You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

June 3, 2011

Corporate Relocation: An Employer Perspective

Subscribe to Updates
Bangkok Post, Corporate Counsellor Column

Corporate relocation is common in Thailand. Despite their best intentions, however, many employers find themselves in violation of Thai labour laws during the relocation process. This article explains the steps an employer should follow to ensure that the relocation is in compliance with Thai law.

Under Section 120 of the Labour Protection Act, if the relocation of a company affects the ordinary course of an employee’s life or that of his or her family, an employer must adhere to a specific procedure:

  • First, the employer must notify the employees no less than 30 days prior to relocation.
  • Second, if an employee chooses not to relocate with the company, that employee must terminate his or her employment contract within 30 days of receipt of the employer’s relocation notification.
  • Third, the employer must pay special severance equal to the statutory severance under Section 118 of the Labour Protection Act, no later than seven days following the employee’s termination of his or her employment contract.

The amount of the employer’s statutory severance obligation depends on the length of an employee’s service to the company, as shown in the table.

Length of Service                                     Statutory Severance

120 days but less than 1 year                   30 days at last wage rate or last 30 days’ wages for work unit performed

1 year but less than 3 years                      90 days at last wage rate or last 90 days’ wages for work unit performed

3 years but less than 6 years                    180 days at last wage rate or last 180 days’ wages for work unit performed

6 years but less than 10 years                  240 days at last wage rate or last 240 days’ wages for work unit performed

10 or more years                                       300 days at last wage rate or last 300 days’ wages for work unit performed

In theory, the procedure for Section 120 seems straightforward, but in practice it can be fairly complex. The following scenarios illustrate this complexity and suggest avenues employers can take to ensure compliance.

If an employer fails to inform its employees 30 days in advance of relocation, the employer, in addition to paying special severance under Section 120, must also pay an additional amount in lieu of advanced notice. This amount is typically equal to around one month’s wages, but can be more in some cases.

If an employer fails to satisfy its special severance obligation, the employee can file a complaint with the Labour Welfare Committee within 30 days of the due date of payment.

It is important to note that the employee must first terminate his or her contract pursuant to Section 120 before the employer is required to pay special severance and before he or she may file a complaint with the Labour Welfare Committee.

If the committee finds that the employee is entitled to special severance, it will issue a written order to the employee within 60 days of receiving the complaint. After receiving the order, the employer must pay the special severance within 30 days. If the employer still fails to pay special severance, the employer could face criminal charges, with its officers or directors facing possible punishment of imprisonment not exceeding six months, or a fine not exceeding 100,000 baht, or both. If the committee finds that the employee is not entitled to special statutory severance, it must inform all parties in writing.

Within 30 days of receiving the committee’s order, either party may file an appeal with the Labour Court. If an appeal is filed, the employer must post a bond equal to the amount in dispute. If neither party appeals the committee’s order within the 30-day prescription period, the committee’s order is final.

Under Section 120, if an employer has two locations and moves its employees to a single location, the employer may not be not obligated to pay special severance to employees who do not wish to relocate if the move does not impose an undue burden. For example, the Supreme Court has ruled that combining offices in Bangkok and a factory in Samut Prakan province does not constitute a “relocation” under Section 120. (Supreme Court Precedent Case No. 3398/2003)

In summary, an employer wishing to relocate must first notify its employees 30 days before the relocation takes place. Once those employees who decide not to follow the company to the new location have terminated their employment contracts, the employer must be prepared to make special severance payments to such employees. Finally, employers who decide to combine two premises may not have any severance obligation if they are not seen as “relocating” under Section 120 of the Labour Protection Act.

