Ending an employment contract in Thailand in 2026: fixed-term non-renewal, notice periods and unfair dismissal risk under the Labour Protection Act

Ending a Thailand employment contract lawfully in 2026 depends on three separate questions. The first is whether a fixed-term contract qualifies for the severance exemption. The second is whether written notice or pay in lieu was handled correctly, and the third is whether the reason would hold up before the Labour Court.

A fixed-term contract ends on its stated date without notice, yet non-renewal generally still triggers severance unless the role meets narrow conditions. The checks that follow track the legal order in which those obligations arise during an exit.

Key takeaways

About the author

This guide was prepared by Settlr Global's People & HR team, which handles employer of record and payroll offboarding work for companies operating in Thailand. Settlr Global is led by Managing Director Gagan Ajmani, who has 15+ years of regional experience across Southeast Asia.

What does Thai law require when an employer ends a contract?

Those three questions are governed by two different laws. The Labour Protection Act sets the rules on notice, severance and final pay.

The Labour Protection Act does not define unfair dismissal. Instead, the Act on the Establishment of Labour Courts and Labour Court Procedure lets the Labour Court decide whether a dismissal lacked a justifiable reason[3].

Each obligation has its own trigger, as this formula shows:

Employer exit cost = notice pay (where notice is short) + severance + pay for unused annual leave + any Labour Court award

Paying one item in the formula does not settle another. Severance does not make up for missing notice, and correct notice does not protect the employer from an unfair dismissal award.

HR should cost each item separately before the decision is communicated. An employment contract review can show which costs the current paperwork creates.

Does fixed-term non-renewal require Thailand severance pay?

Fixed-term contracts are a common source of errors in that formula. The end date removes the notice requirement, but severance generally still applies.

A founder might reason, "The contract ends on 31 December 2026, so nothing is owed." In practice, non-renewal generally counts as termination by the employer. Severance is exempt only when all of these conditions are met:

Take a software company that hires a developer on a one-year contract to build its core product. That contract generally fails the second condition, because product development is the company's normal business.

Successive fixed-term contracts are generally counted as continuous service, and Section 20 of the Labour Protection Act counts all periods together where the employer breaks service with intent to deny rights, so severance is calculated on the full period [1]. Ending a fixed-term contract before its stated date can also expose the employer to a damages claim.

Contracts should be checked against these conditions at signing. The exemption cannot be added at the point of exit.

How do notice periods work for indefinite and probationary contracts?

Where the fixed-term exemption does not apply, notice is the next cost to plan. Under Section 17 of the Labour Protection Act, an employer can generally end an indefinite contract with written notice given at or before a pay date, and no more than three months' notice is required [1]. The termination then takes effect on the following pay date.

The employer can also pay wages for the notice period and end employment immediately, and under Section 17/1 that payment is due on the day the employee leaves[4].

Probationary contracts are generally treated as indefinite contracts. The same notice rules apply, and probation does not create a separate severance exemption, although severance only starts at 120 days of service[1].

Under Sections 17 and 119 of the Labour Protection Act, notice and severance are generally not required for serious misconduct listed in the Act [1]. Examples include dishonesty toward the employer, intentionally causing damage or breaching work rules after a written warning, which lasts up to one year. The employer must state the facts in the termination letter or at termination, or it cannot rely on them later[1].

Notice letters should be dated with the payroll calendar in mind. A letter served one day after a pay date can push the effective date out by a full pay cycle.

When does a dismissal become unfair under Thai law?

Correct notice and severance cover the statutory payments. The Labour Court can still ask whether the dismissal had a justifiable reason.

There is no fixed list of fair or unfair grounds, so the court looks at the facts of each case. Under the Act on the Establishment of Labour Courts and Labour Court Procedure, it can order reinstatement or compensation. Statutory severance tops out at 400 days of wages under Section 118 of the Labour Protection Act, but unfair dismissal compensation has no statutory maximum and is set by the court, which weighs the employee's age, length of service, hardship, the cause of termination and severance due [3].

That means weak paperwork can create a liability that lasts long after the exit[2].

