer. Those who do not do comply face a fine of up to 100,000 Baht, or even the imprisonment of the company director/s for up to six months. However, this is This system pays lump sum benefits to employees on retirement or involuntary termination. An employee who has worked for less than 120 days can be terminated without receiving severance pay. With a view to reform the archaic labour laws and to facilitate the ease of doing business in India, the Government of India had decided to consolidate twenty nine (29) central labour laws ... On September 28, 2020, three new labour law codes namely, the Industrial Relations Code, 2020, the Occupational Safety, Health and Working Conditions Code, 2020 and the Code on Social Security, 2020. How to Evaluate a Voluntary Separation Package or Early Retirement Offer. If the employer does not have a retirement policy, employees who are 60 years of age or more may inform the employers of their intention to retire. In addition to ensuring that retiring employees have the right to receive statutory severance pay upon retirement, the provision also provides employees, who are 60 years old or more, the right to choose to retire with full severance pay. Severance pay amounts are as follows: Employees with more than 120 days, but less than one year employment are entitled to severance pay equal to one month's salary. By SPECIAL TO THE NATION The Labour Protection Act was recently amended to entitle retirees to severance pay and set the retirement age. Prior to the enactment of the new Labor Protection Act (No.6) B.E. Legally, employers in Thailand must pay a severance to their Retirement is deemed a dismissal under Thai labour laws. Under the circumstance of normal termination of employment where “termination of employment” means: The company prevents an employee from continuing to work and receive his basic pay thereof, whether due to the termination of an employment contract … 90 days' wages where the Employees cannot waive their rights to severance or retirement pay. Severance pay is a benefit for terminated employees that helps to ease the transition to a new job, and most countries set the terms and rates of severance by statute. Previously, the law was silent on the issue and employers had discretion to set their own retirement policy. The employer who fails to give severance pay to the retiring employee may be subject to a maximum of six months imprisonment and/or a fine of up to THB 100,000. need to pay severance to their retiring employees. Severance Pay - Severance pay will be paid upon retirement, at the employee’s daily rate of pay, in the amount of … As Thailand gradually transforms into an ageing society, the potential economic and social burden of retiring workers is one issue that is likely to be on the minds of many employees, employers, and policymakers. However, terminations and dismissals are subject to certain rules that are important to respect in order to avoid any subsequent dispute with the employee or for the employer. employees when they retire. notice), they're entitled to severance pay. Provide employer’s duty to pay 15% interest per annum for some more cases, e.g. Taxes in Thailand. Also, the legal implications relating to the obligations of employers the rights of retiring employees remained unclear until the Supreme Court handed down several precedent rulings on retirement issues. If an employee is terminated by his or her employer without any grounds (as provided under Section 119 of the Labour Protection Act B.E. The new law clearly requires an employer to pay severance pay in the following the cases. Retirement is deemed to be termination of employment, and the retiring employees are entitled to severance pay under Section 118. relatively-new stipulation is low, putting companies at risk of Moreover, employers may also need to securely set aside sufficient internal reserve funds in preparation for employee retirement. The Labor Protection Act of 1998, Section 118, (LPA) requires all employers in Thailand to pay severance to employees who are “terminated” by the employer without legal cause (as described in LPA Section 119). 2541 (1998), which governed relationships between employers and employees in the private sector, and which provided protection for employees, did not mention retirement. country is now 60 years-old. We can also assist with How to Evaluate a Voluntary Separation Package or Early Retirement Offer. Technology, Media, and Telecommunications. company they work for. By using our website you agree to our use of cookies as set out in our Privacy Policy. Thai Law does not specifically address trials or probationary periods. or until they voluntarily resigned. These Supreme Court judgments have assumed precedence over retirement issues. Once you live in Thailand for six months you will need to pay income taxes. individual employee retirement negotiations, the calculation of And once the employee did about your specific circumstances. guide to the subject matter. In addition to codifying the court judgments, the new amendments to the retirement regime provide substantial benefits for employees in terms of the right to retirement, and the right to severance pay upon retirement. Exemption for severance pay not exceeding 300,000 Baht and not exceeding ‘10 months’ salary . The benefits are highly valued by employees and the benefit terms are approximately one month of final pay for every year of service - … Retirement is deemed a dismissal under Thai labour laws. Severance pay; Less than 120 days: No severance pay: 120 days - 1 year: Wages for at least 30 days: 1 year - 3 years: Wages for at least 90 days: 3 years – 6 years: Wages for at least 180 days: 6 years – 10 years: Wages for at least 240 days: 10 years – 20 years: Wages for at least 300 days: More than 20 years: Wages for at least 400 days 30 days' wages where the regulation. It is not compulsory, but optional, for those employees who are 60 years of age or more to exercise this right of retirement. Need more information? Just when you think you have everything figured out and a concrete retirement plan in place, you’re thrown a curveball – Your employer has offered you an early retirement or voluntary separation package. The Labor Protection Act (LPA) requires all employers in Thailand to pay severance pay to employees whose employment is “terminated” without cause of serious misconduct. Such retirement shall be effective within 30 days from the date of such expression, and the employer shall pay severance to the employee in accordance with Section 118.”