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​ 

July 23, 2025
In cross-border disputes, a recurring concern for claimants is whether they can protect respondents’ assets located in jurisdictions other than the seat of arbitration. This article explores whether Thai courts can issue interim measures, such as freezing orders, under Section 16 of the Thai Arbitration Act (2002) to support an arbitration seated outside of Thailand. Requesting Interim Measures Section 16 provides that a party to an arbitration agreement may request that the court impose interim measures, either before or during arbitral proceedings. If the court determines that it would have been able to impose such measures had the proceedings been conducted in court, it may proceed as requested. Notably, Section 16 does not limit its application to arbitrations seated in Thailand. It simply refers to “a party to an arbitration agreement,” which arguably includes both domestic and international arbitrations. Further, it allows for applications even before arbitration is commenced, provided that the arbitration is initiated within thirty days from the issuance of the order (or other period the court prescribes). A Hypothetical Scenario Consider the following scenario: Company A, incorporated in the Netherlands, and Company B, incorporated in the Cayman Islands, have entered into a contract containing a clause requiring arbitration at the Singapore International Arbitration Center (SIAC). A dispute arises, and Company A commences arbitration at SIAC. Company B holds significant assets in Thailand, such as bank accounts or real estate. Concerned that Company B might dispose of its assets before an award is rendered, Company A applies to the Thai court seeking a freezing order over those assets. Can the Thai court issue such an interim measure? The answer is not straightforward. Thai law is silent regarding whether Section 16 applies to arbitrations seated outside Thailand, leaving the door open for argument. Some academic sources suggest that
Read More
July 7, 2025
On June 20, 2025, Cambodia’s Ministry of Economy and Finance issued Instruction No. 19116 to clarify when board members and company directors must receive salaries and pay payroll taxes. Board members and company directors who are not considered employees are subject to a withholding tax. This category consists of people who complete services for a nonresident individual and people who perform independent work for a company in Cambodia. Board members and company directors who are considered employees, including those appointed by a foreign head office to temporarily manage a company in Cambodia, must pay payroll taxes on any salary they receive, regardless of whether they are paid by a local or foreign branch of the company. The above obligations apply regardless of whether the person has a work permit. Board members and company directors are exempt from paying payroll tax if they: Are not present and not performing a regular management role at the company despite being registered on the company’s statutes or patent tax card; Participate only in board meetings and occasional shareholder meetings; and Do not receive a salary from a company in Cambodia. Overall, this instruction provides an important clarification regarding the tax obligations of board members and company directors. Companies should pay attention to the classification of their board members and directors and be mindful of the exemption.   This article was written with the assistance of Tilleke & Gibbins interns Amelia Gemma Erickson and Amrin Keat.
Read More
July 7, 2025
On June 27, 2025, Thailand issued the new Ministerial Regulation Prescribing the Criteria and Rates for Receiving Unemployment Benefits (No. 2) B.E. 2568 (2025), which amended a similarly named ministerial regulation by boosting the rate of social security benefits to alleviate hardships for employees who are terminated. The new ministerial regulation took effect the following day. Under this new ministerial regulation, eligible terminated employees are entitled to receive unemployment benefits under the Social Security Fund (SSF) for a maximum of 180 days per year, at the rate of 60% of the employee’s monthly wages at the time of termination, up from 50% previously. However, the maximum wage used as the basis for calculating the benefit remains capped at THB 15,000 per month. Therefore, the maximum unemployment benefit that an employee can receive from the SSF is now THB 9,000 (up from THB 7,500) per month for a period of up to six months. To qualify for the unemployment benefits from the SSF, employees must be registered with the Social Security Office and must have contributed to the SSF for at least six months within the 15 months prior to the start date of the relevant unemployment period. This new ministerial regulation was enacted to increase the amount of financial support provided to insured persons in the case of termination, as part of the government’s objective of alleviating economic hardship under current economic and social conditions in Thailand. For more details on unemployment benefits in Thailand, or on any aspect of employment law in the country, please contact Pimvimol (June) Vipamaneerut at [email protected], Dusita Khanijou at [email protected], Ketnut Pukahuta at [email protected], or Chomanut Arif at [email protected].
Read More
July 4, 2025
On July 1, 2025, new minimum daily wage rates for Bangkok and certain business types nationwide were published in the Government Gazette, taking effect on the same day. The daily minimum wage rate for Bangkok has been increased to THB 400 per day, while the minimum wage rates for other provinces remain unchanged from the rates that took effect on January 1, 2025. However, daily minimum wage rates have also been increased to THB 400 nationwide for type 2, type 3, and type 4 hotels under the Hotel Act and for entertainment establishments under the Entertainment Place Act. This THB 400 rate applies to all businesses that meet the criteria, even if the province’s general rate is lower. The new minimum wage rates supersede any lower wages agreed upon in existing employment contracts or conditions of employment that were in force before this announcement came into effect. As a result, these employees must be paid their wages at the newly prescribed rate for work performed from July 1, 2025, onward.
Read More