Download Full Article
Related Professionals

Practices

Dispute Resolution and Litigation

Employment

Location

RELATED INSIGHTS​ 

January 14, 2026
Employers operating in Thailand can enforce post-employment noncompete covenants, but success depends on precise drafting and strong evidentiary support. Thai courts will uphold restraints that protect legitimate employer interests and are fair and reasonable in duration, geographic reach, and substantive scope. Overbroad covenants, however, draw judicial skepticism and may fail unless they are drafted in severable, defensible components tied to the employee’s actual role. This article synthesizes recent trends in Thai case practice, explains how Thai courts assess reasonableness in employment restraints, and provides a practical litigation-focused framework for drafting enforceable covenants, preparing evidence, and pursuing relief through the Labor Court. The Legal Framework and Its Practical Implications Thai courts evaluate noncompete covenants under general principles of contract enforceability and public policy, with particular focus on whether a restraint is necessary to protect a legitimate employer interest and proportionate to that objective. In employment matters, this analysis is shaped by the employee-protective tenor of Thai labor law and by the Labor Court’s equitable discretion in determining appropriate remedies. The practical takeaway is that standardized or broadly drafted covenants rarely survive scrutiny. Courts look for a demonstrable nexus between the employee’s actual exposure to confidential information, trade secrets, or customer relationships and the scope of the restraint. Where that nexus is weak or the restraint operates as a blanket prohibition, courts are inclined to decline enforcement or limit relief to a narrowly tailored prohibition. The employer interests most commonly recognized as legitimate in Thai practice include the protection of trade secrets, confidential business information, and goodwill tied to identifiable customer segments or territories. Courts are more likely to enforce restraints where employers can clearly document what information is at risk, why particular customer relationships matter, and how the employee was involved with those assets. Judges also look closely at the
Read More
January 8, 2026
Doing business in Thailand means operating under a strict regulatory framework. From time to time, companies may receive unexpected administrative orders from government authorities that restrict their operations, impose new compliance obligations, or levy fines and penalties. When this happens, a business may challenge the order under Thailand’s administrative law system. The primary concern in pursuing administrative litigation is timing, as strict statutory deadlines apply and missing them can permanently affect a company’s rights. First Step: Administrative Appeal Many companies assume the first step is to immediately bring the matter before the Administrative Court to seek revocation or suspension of the order. Some even attempt to request an interim injunction to stop the order from taking effect. However, Thai law generally requires that the company first challenge the order through an administrative appeal with the same agency that issued it. Only after this process is complete can the matter be taken to court. Seeking an interim injunction at this stage is also not possible. This is because Thai law does not allow a standalone application for an interim injunction; an injunction can only be requested together with the underlying complaint filed with the Administrative Court. Since a court complaint cannot be filed until the administrative appeal process has been exhausted, an injunction is usually not available at the early stage. What Are the Timeframes for Administrative Appeal? Thailand applies a two-stage administrative appeal process. The appeal must first be submitted to the same authority that issued the order, which will review its own decision. If that authority affirms its decision, the appeal is then escalated to the relevant higher authority for further review. In most cases, both stages must be completed before a company is allowed to proceed to court. The timeframe for filing an administrative appeal is very
Read More
December 19, 2025
Prior to the dissolution of the House of Representatives, Thailand’s cabinet approved a draft amendment to the Administrative Procedure Act, following review by the Council of State. If enacted, this reform will fundamentally change how state agencies process business applications and appeals by imposing enforceable timelines and legal consequences for inaction. The draft directly targets a longstanding commercial frustration: applications and appeals that vanish into administrative silence, stalling investment and foreclosing judicial review across sectors ranging from real estate and manufacturing to healthcare and finance. The “Silence Means Yes” Rule for Applications At the core of the reform is a new automatic “approval by implication” for applications subject to statutory processing deadlines. If an official fails to notify an applicant of a decision within the legally prescribed period, the application will be deemed approved as a matter of law. This presumption shifts the costs of delay from businesses to the bureaucracy and gives applicants a definitive legal position once time expires. The mechanism applies to routine licensing and registration matters governed by explicit consideration periods in existing statutes or ministerial regulations. Officials may extend the decision period by up to thirty days, but only if they notify the applicant before the original deadline and substantiate that the delay arises from genuinely exceptional circumstances beyond their control. Certain sensitive applications are expressly excluded from automatic approval, including those that may significantly affect national security or defense, public safety and health, the environment or natural resources, or national cultural heritage. Once the deadline passes without a decision, businesses can proceed with deployment of capital and operations—construction, hiring, procurement, and market entry—without waiting for formal permission that may never arrive. For time-sensitive projects, this materially reduces regulatory timing risk. The “Deemed Rejection” Rule for Appeals The draft introduces a parallel “deemed rejection”
Read More
December 19, 2025
On December 12, 2025, Thailand’s Ministry of Labor published a ministerial regulation prescribing the minimum and maximum wages used as a base for calculating social security contributions. The regulation, which takes effect on January 1, 2026, sets a flat minimum base wage of THB 1,650 per month and a phased increase of the maximum base wage over the following six years, as outlined in the table below. Impact on Social Security Benefits Not only will monthly contributions increase as a result of the adjustment to the maximum wages used as a base for calculating social security contributions, but the maximum benefits available to insured persons will also be enhanced, as shown in the next table. Employer Obligations From January 1, 2026, employers must correctly withhold wages and remit social security contributions for both the employer’s and employees’ portions in compliance with the revised thresholds. Failure to comply may expose employers to penalties under the Social Security Act B.E. 2533 (1990). Employers should ensure that payroll systems are updated as necessary to reflect these changes to the wage ceiling used for social security contribution calculations.
Read More