What should an Employment Separation Agreement include under Thai law?

1. Definitions and Interpretation
2. End of the Employment
3. Payments
4. Special Payment
5. Return of Property and Hand-over
6. Confidentiality and Continuing Obligations
7. Settlement of Claims
8. Certificate of Employment and References
9. Work Permit and Visa
10. Personal Data
11. General

• No stamp duty is payable on this Agreement. An agreement about the end of an employment, including a compromise of claims, is not an instrument listed in the Stamp Duty Schedule of the Thai Revenue Code.

• Thai labour law sets minimum amounts that the Employer must pay. An employee's promise, made in advance, to accept less than the law requires does not bind the employee. This Agreement therefore lists the amounts the Parties have calculated (Clause 3.1) and obliges the Employer to pay any shortfall (Clause 3.3).
• Severance pay depends on continuous service and the last rate of wages (Labour Protection Act section 118): 30 days' wages for 120 days to under 1 year, 90 days for 1 to under 3 years, 180 days for 3 to under 6 years, 240 days for 6 to under 10 years, 300 days for 10 to under 20 years, and 400 days for 20 years or more. Check the figure you entered against the service of … and the last wage of ….
• Pay in lieu of notice is due when the Employer ends the employment without the advance notice required by section 17 (notice given on or before a pay day, taking effect on the next pay day, capped at three months). It equals the wages the Employee would have earned until the date the notice would have taken effect, and must be paid on the day the Employee stops work (section 17/1).
• An employment ended "by mutual agreement" at the Employer's suggestion is normally still a termination by the Employer. Clause 2.2 records it that way, and the Employer must not later try to rely on a ground for dismissal without severance (section 119).- An employee who resigns is not entitled to severance pay. But if the Employer pressured the Employee to resign, a labour court may treat the resignation as a termination by the Employer, and severance becomes due. Clause 2.2 records that the resignation was voluntary; make sure that is true.
• Late payment of wages, pay in lieu of notice or severance pay carries interest of 15% per year, and a wilful failure to pay for more than 7 days adds a surcharge of 15% of the unpaid amount every 7 days (section 9). Pay on or before …, and no later than the law requires.

• The Special Payment of … is extra to the statutory amounts (Clause 4.2) and is what the Employee receives for giving up other claims, such as a claim that the termination was unfair (Clause 7.1). A compromise must be evidenced in writing and signed by the party bound by it (Civil and Commercial Code section 851), and it ends the claims that the parties have given up (section 852).
• The release does not cover the statutory amounts, social security and provident fund benefits, unknown work injuries or any right that cannot be waived (Clause 7.2). Do not try to widen it.
• Pay the Special Payment in full and on time. The releases take effect only after payment (Clause 7.1).

• Payments on termination are employment income. Severance pay paid under the law has a partial income tax exemption, subject to limits and conditions; ask your accountant how to withhold correctly.
• Notify the Social Security Office of the end of the employment and state the true reason (Clause 8.3). The reason affects the Employee's unemployment benefit, and a false reason can be challenged.

• Notify the authorities of the end of employment within the time required by law, and give the Employee a letter confirming the end date (Clause 9.1). The Employee's visa based on this employment will usually end or need to be changed; the Employee should check with the Immigration Bureau promptly.

• Give the Employee the draft at least … days before signing and let the Employee take advice (Clause 11.2). Pressure to sign on the spot is the most common reason separation agreements are challenged.
• Check every figure against payroll records: unpaid wages to the Last Working Day, overtime, untaken annual leave, pay in lieu of notice and severance pay.
• Return of company property (Clause 5) is not a condition for paying statutory amounts. Claim separately for any loss.

• Keep the signed Agreement, the payroll calculation, bank transfer slips, the withholding tax certificate and the social security notification. If the Employee does not read English well, explain the Agreement or provide a Thai translation (Clause 11.9).
• Employment disputes go to the Labour Court, which works in Thai. A Party relying on this Agreement must file a certified Thai translation.

Compiled from the notes that accompany the English contract templates on this site, published by Phuwara Krobtaku (ภูวรา ครอบตะคุ), Thai attorney-at-law, licence no. 477/2558. The short answer and summary at the top of this page are put together by the site from the template's clause headings and notes. Statutes are quoted only in the official Thai text: Thai is the only official language of Thai legislation, and an unofficial translation can mislead. Article registry OKC-8BAFA5. If you reuse this content, please credit the author and link to the original.