Dear Karen,
We attach the draft response letter for your consideration. We note that the letter will be issued by B&M on behalf of Sika. Please find our response below, regarding the risk if Mr. Guise brings the case to the court.
1. Compensation for unfair termination
According to our analysis, there is a chance that the court may take the view that Sika cannot prove the poor performance, and award compensation for unfair termination. The amount of compensation is usually equal to one month's salary, at the employee's most recent wages rate, for each year of service. Therefore, the approximate compensation is 392,040*2 = Baht 784,080.
Nevertheless, Mr. Guise signed a waiver of rights. There is a chance that Mr. Guise may allege that he did not voluntarily sign the waiver, either because he was forced or as a result of fraud. However, the court will consider relevant factors including his position, education, and experience, in which we believe that the court is unlikely to believe that he was forced to execute the waiver, or executed it as a result of fraud. Therefore, the wavier of rights should be enforceable, and he should have no legal claim to this compensation.
2. Severance pay and payment in lieu of advance notice
Mr. Guise claims outstanding severance pay and payment in lieu of advance notice, as those payments did not include the pension fund contribution. Note that it is normal, in cases of termination of employment, for the ex-employee to claim compensation for unfair termination, even though he or she executed a waiver of rights. In addition, together with that compensation, the ex-employee will normally include all types of remuneration into wages which is the base amount when calculating severance pay and payment in lieu of advance notice. If Mr. Guise brings a case to the court, the court will determine the nature of each disputed element of remuneration to determine whether they are individually to be considered as wages.
In the precedents, the court has usually held the view that, if an employee regularly receives a fixed amount as reimbursement of costs, without regard to the actual costs that the employee has to pay, then such payments are wages. However, the above concepts are not exhaustive. If it can be satisfactorily proven to the court that the money was provided specifically for welfare purposes, such as to assist with the employee's living expenses, the court may take the view that the money was not paid in return for the employee’s work, and is therefore not considered wages under the law.
We anticipate that Mr. Liam would allege that the pension contribution is considered as wages as Sika paid this payment every month without any conditions. However, as mentioned above, the concept of fixed payment is not exhaustive. We believe that Sika has room to challenge such an assertion due to the following reasons:
2.1 The court's empowerment to determine wages is to prevent employers from separating remuneration paid to an employee, by giving the employee a very low basic salary and a high allowance. However, considering Mr. Guise's high amount of base salary compared with the amount of pension contribution (only 10 percent of the base salary), Sika have shown no intention to avoid wages or other payments calculated from wages.
2.2 According to clauses 3.2, and 3.3 of the employment agreement, Mr. Guise agreed that only the base salary was to be regarded as wages, and other allowances are not considered as wages. We are not aware of the precedents regarding such a clause but we believe that it should be enforceable, as the employer and employee should be able to agree on which money is regarded as wages or welfare.
2.3 Under the law, an employer has a duty to deduct some payments from the employee's wages e.g. withholding tax and social security payment. However, according to the precedents in which the employer did not deduct such payments, but paid such payments to the relevant authorities on behalf of the employee, such payments are not considered as wages as the purpose of them was to assist the employee's living. In our case, even though the work regulations state that the provident fund is for Thai employees only, if the provident fund's rules do not state the same, there may be a special arrangement between the employer and foreign employee to allow foreigners to be provident fund members. Nevertheless, we note that Mr. Guise is not a provident fund member, and that the pension contribution is not Sika's contribution to the provident fund. It is noted that Sika complies with the work regulations by not allowing Mr. Guise to be a provident fund member, therefore, Sika paid him an pension contribution which is about 10% of his base salary as welfare.
If Sika can prove the above facts in item 3, i.e. the purpose of the this pension contribution, together with the reasons in items 1 and 2, we believe that the court is likely to has a view that Mr. Guise's wages does not include the pension contribution. Therefore, Sika should have paid correct severance pay and payment in lieu of advance notice.
Regarding the waiver, there is a precedent in which the court ruled that a waiver of severance pay, one month after the employee no longer worked with the employer, is enforceable. There is no precedent in which the waiver was signed immediately after termination. However, we believe that there is a chance that the court will have the same view that the waiver is enforceable resulting in Mr. Guise having no legal claim to these payments.
Please let us know if you have any questions.
Best regards,
Ploy Chongcharoentanavat