The AI transition: A guide to smart employment transitions

The digital era has arrived, and AI is revolutionising businesses across industries, presenting exciting opportunities for growth and efficiency. However, these advancements come with new legal responsibilities for employers. If your organisation is planning to implement AI or new technologies that may affect your workforce, it is crucial to understand your legal obligations.
Thai labour law stipulates special obligations for employers in cases where employees are terminated due to workforce reductions resulting from the introduction or modification of machinery, or the implementation of new technologies that replace human labour. These special provisions apply when the employer undertakes:
In these scenarios, employers must adhere to specific legal requirements regarding termination notices, severance pay, and other obligations. These measures are designed to protect employees while allowing businesses to modernise and improve efficiency.
In general employment situations, Thai law requires that employers provide advance written notice of termination. This notice should be given when or before the due date for wage payment in any period, to take effect on the next due date for wage payment. Alternatively, employers may choose to pay wages in lieu of notice for the period specified and dismiss the employee immediately.
However, when terminating employees due to technological improvements, such as AI implementation, there are special requirements. You must inform affected employees at least 60 days before the termination date. This notice must include important details such as the termination date, (ii) the reason for termination, and (iii) a list of affected employees. Additionally, you are required to notify the labour inspection officer of these changes.
Employers are required to provide severance pay to terminated employees based on their length of service. The general severance pay structure is as follows:Service years with employer    Rate of severance payment120 days to 1 year    The last 30 days’ wage1 year to 3 years    The last 90 days’ wage3 years to 6 years    The last 180 days’ wage6 years to 10 years    The last 240 days’ wage10 years to 20 years    The last 300 days’ wageMore than 20 years    The last 400 days’ wage
It is important to note that terminations due to AI implementation or technological improvements come with additional severance requirements. On top of the standard severance pay, the employer is required to provide special severance pay in the following cases:
1. The employer fails to notify the employee to be terminated in advance or provide the notification in less than 60 days before the termination date: Special severance pay in lieu of advance notice equal to the last wage rate for 60 days or equal to wages for the last 60 days of work for employees who receive wages based on work output calculated per unit. When special severance pay has been paid, it shall be deemed that the employer has paid wages in lieu of advance notice.
2. If that employee has worked continuously for more than six years: Special severance pay of not less than the last wage rate for 15 days per year of service, or not less than wages for the last 15 days of work per year of service for employees who receive wages based on work output calculated per unit. However, the total amount must not exceed the last wage rate for 360 days or not exceed wages for the last 360 days of work for employees who receive wages based on work output calculated per unit.
Note: If an employee’s working period is incomplete but exceeds 180 days within a given year, it will be considered as a full year of service.
Although the Thai labour law does not clearly specify the definition of “Unfair” termination, it is  crucial to understand that all terminations must be justified and reasonable. Failure to meet legal requirements or provide valid reasons for termination could lead to serious consequences. These may include legal disputes, court-ordered reinstatement of employees, or costly compensation payments. By following proper procedures, you can safeguard your company against potential legal challenges and financial risks.
Moreover, your responsibilities extend beyond these primary considerations. As an employer, you must also address issues such as payment of wages for unused leaves, withholding of taxes, issuance of work certificates, management of social security fund and compensation fund matters, and others.
As an employer considering the use of AI or advanced technology to optimise your business operations, it is crucial to approach workforce changes with careful consideration of your legal obligations. Proper handling of employee terminations not only ensures compliance with Thai labour laws but also protects your company’s reputation and minimises the risk of costly legal disputes.
Navigating the legal intricacies of AI-driven workforce changes can be complex and time-consuming. Qualified advice on employment laws and trends, labour and human rights, handling demands of labour unions and retaining talents, especially during spinoffs or reorganisation are necessary to maintain business success. Contentious employment law disputes are often a worst-case scenario for all parties involved. Our experienced legal team is here to guide you through every step of the process, ensuring that your technological transition is not only innovative but also fully compliant with Thai labour laws.
Authors: Chai Lertvittayachaikul, Partner ([email protected]) and Tossavajra Siriratusdorn, Associate, ([email protected]) For more information on Kudun and Partners, please contact Ben Cheok, Head of Business Development ([email protected]).
Series Editor: Christopher F. Bruton, Executive Director, Dataconsult Ltd, [email protected]. Dataconsult’s Thailand Regional Forum at Sasin provides seminars and extensive documentation to update business on future trends in Thailand and the Mekong Region.