Retirement Severance Pay at 60 in Thailand: How Many Days and How to Calculate It
Short answer: Under Section 118/1 of the Thai Labour Protection Act, retirement is treated as termination of employment, so the employer must pay severance based on length of service. An employee with 20 or more years of service receives 400 days of their final wage.
Severance rates under Section 118
120 days but less than 1 year: 30 days
1 year but less than 3 years: 90 days
3 years but less than 6 years: 180 days
6 years but less than 10 years: 240 days
10 years but less than 20 years: 300 days
20 years or more: 400 days
Example calculation
An employee earning 35,000 baht a month with 22 years of service. Daily wage = 35,000 ÷ 30 = 1,166.67 baht. Severance = 1,166.67 × 400 = 466,667 baht
If the company has no set retirement age
The law allows employees aged 60 or over to give notice that they wish to retire, taking effect 30 days after informing the employer. The employer must still pay severance at the rates above.
Why the finance team should care
This amount is the obligation the company must provide for under TAS 19. If you have several long-serving employees, the total can be very large.
Frequently asked questions
Is retirement severance pay taxable? It must be included in income tax calculations, but if the employee has worked for 5 years or more, they can choose to calculate the tax separately from other income, which usually reduces the tax. The tax exemption rules for severance have been updated in recent years, so check the latest rules with the Revenue Department before filing.
Which wage is used for the calculation? The final wage rate, excluding bonuses and overtime.
Does retiring before 60 under company rules still qualify for severance? Yes, because retirement under company rules is treated as termination.
Want to know your company's total retirement severance obligation? Let First Draft assess it under TAS 19. See our TAS 19 service
About the author: The First Draft Team, with 10+ years of experience across a wide range of industries and in TAS 19 employee benefit valuation.
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