Unfair Termination (Part 1)
Author: Mr. Worasete Phueksakon
Most employers misunderstand the law relating to terminating staff and as such are of the opinion that if they pay severance pay to a terminated employee according to the Labor Protection Act, they can terminate an employment contract for any reason whatsoever. Such a misunderstanding of the law can lead to an employer being subject to considerable legal liability as an affected employee may be able to claim compensation from the employer on the grounds of unfair termination or in some cases an employer may be forced to recall a terminated employee back to work again.
There are many issues which need to be examined when determining what constitutes an unfair termination, however in this article we will mainly focus on judgments of the Supreme Court in order to provide guidance on the issue.
To begin with, I would like to draw your attention to the substantive law on the topic of unfair termination which is detailed in section 49 of the Labor Court and Labor Procedure Law Act B.E. 2522 which provides that:
“With regard to the trial regarding the employer terminates the employment contract. If the Labor Court considers the employee is unfairly terminated, the Labor Court may order the employer to call the employee back to work with the same wage rate as the employee received before terminated. However, if the Labor Court considers the employer and the employee may not work together anymore, the Labor Court may specify the compensation which the employer will have to pay to the employee instead. With regard to the compensation, the Labor Court will consider from the age of the employee, the period of work of the employee, the hardship of the employee if he/she is terminated the employment contract, the cause of termination and the severance pay which the employee is entitled to receive”.
In determining whether an employee has been unfairly terminated the Supreme Court considers the cause of termination and whether the employee was reasonably terminated or whether the employer had a sufficient and justifiable reason to terminate the employment contract. If an employee is terminated due to no fault of their own, then such termination will be considered as an unfair termination.
In relation to what grounds would justify a reasonable termination, we need to consider the practical meaning of the word “reasonable,” The following case studies will provide some guidance on the matter.
1. Case Study One – Termination due to Employee Dishonesty
Generally speaking, if an employee is terminated due to dishonest conduct in the performance of their duties, the termination shall not be deemed as being unfair. In some cases, if the employees’ behavior was likely to be dishonest or distrustful, the employer may be able to terminate the employment contract without it being considered as an unfair termination despite the fact that the employer did not have any evidence to prove the employees’ guilt. The following judgments of the Supreme Court help to clarify the issue of dishonesty and if a termination based on this reason constitutes an unfair termination.
In red case number 6877/2544 the staff under the supervision of the employee embezzled the employers’ money. The court held that in such cases it is reasonable for an employer to feel distrustful for their employee and as such their termination would not be considered as being unfair.
In red case number 363/2546 the employee became aware that their employer faced a financial liquidity problem, however despite this knowledge the employee took advantage of their employer by means of constantly approving for their monthly wage in advance, which caused damage to their employer. The Court held that even if the employee’s actions were not, their conduct could be deemed as dishonest or distrustful behavior which would permit the employer to terminate the employee without it being considered as unfair.
2. Case Study 2 – Termination due to an Employee’s Illness
In order to fairly terminate the employment contract of an employee due to illness, the employer will need to be able to prove that the employee could not perform their duties at the same position and the employer didn’t not know when the employee’s health would return to a satisfactory state. The employer will also need to show that they could not arrange another suitable job for the employee. The following decisions of the Supreme Court illustrate what constitutes unfair termination when an employer terminates an employee’s employment contract due to illness.
In red case number 1849/2529 the employee suffered from severe diabetes which meant that the employee was unable to perform his duties as a driver. Due to the employee’s health condition, the employer was unable to know when the employee’s health would return to normal, moreover, the employer could not arrange a different work role for him to undertake. Therefore, the Court held that the employer was able to terminate the employment contract and that such act would not be considered as an unfair termination.
In red case number 2600/2529 the employee was a bus driver who frequently took sick leave. It was deemed that the employee was an invalid and as such could not perform his duties. Hence, the Court found that it was reasonable and fair for the employer to terminate the employment contract on the basis of the employee’s illness.
3. Case Study 3 – Termination due to a Serious Violation of Work Rules
In the case of a serious violation of an employer’s work rules, an employer can terminate the employment contract and such termination shall not be deemed as an unfair termination. The following cases give additional direction on when an employer can fairly terminate an employee due to a breach of work rules.
In red case number 5978/2549 the employer ordered their employees not to loan money to other staff within the Company, but the employee violated such order. The employee lent other employees money and charged interest on the loans at the rate of 10% per month which breached the criminal law according to the Interest Rate Prohibition Act B.E. 2475. The employee’s actions at work breached the criminal law, caused hardship to his colleagues and caused damage to the employer’s business; therefore the Supreme Court determined that the employee’s actions constituted a serious violation of the work rules that intentionally caused damage to his employer. Thus, the judges decided that the employer could terminate the employee’s employment contract and such termination would not be considered as being an unfair termination.
4. Case Study 4 – Termination due to Minor Violation(s) of Work Rules
In relation to the issue of unfair termination on these grounds, firstly, we need to consider whether the rules, regulations or orders of the employer are lawful and fair for the employees.
The orders of an employer which are considered lawful and fair for their employees do not include those orders which take away from an employees’ benefit without a justifiable reason. An example of an unlawful/ unfair order would be where an employer orders an employee to work at a lower job position or a job position with less remuneration. In such a case if the employee then fails to comply with such order and the employer then terminates the employment contract it shall be deemed to be an unfair termination. Moreover, if the employer terminates an employee due to the fact that the employee violated the employer’s work rules and the rules provided that such violations were not subject to the penalty of termination, then, such termination shall be deemed an unfair termination. The following judgments provide greater detail on termination based on minor violations of work rules.
In red case number 1947/1525 the employee was the purchasing manager who had a dispute with his employer regarding some goods. The employee expressed an opinion which was considered inappropriate by the employer, moreover the employee let his lawyer give notice on his behalf to the employer. The Court held that it was not reasonable enough for the employer to terminate the employment contract. Therefore, if an employee is terminated under such circumstances, it shall be deemed as being an unfair termination.
In concluding, readers should be aware that there are many other Supreme Court cases dealing with the issue of unfair termination. In our next installment we shall examine additional case studies in order to provide further practical guidance on when the termination of an employee will be considered as unfair.