Notification on Compensation for Employment Contract Termination
Keywords: contract termination, compensation, seniority indemnity, payment of wages, FDC, UDC, labor law
On 21 March 2024, the Ministry of Labour and Vocational Training (“MLVT”) issued the Notification on Compensation for Employment Contract Termination (“Termination Compensation Notification”). The Termination Compensation Notification intends to avoid interpretations against the Labour Law and regulations concerning the payment of compensation for employment contract termination.
Workers/employees shall be entitled to the following wages and benefits after employment contract termination as follows:
| Termination Type | Contract Type | Rights and Entitlements |
| Termination by Employer without valid reasons | FDC | Unpaid wages (Article 116), payment for remaining annual leave (Articles 166&167), 5% severance pay of wages during the contract (Article 73), damages equal to wages until the end of the contract (Article 73) |
| Termination by Employer without valid reasons | UDC | Unpaid wages (Article 116), payment for remaining annual leave (Articles 166&167), payment instead of notice (Articles 75&77), seniority indemnity (new Article 89), damages equal to seniority indemnity (new Article 91) |
| Termination by Employer for serious misconduct | FDC | Unpaid wages (Article 116), payment for remaining annual leave (Article 166&167) |
| Termination by Employer for serious misconduct | UDC | Unpaid wages (Article 116), payment for remaining annual leave (Article 166&167) |
| Bankruptcy | FDC | Unpaid wages (Article 116), payment for remaining annual leave (Article 166&167), 5% severance pay of wages during the contract (Article 73) |
| Bankruptcy | UDC | Unpaid wages (Article 116), payment for remaining annual leave (Articles 166&167), payment instead of notice (Articles 75&77), seniority indemnity (new Article 89) |
Note: For bankruptcy, no damages are provided because the honor and dignity of the workers/employees who are terminated due to bankruptcy are not affected or misled by the public or other workers/employees into thinking that they have no ability or labor productivity. The loss of jobs of all workers/employees is not an element to get damages. Termination of workers/employees in part or other cases by the employer has an element affecting the honor and dignity and leads to doubts from other co-workers/employees about the ability or labor productivity or behavior of the terminated workers/employees.
For any Labour or Employment related inquiries, please feel free to contact the Labour Practice Group at SOK SIPHANA & ASSOCIATES.
