How much severance must a factory pay on termination, and when does it risk an unfair-dismissal claim?

Severance is calculated on a statutory length-of-service ladder under the Labor Protection Act, so the longer the service, the higher the pay, and any termination needs fair cause and the correct procedure. Terminating without cause or skipping steps exposes you to an unfair-dismissal claim and additional damages. Most factories lose these cases on missing documents and wrong procedure, not on the facts.

How can a factory lawfully reduce customs costs when importing machinery and raw materials?

Classify goods under the correct tariff code to avoid overpaying duty or facing back-assessment plus penalties, and use the privileges available to you — BOI exemptions, duty drawback on raw materials used in exports, and import into Free Zones. If customs assesses extra duty, you have the right to appeal and litigate the matter in the Tax Court.

What BOI and EEC incentives apply to factories, and what must you do to keep the privileges?

BOI grants corporate income-tax exemption or reduction, import-duty exemption on machinery and raw materials, land-holding rights, and easier work permits for foreign specialists; factories in the EEC (Chonburi, Rayong, Chachoengsao) gain extra tax, visa, and one-stop-approval benefits. After promotion you must report privilege use annually and meet all conditions, or the privileges can be suspended.

What environmental and safety duties does a factory have, and what should it do during a complaint or inspection?

A factory needs its operating licence (Ror.Ngor.4), an Environmental Impact Assessment (EIA) where the law requires one, compliant industrial-waste and wastewater management, and proper workplace safety. When facing a complaint or inspection, consult a lawyer immediately to prepare submissions to the Provincial Industry Office or IEAT and to defend any administrative or criminal proceedings and protect the licence.

What should a factory watch for on visas and work permits when hiring foreign specialists and migrant workers?

You must keep visas, work permits, renewals, and foreign-worker quotas fully in order for every foreign hire. Letting a foreigner start work before the permit is issued is an offence even if the visa allows residence. We time the filings to align so there is no gap in lawful employment.

Factory & Industrial-Estate Law in Thailand — Labor, Customs, BOI & Environmental (2026)

Why a factory in an industrial estate needs industry-literate counsel

A factory rarely faces just one body of law — it faces several at once: labor law, customs procedure, BOI privileges, Industrial Estate Authority (IEAT) regulation, environmental law, and immigration law for foreign staff. A mistake in one layer usually spills into another: an unlawful termination becomes a Labor Court case; a misdeclared tariff code can jeopardize BOI privileges.

This guide summarizes the issues factories in estates meet most often, so management can see the whole picture and know where to ask for advice.

1. Labor law — the number-one factory issue

A factory employs many people, which makes labor disputes its biggest legal risk. Get these right from the start:

Employment contracts and work rules — establishments above the statutory headcount must maintain and file work rules under the Labor Protection Act. Tight documentation reduces later disputes.
Termination and severance — severance is calculated on a statutory length-of-service ladder; the longer the service, the higher the pay. Termination needs fair cause and correct procedure, or you risk an "unfair dismissal" claim and additional damages.
Restructuring / line closures — mass terminations from replacing labor with machinery, or restructuring, carry special severance rules. Plan ahead.
Disputes and unions — collective-bargaining agreements, mediation, and Labor Court litigation.

Most factories lose labor cases on "missing documents" and "wrong termination procedure," not on the facts. Setting up the system early is far cheaper than fixing it later.

See our labor and termination services.

2. Customs and import duty — where money is most often lost

Factories importing machinery and raw materials have manageable tax costs if they use the right privileges:

Tariff classification and valuation — wrong classification means overpaid duty, or back-assessment plus penalties.
Exemptions and drawbacks — BOI privileges, duty drawback for raw materials used in exports, and import into Free Zones / free-trade zones.
Challenging customs assessments — when assessed extra, operators can appeal and litigate in the Tax Court — a core strength of the firm.

See tax and customs and international trade.

3. BOI investment promotion

Many estate activities qualify for BOI promotion, which grants key privileges:

Corporate income-tax exemption or reduction
Import-duty exemption on machinery and raw materials for promoted activities
Land-holding rights for promoted activities and easier work permits for foreign specialists

After promotion you must report privilege use annually and meet the conditions, or privileges can be suspended. See investment and BOI.

4. Land holding and leasing in estates

Foreign operators generally cannot hold land themselves under the Land Code, but estates offer lawful routes — land-holding rights under a BOI-promoted activity, rights under the Industrial Estate Authority law, or long-term leases. We will not build nominee-shareholder structures, which are an offence.

5. Factory environmental and safety compliance

Factory operating licence (Ror.Ngor.4) and modification/expansion
Environmental Impact Assessment (EIA) for activities the law requires
Industrial-waste and wastewater management to standard
Workplace safety and liability when accidents occur

When facing a complaint or inspection, consult a lawyer immediately to prepare submissions to the Provincial Industry Office or IEAT and defend related administrative/criminal proceedings to protect the licence. See compliance and environment.

6. EEC — special privileges for the Eastern industrial base

Factories in the Eastern Economic Corridor (EEC) — Chonburi, Rayong, and Chachoengsao (e.g., Amata City, Laem Chabang, Map Ta Phut, Eastern Seaboard) — receive extra tax, visa, and one-stop-approval privileges. Structuring to use EEC alongside BOI can cut costs significantly.

7. Foreign workers and work permits

Factories employing foreign specialists and migrant workers must keep visas, work permits, renewals, and foreign-worker quotas in order. Letting a foreigner work without a permit is an offence even if the visa allows residence. We time filings so there is no gap.

Common mistakes

Failing to maintain complete work rules and employment documents
Terminating without fair cause and correct procedure — unfair-dismissal claims
Misdeclaring tariff codes, or not using available drawback / Free Zone privileges
Letting BOI privileges lapse by missing reporting deadlines
Using nominee structures to hold land — unlawful and revocable
Letting foreign staff start work before the permit is issued

Talk to a lawyer for your factory

Suwanvara Law Firm acts for factories and operators across Thailand's industrial estates, with a bilingual Thai-English-Chinese team. Choose your estate to see area-specific services at our industrial-estate hub, or call for a free initial consultation: +66 92 254 2045.

— Business & Industrial Law Desk, Suwanvara Law Firm (established 1986)