Unfair termination & Employer Specifying Reasons for Termination

Labour Law Article – Unfair termination & Employer Specifying Reasons for Termination

Supreme Court case No. 7429/2560

Issue: If an employer terminates an employee and fails to specify the reason for such termination in the termination letter or explain the reason to the employee at the time of termination, then can the employer later raise the reason for the termination if the employee sues their employer in the Labour Court claiming unfair termination?

Background: The Defendant terminated the employment of the Plaintiff. The Plaintiff (employee) then sued the Defendant (employer) to claim compensatory damages by arguing that their termination constituted an unfair termination. In this case the employer did not specify the reason for the employee’s termination in the termination letter, nor did they explain the reason for the termination to the employee at the time of the termination.

Relevant Law:
The Labor Protection Act B.E. 2541 (1998) (‘LPA’)
Section 119 paragraph 3 – Upon termination without severance pay under paragraph one, when the employer fails to specify the fact which is a cause of termination in the latter of termination of employment or fails to inform the cause of termination to the employee at a time of termination of employment, the employer cannot afterward claim for such cause.

The Act on Establishment of Labor Courts and Labor Court Procedure B.E. 2522 (1979)
Section 49 – To decide the case that the employer terminates the employment of employee, if the Labor Court considers that the termination of employment is unfair to the employee, the Labor Court may order the employer to reaccept the employee to work with the salary that the employee had received at the time of termination. If the Labor Court considers that the employee cannot continuously work with the employer, the Labor Court shall decide the amount of damages that the employer shall pay for such damages by considering the age of employee, the term of employment of employee, the difficulty of employee from being terminated, the cause of termination, and the severance pay which the employee has the right to be granted.

Judgment:
The Supreme Court (Labour Law Division) interpreted that the requirement in paragraph 3 of section 119 of the LPA that stipulates that if an employer wishes to claim the reason for the termination of its employee then it must inform the cause of termination to the employee at the time of termination (if they wish to rely on it) only applies with severance pay disputes.

The Court held that this requirement does not apply with unfair termination disputes brought under section 49 of the Act on Establishment of Labor Courts and Labor Court Procedure B.E. 2522 (1979).

Therefore, this means that an employer can later raise the cause of a termination against their employee who sues the employer for the unfair termination even if the employer failed to inform the cause of the termination at the time of the employee’s termination.

Writer’s Opinion of the Judgment
The author thinks the issues being considered are as follows:
There are two types of money related to the termination of employment. One relates to monetary damages arising from unfair termination (if such claims are proven); and the other type is severance pay that an employee is entitled to under section 118 of the LPA based on certain conditions being met. Each is discussed below:

1. Unfair termination and compensatory damages arising therefrom:
The writer would like to point out that she agrees with the Supreme Court’s judgment in this case which provides that an employer can later raise the cause of termination to defend against claims from an employee regarding unfair termination, even if the employee was not informed of the cause of their termination at the time of their termination. The writer contends that the cause of termination which is presented by the employer following the termination should be permitted to be admissible evidence which the Labor Court can consider in order to determine if such termination was unfair.

The writer would also like to point out that if the Labor Court decides that a termination was not unfair then the employer will not be liable to pay compensatory damages resulting from unfair termination under section 49 of the Act on Establishment of Labor Courts and Labor Court Procedure B.E. 2522 (1979). Finally, the writer would like to stress that this type of damages/ compensation is different from severance pay which is discussed below.

2. Severance pay and cause of termination of employment
With respect to legal disputes concerning the payment of severance pay, paragraph 3 of section 119 of the LPA provides that the employer must inform the cause of termination to the employee at the time of termination. If the employer fails to specify the cause of termination in the termination letter or otherwise fails to inform the employee of the reason(s) at the time of termination then the employer cannot later raise the cause of termination against the employee when defending against their ex-employee in terms of the employer’s liability with respect to severance pay.

Thus, in summary, if the employer wishes to raise the cause of termination against the employee who claims severance pay, Thai labor law still requires the employer to inform the fact or cause of termination to the employee at the time of the termination.

The writer would like to point out that if the cause of termination is not specified in the warning letter but is expressed to them verbally then the employer should do so in front of witnesses who can later provide testimony that this was done.

Writer: Ms. Pongkan Sorthip (email: pongkans@dlo.co.th)