Unfair Termination in Thailand – Supreme Court Case Studies (Part 3)

In this third installment of our case studies on Supreme Court cases relating to unfair termination we shall continue our examination of various types of reasons used to justify employee termination including defamation, sale of business, and dismissal due to restructuring of the employer. These judgements shall help to provide useful and practical guidance on what does and does not constitute unfair termination under Thai law.

Defamation

Case Number 19565/2557

Facts: The Plaintiff slandered his supervisor when he spat and said that the supervisor was not an honest person like in the past and that he is a disrespectful person. Given this, the Defendant terminated the employment of the Plaintiff. The Plaintiff then subsequently sued the Defendant in the Labour Court claiming unfair termination. The Appeal Court ruled that even though the Plaintiff’s behavior was not a serious violation of the employer’s work regulations and that the Plaintiff was not prosecuted in a criminal lawsuit, the Plaintiff verbally expressed negative words, which were found to be derogatory, condemning or insulting to their supervisor. Hence, the Appeal Court held that the Plaintiff’s actions constituted an offense against the employer’s work regulations which was inappropriate for the position, thus the termination was judged as reasonable.

Supreme Court Judgement: The Supreme Court considered that the Plaintiff’s words meant that the supervisor was a dishonorable person and not a good person like before. Therefore the Court found that the Plaintiff’s words could be considered as speech that expressed a message or behavior that is slanderous, contemptuous, and insulting to his superior which constituted a violation of the work regulations. The Supreme Court decided that although the Plaintiff’s violation of the regulations was not a serious violation, his subsequent termination was based on reasonable cause. Hence, the Court ruled that the Defendant was justified to terminate the Plaintiff’s employment and that it was not an unfair termination.

Termination due to sale of business

Case Number 601-602/2557

Facts: The Defendant was a legal entity with Dutch nationality that was running an international shipping business, which operated in Thailand via a branch office. The two Plaintiffs were employees of the Defendant’s Thailand branch office and both were responsible for accepting freight reservations and collecting freight fees on behalf of the Dutch parent company. The Defendant terminated both Plaintiffs because the Defendant’s parent company in the Netherlands sold its business to another company and dissolved its own shipping business. Hence, the Defendant submitted a notice of termination to both Plaintiffs two months in advance and paid both of them severance pay, unused vacation wages and wages in lieu of advance notice according to the law. The Plaintiff sued the Defendant claiming unfair termination but the Defendant claimed that the termination was fair and asked the Labour Court to dismiss the case.

Supreme Court Judgment: The Supreme Court was presented with evidence which showed that the Defendant sold all of its shares to A.P. Company at a high price and that it did not appear to have suffered any previous loss and that its business could make profit. However, the evidence also showed that after the Defendant sold its shares it no longer had any position for the terminated employees because its business in Thailand was sold to the third party. Therefore, all employees were terminated without discrimination and persecution. In addition, the Court noted that the Defendant paid special compensation to the Plaintiff’s in case they didn’t receive a job offer from A.P. Furthermore, the Court noted that the first Plaintiff had received special compensation for working with the Defendant up until the effective date of dismissal, which was beyond what the Defendant was legally required to do. Therefore the Supreme Court held that the termination was fair.

Dismissal due to restructuring of employer and termination criteria

Case Number 8484-8485/2559

Facts: Both Plaintiffs were employees who received high salaries that were terminated by the Defendant. The Defendant claimed that it was facing economic challenges and as such it needed to reduce its operating expenses. This in turn led to the Defendant instituting a plan to restructure its organization and reduce its number of employees.

Supreme Court Judgment: The Supreme Court ruled that if the employee’s termination was a necessity for the business to survive then it would not be considered as unfair, provided that the following criteria were applied:

1. the reasons and criteria for the employees to be terminated must be clearly communicated to the staff;
2. the selection process for determining those staff to be terminated must be fair and transparent; and
3. the process must be conducted without discrimination i.e. not favoring or discriminating against certain employees.

However, in this case the Court ruled that there was no evidence that the Defendant announced the reasons, criteria, or methods for selecting those employees who would be dismissed, nor was there any justification given for terminating the two Plaintiffs apart than their higher salaries. Therefore, the Court held that the dismissal of the two Plaintiffs was unfair.

Termination due to family of employee potentially causing disturbance to the employer

Case Number 8212/2550

Facts: There were ten people involved in a workplace incident (including the Plaintiff) where Ms. A’s jewelry went missing. As a result of the incident, the Defendant ordered the suspension of the Plaintiff and some other employees from 17-24 March 2005. On the evening of 16 March 2005, the Plaintiff’s husband called Mr. B (the Defendant’s HR manager) to ask that his wife not be punished and that she be allowed to continue working. On 17 March 2005, the Plaintiff’s husband again called the Defendant’s company and he loudly requested that the Plaintiff must be allowed to continue working and stating that he would come to see Mr. B in person. Thereafter, the Plaintiff’s husband went to the Defendant’s company, where the security staff, noticed his loud and disruptive behavior and informed Mr. B accordingly. As a result Mr. B was afraid that there would be a problem so he did not meet with the Plaintiff’s husband and instead reported the matter to the Defendant’s management. The Defendant therefore terminated the Plaintiff’s employment, believing that if the Plaintiff continued to work, the Plaintiff and her family would cause further disturbances to the Company.

Supreme Court Judgment: Despite the fact that it was not yet clear who stole the personal jewelry of Ms. A and whether the Defendant’s order to suspend the Plaintiff and other employees was appropriate, the Court ruled that such actions were taken under the Defendant’s authority in managing its personnel. However the Court held that the Plaintiff had the right to contest the order if she felt it was inappropriate.

Nevertheless, when the Plaintiff’s husband called Mr. B, (the Defendant’s HR manager) and requested a meeting to discuss and ask for the Plaintiff to return to work, the Court determined that this was not appropriate and may have caused some disturbance to the Defendant. However, the Court ruled that it did not constitute a sufficient reason for terminating the Plaintiff. Thus, the Court judged that the Defendant’s termination of the Plaintiff constituted an unfair termination according to section 49 of the Labor Court Establishment and Labor Court Procedure Act B.E. 2522.

Dharmniti Law Office Co., Ltd.

2/2 Bhakdi Building 2nd Floor, Witthayu Road, Lumphini, Pathumwan, Bangkok 10330

Tel: (66) 2680 9777

Fax: (66) 2680 9711

Email: ryan@dlo.co.th  info@dlo.co.th