. As a result, the retiring employees were entitled to statutory severance pay. employees and in particular, agree how many years beyond the age of no payment in lieu of advance employment termination notice, etc. regulations, Code on Wages, 2019 – Key Features And Highlights, Thailand's New Labour Protection Act Increases Employee Benefits, Termination Of Employment: Part III – Lay-Off Termination, Deemed Retirement Age Now 60 – Right To Statutory Severance, Employer's Role During The Covid-19 Outbreak, © Mondaq® Ltd 1994 - 2020. all aspects of retirement. New Rate of Severance Pay; An employee who has been terminated without cause will be entitled to, among others, severance pay; the rate of which depends on an employee’s length of service and last wage rate. penalties, including jail time. regulations. Severance pay under both the LSA and the LPA must be paid within 30 days of termination. Thailand • Severance pay • Notice of at least one pay period, on or before any payday, so that the termination of the employment contract will take effect on the next payday, or a longer period if specified under the employment agreement, or payment in lieu. ... Retirement … Thai labor law is relatively flexible for employers. Thailand labour law December 4, 2010 An employee terminated without a valid cause as stipulated by law is entitled to receive the following severance pay: 30 days’ wages where the employment period is at least 120 days but is less than one year. The severance pay (Section 118) The maximum severance pay rate is set at 300 days of the employee’s latest wage rate for an employee who has worked 10 consecutive years or more. In response to the new amendment, employers should review their employment agreements and work rules, to ascertain whether the requisite retirement policies have been implemented, and to ensure those policies conform to the law. For example, the Government Pension Act B.E. Before Labour Protection Act (No. You have spent decades planning for retirement. You need to pay taxes even if you don’t have a work visa. 240 days' wages where the An employee who has worked for less than 120 days can be terminated without receiving severance pay. But when they do cease (with 30 days' Each employee’s consent is required for any change of employer. In Thailand, retirement is deemed to be a termination of employment, entitling employees to a … 2541 (1998) includes the fact that the retirement of employees is a termination of contract of employment. Employers should see if their retirement policy, work rules, employment contracts and any other document related to retirement needs to be drawn up and/or amended to comply with this new law. no longer the case. employment period is 10 years or more. meant that employees were free to work for as long as they could, Not only can it take several weeks (or months) to complete the paperwork, but once your claim has been submitted to OPM, it can take an additional 6 – 14 months to receive a decision. The Thai government has set a clear red line in that employers need to pay severance to their retiring employees. Employers can still negotiate with their years. Extra Severance Pay Rate. New amendments to Thailand’s Labor Protection Act have addressed this issue by introducing a retirement regime for the Thai private sector employees, placing severance obligations on employers, enhancing protection for employees, and creating a more effective framework for enforcement of labour laws. New Rate of Severance Pay; An employee who has been terminated without cause will be entitled to, among others, severance pay; the rate of which depends on an employee’s length of service and last wage rate. Severance Pay is the compensation that an employer provides to a laid off or terminated employee, whose job has been eliminated, who through mutual agreement, decided to leave the company or left the company because the company can no longer operate its business, or for other reasons. It was interpreted that the old law placed the onus for determining and implementing retirement policies in private sector companies in the hands of the employer, or that retirement was dictated by agreement reached between the employer and employee. Discover how we help our global clients adapt to foreign rules and The Thai government has set a clear red line in that employers A system of mandatory Severance Pay also operates in Thailand. This includes all domestic and international income. do comply face a fine of up to 100,000 Baht, or even the 2494 (1951) stipulates that 60 years of age is the retirement age for civil servants, although extensions are permitted under certain conditions. Severance pay is a benefit for terminated employees that helps to ease the transition to a new job, and most countries set the terms and rates of severance by statute. employment period is at least six years but less than 10 rules and policies to ensure they are compliant with the new No longer permitted employees to work for as long as they could, or they. Days ' wages where the employment period is at least three years but less retirement severance pay in thailand. Rate equivalent to 400 days of pay or until they voluntarily resigned some more cases e.g... Or probationary periods the employer specifically address trials or probationary periods: employment HR. For as long as they could, or until they voluntarily resigned termination. Using our website you agree to our use of cookies as set out in Privacy! Ll only need to pay severance to their retiring employees are entitled severance... Months you will need to pay 15 % interest per annum for some more,. Retirement pay, including unused vacation time, commissions, bonuses,.... Least three years but less than 120 days can be terminated without receiving severance.. Prior to the subject matter eligible for state pension benefits, as prescribed by law in... The fact that the retirement age of any employee in the employment period at. 180 days ' wages where the employment period is at least one year but than. Both the LSA and the retiring employees these Supreme Court judgments have assumed precedence over issues! Retirement is deemed to be termination of employment, and also halted payment of wages to employees retirement. Is 10 years or more will be compensated at a rate equivalent to 400 days of pay of Voluntary,. ) for each female employee and policies to ensure they are compliant with new. May result in a special severance payment in lieu of advance employment termination notice etc. Business in Cambodia, Indonesia, Laos, Myanmar, Thailand, and the retiring.. But less than 120 days but less than 120 days but less than 10.. Amended to entitle retirees to severance pay also operates in Thailand Labour laws consent is required for any of. Previous Labour Protection Act B.E each female employee any employee in the private sector cookies. Duty to pay taxes even if you don ’ t have a work visa to! Least three years but less than 120 days can be terminated without receiving severance under. Prohibit both parties from agreeing otherwise, such as an extension for retirement or involuntary termination they resigned! Retire will become effective 30 days of pay previous Labour Protection Act ( retirement severance pay in thailand. A renewal of employment until this was adjusted on 5 may 2019 receive severance pay live Thailand... New Labor Protection Act B.E article, all you need to pay income taxes severance or retirement.! Ltd. all rights reserved income taxes partner at KPMG in Thailand where both expats residents! Across Labour legislations in India ) ), they 're entitled to receive severance pay upon termination reserve in. Consequently, retirement regimes have only been formally set out for public sector employees are automatically! Aside sufficient internal reserve funds in preparation for employee retirement is deemed a dismissal under Thai Labour.!

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