Severance Pay in Thailand (2026): Rates Table, Eligibility & How to Claim

A termination conversation in Thailand has a number sitting behind it that both sides need to know before anyone speaks: the severance pay figure — ค่าชดเชย. Employees often underestimate it ("I only worked here two years, probably nothing"), and small-business employers routinely overestimate their flexibility with it ("we'll just pay one extra month"). Both are wrong, because severance isn't discretionary goodwill — it's a statutory debt calculated from a table in the Labour Protection Act.

This guide gives you the exact tiers, who qualifies, how the money is computed line by line, the situations where an employer can lawfully pay nothing, and what each side should do when the number doesn't get paid.

Who Qualifies for Severance in Thailand

The threshold is low: any employee who has worked at least 120 days of continuous service qualifies for statutory severance if the employment ends by termination. "Employee" here means anyone performing work for wages under an employer's direction — job title doesn't matter, and neither does calling someone a "contractor" on paper; Thai labour authorities look at the substance of the working relationship.

Key boundary cases:

• Resignation: an employee who quits voluntarily is not entitled to severance.
• Fixed-term contracts: a contract ending on its own agreed expiry date generally triggers no severance — but early termination before expiry does, and repeated renewals can convert a "fixed-term" arrangement into continuous employment.
• Retirement: an employee who reaches retirement age set by agreement (or 60 where nothing is agreed) and is retired is treated as terminated — severance applies, plus any retirement payment promised.
• Business sale or restructuring: continuity of the work relationship usually carries service years across the change; "the new company restarted the clock" is rarely accepted.

The Severance Pay Table (Labour Protection Act)

Severance scales with length of continuous service. Under Section 118 of the Labour Protection Act B.E. 2541 as amended:

Continuous service	Minimum severance
120 days – under 1 year	30 days' wages
1 year – under 3 years	90 days' wages
3 years – under 6 years	180 days' wages
6 years – under 10 years	240 days' wages
10 years or more	300 days' wages

Amendments have extended compensation further for very long-serving employees (20+ years), so employers budgeting terminations of long-tenure staff should verify the current maximum tier against the latest version of the Act rather than relying on older summaries.

Three things people miss about the table:

1. The 120-day rule is recent and real. Someone dismissed at day 121 gets 30 days' pay. Employers who time dismissals "just before" thresholds create exactly the pattern labour inspectors look for.
2. It's days of wages, not months of salary — the conversion trips people up (see next section).
3. Partial years round down between tiers: 5 years 11 months earns the 3–6-year tier, not the next one.

How the Money Is Actually Calculated

Severance equals days of wages × the employee's highest lawful wage rate, capped at the statutory ceiling per day for computation purposes. The steps:

1. Determine the wage base. The regular wage — basic salary plus amounts paid regularly in connection with work. Habitual overtime and regular bonuses that form part of true remuneration can be argued into the base; genuinely occasional payments generally aren't. This is the most commonly disputed variable.
2. Convert to a daily rate. For monthly-salaried staff: monthly salary ÷ 30 (per the Act's method) — not ÷ the actual working days.
3. Multiply by the tier days. A Bangkok office worker earning 45,000 baht/month with 4 years of service: 45,000 ÷ 30 = 1,500/day × 180 days = 270,000 baht minimum severance.
4. Check the cap. The Act caps the daily wage used in this calculation at a statutory maximum (adjusted over the years); above-cap earners receive severance computed on the capped figure — which is why senior executives' settlement packages are negotiated rather than computed.

Worked examples make this concrete:

Employee	Monthly salary	Service	Tier	Calculation	Severance due
Retail staff	15,000	8 months	30 days	500 × 30	15,000฿
Accountant	35,000	2 years	90 days	~1,167 × 90	105,000฿
Manager	70,000	7 years	240 days	~2,333 × 240	560,000฿*

* Subject to the daily-wage cap; check current cap value for high salaries.

When an Employer Can Lawfully Pay Nothing

Section 119 lets an employer terminate without severance only for specific serious misconduct — and "serious" means provable:

• Dishonesty in duties or criminal offences against the employer
• Intentionally causing the employer serious damage
• Negligent conduct causing serious damage
• Violating work rules or lawful orders after written warning (or without warning only where the violation is grave)
• Abandoning duties for consecutive working days without reasonable cause

Two reality checks for employers: the warning must actually have been given and documented — a warning that lives in someone's memory is worth nothing at the labour office; and even in misconduct cases, the burden of proof sits with the employer, not the employee.

Separately, termination itself requires advance notice under Section 17: notice served at or before a wage-payment due date takes effect at the following wage-payment date, or the employer pays wages in lieu. Notice and severance are separate obligations — serving notice correctly doesn't reduce the severance bill by a baht.

What Employees Should Do When Severance Isn't Paid

Escalate in order, and document everything at each step:

1. Request it in writing. A polite message stating your service period, expected tier, and the amount owed creates the paper trail everything else builds on. Attach your employment contract, pay slips, and transfer records.
2. Complain to the Labour Inspector. The Department of Labour Protection and Welfare (กรมสวัสดิการและคุ้มครองแรงงาน) takes complaints free of charge, summons the employer to conciliation, and resolves a large share of disputes at this stage — employers take inspector summonses seriously.
3. File with the Labour Court. If conciliation fails, specialised labour courts handle these claims, and employees are exempt from advance court fees. You can file yourself for straightforward severance claims; the process is designed to be navigable without counsel for clear-cut statutory debts.
4. Mind the clock. Claims for statutory entitlements carry their own limitation periods (generally three years from when each entitlement falls due). Don't let a "we'll pay eventually" promise run out the clock — get promises in writing with dates.

What Employers Should Do Before Any Termination

If you employ people in Thailand, compute the liability before deciding, not after:

• Build the number first. Service years → tier → wage base → total. Add notice-period wages or payment in lieu. That combined figure is the true cost of the decision.
• Document performance problems contemporaneously. The Section 119 route requires warnings and evidence created before termination. Retrofitted files convince nobody.
• Use a proper termination letter. State effective date, reason category, notice computation, final-pay breakdown including severance, and benefits handling. Ambiguity in the letter becomes Exhibit A later.
• Consider negotiated exits. A signed mutual separation agreement paying slightly above the statutory minimum buys a release of claims — usually cheaper than defending one.
• Keep the paperwork with the payroll record. Inspectors ask for service records, wage history, and warnings; scattered records read as no records.

For the letter itself, our termination letter template guide covers the structure employers should follow.

FAQ

Is severance taxed? Severance receives favourable treatment: the portion attributable to years of service is assessed under specific rules that effectively shelter much of it compared with ordinary income. Exact treatment depends on amounts and structure — worth confirming for large figures.

Can I waive my severance? A release signed knowingly and with adequate consideration can be binding — which is why employers offer settlements slightly above statutory minimums. Signed under pressure on the termination day itself, with no extra payment? Much weaker.

Does severance include commission? Regular commissions that constitute genuine remuneration can count toward the wage base; purely discretionary bonuses generally don't. Expect this to be contested ground in sales roles.

I was "promoted" to a contractor with the same desk and boss. Do I qualify? Likely yes — Thai authorities apply a multi-factor test (control, schedule, integration, payment method), and relabelling doesn't defeat it.

Can severance be paid in installments? Only by agreement. Statutory severance is a lump-sum debt due at termination; installment plans require the employee's signed consent.

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