Govt urged to stop taxing severance pay

Govt urged to stop taxing severance pay

Labour activists are calling on the government to waive tax for workers made redundant and forced to accept severance payments to alleviate their financial burden.

A tax exemption would offer a lifeline to workers who lose their jobs during economic hardship brought about by the Covid-19 pandemic, said Manas Kosol, president of the Confederation of Thai Labour.

Mr Manas was referring to severance pay received from being laid off or dismissed.

According to law, any amount above 300,000 baht paid for severance pay will be subject to personal income tax -- ie if an employee received a severance payment of 450,000 baht, then 150,000 baht is considered taxable.

Mr Manas does not want the government to collect tax on the remaining amount of money.

This was one of several proposals floated at a recent online seminar on the grim situation faced by the workforce during the pandemic.

Mr Manas said the government should consider a tax break on severance payments made to laid-off workers as they struggle to find new jobs. He said the proposal will be forwarded to the government via Labour Minister Suchart Chomklin.

Mr Manas also voiced support for the proposed setting up of a risk mitigation fund to act as a guarantee that workers receive full amounts of compensation when their employment is terminated.

The setting up of the fund, which can be established under the labour protection law, was proposed by Manit Promkareekul, president of the Automobile Labour Congress of Thailand.

Under the proposal, both employers and employees will contribute to the fund.

According to Mr Manas, in many cases even though rulings are made in workers' favour, they do not get paid.

Siriwan Romchatthong, secretary-general of the Employers Confederation of Thailand, however, expressed caution over the proposed fund and called for opinions from all stakeholders.

She said businesses have similar costs including contributions to the social security fund and the provident fund.

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