Labour Affairs Q&A

Does Thailand's labour law set a standard retirement age for employees? Is severance payment mandatory if an employer retires an employee on the mutually agreed retirement date?

The law does not interfere with the management's right unnecessarily. Employers may set a date of retirement as they see fit for their operations. Most employment regulations and employment contracts specify retirement at 60 years of age, as in the civil service and state enterprises.

While many workplaces do not mention when employees have to retire, it does

not mean lifetime employment or the obligation to keep someone on the payroll until death.

Is it lawful to set different age limits based on gender or other criteria?

Retiring male and female employees at different ages would be a breach of the Constitution as well as labour law. It is a form of sexual discrimination in employment, forbidden by section 15 of Thailand's Labour Protection Act BE 2541. A few companies were taken to the Labour Court on a plaint of unfair dismissal when they retired their female employees at 50, or 55 when males were kept until 55 or 60.

Severance pay is due employees leaving on the predetermined retirement date just

as for those leaving on redundancy grounds. Many employers find this obligation peculiar and a buden. Because redundancy is not an employee's fault and often unpredictable we agree that employees losing their job because of redundancy deserve financial compensation to maintain themselves for a period of time while looking for another job. Retiring, however, is set on a definite date, usually after years of continuous employment, many of which are not productive. Why should it be necessary then to have severance pay of another 10 months' salary, especially if some firms already have their own attractive retirement schemes?

Thailand's Labour Court in its early years decided against severance pay at retirement. The Supreme (Dika) Court reversed this on a point of law, stating that retirement was not voluntary resignation but an employment termination at a mutually agreed date. One consolation for the employers is that they cannot be accused of unfair dismissal, thus there are no grounds for compensation.

One small anecdotal point is for a retiring employee to collect their severance pay before signing a new contract or agreeing to an extension beyond retirement age.

Note: A half-day seminar in Thai on "Employment and Terminating Employment of Expats: The Legal Concerns" will take place on June 25 at the Bangkok Four Seasons Hotel. E-mail mrts@truemail.co.th for reservations.

Supachai Manusphaibool is managing director of MR&TS, a cross-cultural management-consultancy company. Send your questions to mrts@truemail.co.th