Evidence that often supports a dismissal includes written performance reviews, warning letters and restructuring records that show how roles were selected. Documentation should be gathered before the termination meeting so facts are captured while recent.

What steps should an employer follow before ending a contract?

The legal tests above lead to a fixed sequence of steps. A skipped step often shows up later as an unpaid item in the exit cost formula.

Step 1: Classify the contract as qualifying fixed-term, non-qualifying fixed-term, indefinite or probationary. Use the signed contract and every renewal to do this.

Step 2: Calculate continuous service from the first day of employment, including renewals. This sets the severance entitlement.

Step 3: Document the reason with performance reviews, written warnings or restructuring papers.

Step 4: Serve written notice at or before a pay date, or pay wages in lieu, and keep proof of delivery.

Step 5: Run final pay within 3 days of termination, as Section 70 of the Labour Protection Act requires. This covers outstanding wages, severance, unused annual leave, PND.1 withholding and Social Security Office reporting, with any pay in lieu of notice due on the day the employee leaves[4].

Step 6: Archive the file for the long term, given the general 10-year limitation period in the Civil and Commercial Code[2].

Where a company outsources payroll in Thailand, final pay obligations still rest with the employer. The provider needs the termination date and the basis for the severance calculation in writing. With Settlr Global's payroll service, offboarding and final pay are handled alongside PND.1 withholding and SSO filings.

How does termination work under an EOR or for foreign employees?

The same rules apply when an employee is engaged through a third party. The difference is which entity carries the obligations.

When a company hires through an employer of record in Thailand, the Labour Protection Act applies to the EOR as the company that signed the employment contract, and Section 11/1 can also treat a business operator as the employer of people supplied for part of its own business[1]. With Settlr Global's employer of record service, the client keeps the decision to end employment and funds salary and statutory costs. The EOR acts as legal employer under its Thai company.

Before signing with an EOR or PEO in Thailand, HR teams should confirm in writing which entity is named as the employer. They should also confirm that ending the service and ending the employee's contract are handled as separate notices.

For foreign employees, termination generally ends the basis for both the work permit and the extension of stay tied to the job, and the employer must report the exit to the Department of Employment within 15 days[5]. The employee needs another visa route to remain in Thailand. Visa and work permit services cover the cancellation steps.

Some departing staff who plan to work remotely for overseas clients look at the Destination Thailand Visa. The DTV guide sets out the 2026 requirements, and approval rests with the Thai authorities.

Frequently asked questions

Is notice required to end a fixed-term employment contract in Thailand?

Generally no. Under the Thailand Labour Protection Act, a fixed-term contract ends on its stated date without advance notice. Severance may still be payable unless the contract meets the conditions for written project, temporary or seasonal work lasting no more than 2 years.

How is severance calculated in Thailand?

Severance is based on the employee's last wage rate and length of continuous service. It rises in tiers up to a cap of 400 days of wages. Check the current tier table with the Department of Labour Protection and Welfare.

Can an employer pay wages instead of giving notice?

Generally yes. The employer can pay wages for the notice period and end employment immediately. That payment is separate from severance.

How long does an employee have to file an unfair dismissal claim?

No official source sets a period specific to unfair dismissal. The Civil and Commercial Code applies a general 10-year limit where no specific period is set, so many employers may prefer to keep exit files for that long[2].

Does using an EOR change the termination rules?

No. The same Act applies, and the EOR is the legal employer. In an EOR arrangement, you decide when employment ends and fund the statutory costs.

About Settlr Global

Settlr Global is the operating arm of WOWS Global, a Singapore-incorporated corporate advisory and investment banking group, and an all-in-one platform for company setup, accounting and tax, payroll, visas and Employer of Record in Thailand. It brings those services under a single team, so founders do not have to coordinate separate local agencies. The platform has processed payroll and compliance work for 200+ clients across 15+ countries, from early-stage startups to established multinational enterprises. Its Employer of Record service lets companies hire in Thailand in about two days, with or without a local entity.

For help with employment contracts and exit planning, visit settlrglobal.com.

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