Thailand has one of the region’s steepest tenure-based severance ladders — from 30 days’ wages (under 1 year) up to 400 days’ wages (20+ years). Vietnam computes in monthly wages per year: 0.5 month/year (severance) and 1 month/year (job-loss). Converted to days’ wages, long-tenured workers cost far more in Thailand — but short-tenured workers cost more in Vietnam.
Thailand: the 30–400 days’ wages ladder under Section 118
Section 118 of the Labour Protection Act sets severance for termination without statutory cause (outside Section 119 cases — dishonesty, wilful damage, rule violations after written warning, 3 consecutive days’ unjustified absence, imprisonment), by tenure:
120 days to under 1 year: 30 days’ wages; 1 to under 3 years: 90 days’ wages; 3 to under 6 years: 180 days’ wages; 6 to under 10 years: 240 days’ wages; 10 to under 20 years: 300 days’ wages; 20 years or more: 400 days’ wages. (The 400-day tier for 20+ years was raised in 2019 under Labour Protection Act (No. 7).)
Notably: under 120 working days means no severance on no-cause termination. And tenure counts holidays, weekends and leave days.
Vietnam: 0.5 month/year and 1 month/year — converted to days’ wages
Article 46 of the Labour Code 2019: severance allowance 0.5 month’s wage/year (12+ months; UI time excluded). Article 47: job-loss allowance 1 month’s wage/year, minimum 2 months’ wages (structural/technological change or economic reasons; no UI deduction).
Converted (1 month ≈ 30 days): Vietnamese severance ≈ 15 days’ wages/year; job-loss ≈ 30 days’ wages/year (minimum 60 days’ wages). Against Thailand’s ladder:
5 years’ tenure: Thailand 180 days’ wages; Vietnam (job-loss) 150 days’ wages (30×5) — comparable. 10 years: Thailand 300 days; Vietnam 300 days (30×10) — equal. 20 years: Thailand 400 days; Vietnam 600 days (30×20) — Vietnam pricier. Under 1 year: Thailand 30 days (from 120 working days); Vietnam minimum 60 days (Article 47) — Vietnam pricier.
But with ordinary severance (Article 46, 15 days’ wages/year, minus UI time), Vietnam is cheaper than Thailand at every tenure mark. Vietnam’s two schemes are two completely different “prices” — and economic-reason cuts always use the higher price (Article 47).
Side by side: ladder or straight line?
Structure: Thailand uses a stepped ladder — one fixed rate per tenure band (jumps at 1, 3, 6, 10, 20 years). Vietnam is linear — 15 or 30 days’ wages added per year, no jumps. Consequence: in Thailand, cutting a worker just past the 10-year mark costs a full step more than cutting just before — timing matters.
Effective ceiling: Thailand caps at 400 days’ wages (20+ years). Vietnam has no absolute day-cap on job-loss allowance — 30 years’ tenure ≈ 900 days’ wages, far above Thailand’s cap. For lifers, Vietnam is “pricier”.
Minimum qualifying period: Thailand from 120 working days; Vietnam from 12 months of regular work. Short-term/probation workers are protected earlier in Thailand.
Misconduct dismissal: neither country pays severance for termination with statutory cause (Thailand Section 119; Vietnam: disciplinary dismissal is not a qualifying case). But “statutory cause” is defined differently — compare specifically, never transplant.
Practical recommendations
First, when cutting in Thailand, compute on the exact 6 tenure bands of Section 118 — linear conversion misprices at the jump points. Second, in Vietnam, classify Article 46 vs 47 correctly — double the gap with different UI treatment. Third, for 20+ year tenure, compare carefully: Vietnam (linear, uncapped) can exceed Thailand (400-day cap) — do not assume Thailand is always pricier.
Frequently asked questions
What is Thailand’s severance ladder?
Under Section 118 of the Labour Protection Act: 120 days–under 1 year: 30 days’ wages; 1–under 3 years: 90; 3–under 6 years: 180; 6–under 10 years: 240; 10–under 20 years: 300; 20+ years: 400. Not payable for dismissal with statutory cause (Section 119).
How many days’ wages is Vietnam’s 1 month/year?
About 30 days’ wages/year (1 month ≈ 30 days). Job-loss allowance (Article 47) ≈ 30 days’ wages/year, minimum 60 days’ wages. Ordinary severance (Article 46) ≈ 15 days’ wages/year.
For 10 years’ tenure, which is pricier — Thailand or Vietnam?
Roughly equal: Thailand 300 days’ wages; Vietnam (job-loss, Article 47) 30×10 = 300 days’ wages. But at 20 years: Thailand caps at 400 days, Vietnam reaches 600 — Vietnam pricier. For ordinary severance (Article 46), Vietnam is cheaper at every mark.
Should cuts happen before Thailand’s tenure jump points?
On pure cost, cutting before a mark (e.g. before 10 years) saves a full step. But layoff decisions cannot rest on severance cost alone — valid grounds, procedure and dispute risk all matter. Have every plan reviewed by local counsel.
Is severance paid on misconduct dismissal?
No — in both countries. Thailand: Section 119 lists no-severance cases (dishonesty, wilful damage, rule violations after warning, 3 days’ unjustified absence, imprisonment). Vietnam: disciplinary dismissal is not a qualifying case for either allowance.
For detailed advice on workforce reductions and compliance in Thailand or Vietnam, companies may contact FLAT Law Firm.
This article has been quality-reviewed by the FLAW AI Legal Council. Content was prepared by the FLAT Law Firm AI Legal Council and has not been reviewed by a human lawyer.
