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December 23, 2020

Supreme Court Overrules THB 1.5 Million Unfair Termination Judgement

Tilleke & Gibbins successfully represented a major global clothing company in appeals before the Supreme Court in two related cases brought by former employees. The company terminated the two employees based on redundancy as part of a restructuring process that took place after the company suffered losses over a two-year period. In the first instance, the Labor Court ruled in favor of the employees, finding that because the amount of the company’s losses declined over the two-year period, its revenue actually increased over this time, and that the termination of only two employees could not be considered to have reduced costs for the company and could not be considered part of its restructuring. The company was ordered to pay awards for unfair termination in the two cases in the amounts of THB 600,000 and THB 900,000, plus interest.

Although a party may only appeal to the Supreme Court on legal, as opposed to factual, issues, we argued creatively and persuasively before the Supreme Court to support our argument that the Labor Court had considered facts that conflicted with the evidence. Ultimately, the Supreme Court rendered judgments in favor of the client in both cases, agreeing that the Labor Court’s judgments were in conflict with the evidence and finding that the company’s termination of the two employees was fair and that the company did not need to pay any compensation. Specifically, the Supreme Court found that even though the company’s losses had decreased over the relevant two-year period, this did not demonstrate an increase in revenue, as the Labor Court had found, but instead constituted continuing losses that justified termination of the two employees based on redundancy.

These decisions were particularly significant because the company has since been able to use the arguments included in its Supreme Court appeal as the basis for the termination of other employees. Thus, the Supreme Court judgments not only benefit the company in these two cases, but also prevent a flood of litigation brought against them for other terminations for which the company used the same grounds of termination.