How Much Severance Pay Are You Entitled to When Laid Off?

Uncertainty is part of working life. If you ever find yourself facing the unexpected situation of being let go from your job, one of the first things to understand is the legal rights and entitlements that protect you - particularly your severance pay. This is the financial safety net that helps you stay afloat while you look for your next opportunity. Here's everything you need to know.

Severance pay is the amount an employer is required by law to pay an employee when their employment contract is terminated through no fault of the employee. It's a fundamental right under the Labour Protection Act, designed to give employees a financial cushion to cover living expenses while they're between jobs. Paying severance is a legal obligation for employers. It's intended to ease the impact of sudden income loss and give you the time and stability to get back on your feet.

The amount you receive depends on how long you've worked for that employer - the longer your service, the higher the entitlement. Under labour law, the rates are set as follows

• 120 days – 1 year : 30 days' wages
• 1 year – 3 years : 90 days' wages
• 3 years – 6 years : 180 days' wages
  
• 6 years – 10 years : 240 days' wages
  
• 10 years – 20 years : 300 days' wages
  
• 20 years or more : 400 days' wages
  

Once you know which bracket you fall into, calculating the actual amount is straightforward: Severance Pay = (Monthly Salary ÷ 30) × Number of Days Entitled. Take your final month's salary, divide it by 30 to get your daily wage, then multiply by the number of days you're entitled to under the law.

Say your final monthly salary is 30,000 baht and you've worked at the company for 4 years - which places you in the 180-day bracket.

Step 1: 30,000 ÷ 30 = 1,000 baht per day
Step 2: 1,000 × 180 = 180,000 baht
In this case, your severance pay entitlement would be 180,000 baht.

Many employees wonder exactly when the money will arrive after being let go. Labour law sets out a clear timeline to prevent financial hardship from a delayed payout:

• The employer must pay all severance and any outstanding wages by the date of termination or no later than 3 days from the effective date of dismissal.
  
• The termination must be through no fault of the employee. For example, due to company downsizing, business closure, or financial difficulties.
  
• The employee must have worked continuously for at least 120 days.
  
• This does not apply in cases where the employee resigned voluntarily.
  
• If the employer terminates employment without giving at least one pay cycle's notice (or 30 days), the employer is also required to pay compensation in lieu of notice on the date of termination.
  

While the law protects employees, there are specific circumstances under which an employer is not legally obligated to pay severance. Under Section 119 of the Labour Protection Act, severance is not required if the employee:

• Committed fraud or a criminal offence that affected the employer.
• Intentionally or through gross negligence caused damage to the company.
  
• Clearly violated workplace rules and regulations after receiving a written warning. (In cases of serious misconduct, no warning is required before termination).
  
• Abandoned their duties for 3 consecutive working days without reasonable justification.
  
• Has not yet reached 120 days of continuous employment.
  
• Has been sentenced to imprisonment by a final court judgment.
  

Workplace uncertainty is a reality, which makes having an emergency fund more important than ever. KKP Better - the financial planning app from Kiatnakin Phatra Bank - helps you manage deposits, loans*, insurance**, investment and retirement planning all in one place. If you need to boost your cash flow during a difficult period, the app offers loans that are easy to apply for and come with fast approval results* - helping you navigate any financial disruption with stability and confidence.

Understanding your severance pay rights means you'll be better prepared for the unexpected. But being proactive is even better - systematic financial planning for salaried employees builds the kind of security that lets you face any situation with peace of mind. Download the KKP Better app today to start managing your deposits, investments, and loans in one place. Let us help look after your financial security. So you're ready to move forward confidently at every stage of life.

*Warning: Borrow only what is necessary and within your repayment capacity. 

The Effective Interest Rate (EIR) ranges from 7.99% - 25% per annum.

Loan approval criteria and conditions are as determined by Kiatnakin Phatra Bank. Please study the product information in detail.

**Insurance applicants should understand coverage details and terms and conditions before making insurance decisions.

Kiatnakin Phatra Bank Public Company Limited acts solely as an insurance intermediary.

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