In this second installment of our case studies on Supreme Court cases relating to unfair termination we shall continue to examine various types of reasons used to justify employee termination including inadequate/ poor performance and company reorganization. These judgements shall help to provide practical guidance on what constitutes unfair termination under Thai law.
Inadequate/ poor work performance
Case Number 7096/2550
Facts: The Employee’s employment contract contained conditions which provided that if the employee:
- was unable to work according to the Company’s standards;
- neglected their work duties;
- came to work late;
- was evaluated at a low working level, or
- received several warning letters from employer,
then the employer could terminate the employment contract. In this case the employee was unable to comply with the Company’s work standards and the employee’s work performance was evaluated as being at a low level on several occasions. Thus the employer terminated the Plaintiff’s employment contract.
Supreme Court Judgment: The Court agreed with the Defendant’s finding that the Plaintiff’s work outcome was evaluated to be at a low level and that the employee did not comply with Company’s standards on 3 evaluations, this being despite the fact that for every evaluation conducted, the Plaintiff’s work outcomes improved. However the employee’s performance was still lower than the Company’s standards. Thus, the Court held that the Plaintiff’s abilities were not appropriate for her position and as such the termination was determined to be fair.
Chatting online at work during work hours
Case Number 2564/2557
Facts: The Plaintiff worked as a probationary employee of the Defendant in the role of accountant. During the probationary period, the Defendant terminated the Plaintiff’s employment because the Plaintiff used the Defendant’s computer to surf the internet and chat about personal matters during working hours for about 1 hour on most working days. The Defendant considered that the Plaintiff spent working time unrelated to her work even though she was on probation. Given that the Plaintiff’s role was as accountant, her position required her to be meticulous when carrying out her duties, otherwise it would cause the Defendant to suffer damage. Given the above the Plaintiff was terminated by the Defendant.
The Appeal Court judged that the Defendant was able to terminate the Plaintiff’s employment immediately without notice and without having to pay compensation in lieu of advance notice, in accordance with section 583 of the Civil and Commercial Code, and Section 17 of the Labor Protection Act, B.E. 2541. The Appeal Court ruled that the Plaintiff’s use of her working time to do personal matters would cause the Defendant to suffer damage and as such the Plaintiff’s termination was reasonable, hence the Defendant did not have to pay damages.
Supreme Court Judgement: The Supreme Court ruled that the termination was fair and that the Plaintiff was not entitled to compensation because she constantly spent work time chatting online for personal reasons which were not related to her work. The Court held that the Plaintiff neglected her duties and that this could cause damage to the employer. The Court also found that the Plaintiff’s behavior was not appropriate for the position.
Conducting Personal Business during Work Time
Case Number 3407/2552
Facts: The Plaintiff connected her own personal computer to the Defendant’s electrical equipment and spent her work time doing activities which were for her personal benefit. The Defendant issued the Plaintiff with five warning notices given that her actions caused damage to the Defendant, however the Plaintiff failed to rectify her behavior. Eventually, the Defendant terminated the Plaintiff for this behavior.
Supreme Court Judgment: The Court held that the Plaintiff’s termination was reasonable and fair because the Plaintiff’s behavior caused damage to the employer. Moreover, the Court found that based on the Plaintiff’s actions, it would remain difficult for the employer to control the employee. Hence, if the Plaintiff continued to be employed, it would only cause more damage to the Defendant. Thus the Court ruled that the Defendant had sufficient reason to distrust the Plaintiff and to terminate her employment.
Company Reorganization
Case Number 3412/2561
Facts: The Defendant was a company involved in the business of renting oilfield equipment. The Defendant hired the Plaintiff as an employee. Ten years after the Plaintiff was employed, the Defendant terminated him by claiming that the energy business was experiencing a problem relating to a decline in production prices which caused a lack of finance liquidity and losses. Thus the Defendant claimed that it had to reduce its manpower in order to adjust the organization’s structure to better suit the workload and to manage operating costs. However, the Plaintiff had not violated the employer’s work regulations or labor laws. Moreover, evidence appeared to show that the Defendant’s profit was not sufficiently reduced to justify reducing expenses and manpower to adjust its organizational structure. Despite the fact that the Defendant had informed the Plaintiff in advance of the termination and paid him compensation in lieu of notice and severance pay, the Plaintiff still claimed that his dismissal constituted an unfair termination.
Supreme Court Judgment: The Court noted that the reason for the layoff was that the Defendant was unable to retain all of its employees given its current income. However the Court found that the Defendant’s level of income meant that it was not suffering a major loss to the point where it was unable to continue operating its business. Moreover, the Court noted there were only 4 staff in the Plaintiff’s department and that such department was not a loss-making unit of the business. The Court determined that the Defendant had not specified and announced a method for selecting employees who would be terminated and that the Defendant was unable to provide a reasonable explanation as to why it was terminating the Plaintiff. Thus, the Supreme Court held that even though the Defendant provided the Plaintiff with pay in lieu of advance notice and severance pay, the termination was unfair in accordance with section 49 of the Labor Court and Labor Case Procedure Act (B.E. 2522).
Case Number 8757-8760/2561
Facts: The five Plaintiffs were employees of the Defendant. The Defendant is an employee of a subsidiary of Company A (which has an office in the United States), which received a loan from the parent company. In 2008 the parent company went into bankruptcy and as a result it was unable to provide assistance to the Defendant given that the world economic system had deteriorated. Therefore the Defendant argued that it was forced to reduce its costs by laying off temporary employees and operational employees, hence it terminated the Plaintiff’s employment.
Supreme Court Judgment: The Court noted that when Plaintiff Numbers 1, 2, 3, and 5 met the criteria and conditions for termination, they were terminated with the Defendant paying them all monies as required by law. The Court further noted that other employees who met these criteria and conditions were also terminated and also received all monies as required by law. The Supreme Court ruled that despite the fact that the Defendant’s business improved and recovered due to receiving a loan from a local bank a little over a year after it terminated its employees, the Defendant’s actions in terminating its staff did not constitute unfair termination because if the Defendant did not lay off its employees swiftly at the beginning then it risked have to abandon its business. Therefore, the Court held that the terminations were reasonable and not unfair.
Case Number 3984/2560
Facts: The Defendant operated a construction contracting business. The Defendant sent a letter terminating the Plaintiff’s employment only 5 days before the completion of one year of employment claiming that the Defendant had to reduce its production capacity because it lacked financial liquidity so it must reduce its operational expenses. The Defendant paid termination compensation to the Plaintiff according to law. After the Defendant terminated the Plaintiff’s employment, the Defendant hired new staff to replace the Plaintiff’s position because the wages of the new staff were cheaper.
Supreme Court Judgment: When justifying the termination of the Plaintiff, the Court noted that the Defendant cited a lack of financial liquidity due to economic conditions which resulted in the need to reduce production capacity and expenses. The Court also noted that the Defendant previously renewed the employment contract with the Plaintiff, hence it found that this shows that the Defendant still had the ability to run its business.
Thus the Supreme Court held that the termination was based on only one reason, that the Plaintiff had a high salary. The Court supported its finding by noting that the Defendant hired others on a lower wage to replace the Plaintiff and that this undermines the Defendant’s claims. The Court determined that the Defendant terminated the Plaintiff’s employment without any fault only 5 days before the completion of one year of employment in order to avoid paying a larger amount of compensation (severance pay). Thus the Court held that the termination was not reasonable and that it constituted an unfair dismissal.
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