An employee has missed target for months and the manager's patience is gone. HR asks: "If we run a PIP to the end, can we dismiss now?" The answer many employers hope for is yes, and without paying anything. That is not what Thai labour law provides. A PIP is a management tool, not a legal shortcut. Done properly, though, it gives the employee a real chance to fix the problem and gives the employer clear records if the parties have to part ways.
This guide explains how to build a PIP that can be verified. It follows on from what to do if you are dismissed, severance pay on termination and designing sales KPIs. Read it together with reducing wages, workdays or benefits if you are considering changing terms instead of dismissing.
The short answer
A workable PIP has four things: criteria that were set in advance and can be measured, a genuine chance to improve with support, written records at every step, and a clear line between performance problems and misconduct. But do not tell yourself that a PIP lets you dismiss without cost.
Legal basis. Severance on dismissal is in section 118 of the Labour Protection Act B.E. 2541. Notice is in section 17, and pay in lieu of notice is in section 17/1. The cases where severance need not be paid are in section 119, a specific list: dishonesty in the performance of duty, an intentional criminal act against the employer, intentional damage to the employer, serious negligence causing damage, breach of work rules after a written warning, absence without justification for three consecutive working days, and a prison sentence. Missing a performance target is not on that list. Work rules are in section 108. If the employee considers the dismissal unfair, section 49 of the Labour Court Establishment and Procedure Act B.E. 2522 allows the Labour Court to order reinstatement or compensation instead.
Our practical view. In performance dismissals the court tends to ask whether the employer stated the criteria beforehand, gave enough time and help, and treated others the same way. A complete PIP helps answer those questions, but it does not make the dismissal safe automatically and it does not erase the duty to pay severance.
Hypothetical. A company selling fertiliser and farm equipment in Mueang district, Udon Thani, has a territory sales officer of four years' service who has missed target for three quarters in a row. The manager wants to issue a "warning" and dismiss without severance. Here the low performance is a question of results, not breach of a rule. The company should run a PIP as described in this guide and be ready to pay severance if it ends in dismissal.
1. What criteria can be verified?
Criteria that a court and an employee can accept have these features.
- Set in advance. Not invented when dismissal is being considered. If annual targets were already notified, refer to that document.
- Communicated. The employee acknowledges in writing, not just in a meeting.
- Measurable. Numbers or evidence that can be checked, such as customer visits made, error rate, or tasks delivered on time.
- Consistent with peers. The same standard for the same role. A higher target for one person without a reason looks like targeting.
- Realistic. Take account of territory, selling season, tools and factors outside the employee's control.
| Write criteria like this | Avoid criteria like this |
|---|---|
| Visit at least 12 customers a month, logged in the system | "Be more proactive" |
| Submit the report by the 5th of each month | "Improve attitude" |
| No more than 2 order errors a month | Targets changed midway without notice |
2. What is a genuine chance to improve?
A PIP that is only a ritual before dismissal rarely survives scrutiny. It should include the following.
- Support. State the problems found, arrange training, have the manager or a mentor coach, and provide the tools needed.
- A reasonable period. The law fixes no number of days. It should be long enough to measure in practice. A role with a long sales cycle needs more time than one measured daily.
- Regular check-ins. For example every two weeks, where the employee can explain and give views.
- Written records. Summarise each meeting and have the employee sign, or record the refusal to sign with a witness.
3. How do poor performance and misconduct differ?
The key point: do not use a disciplinary warning for a pure performance problem. A section 119 warning is for breach of lawful work rules or orders. A warning stays valid for one year from the date of the offence. Putting a capability issue into a warning to create a ground for withholding severance usually fails and weakens the whole file.
| Performance problem | Misconduct | |
|---|---|---|
| Nature | Results below standard | Breach of rules or orders, or serious wrongdoing |
| Tool | PIP and evaluation records | Work-rules process, section 108 |
| Written warning | Not used as a section 119 warning | Usable, subject to conditions |
| Severance if dismissed | Payable under section 118 | May be excused if section 119 applies |
If conduct that is a real offence appears during a PIP, such as falsifying sales figures, handle it as a separate disciplinary track: establish the facts, let the employee respond, and choose the sanction the rules provide. See employee investigations.
4. What can a PIP do and what can it not do?
It can show the employee what must change, create evidence that the employer gave a chance, and let both sides decide on facts.
It cannot, and you should tell management this plainly:
- A PIP does not remove severance under section 118. Dismissal for performance does not fall within section 119, so severance is still due by length of service, for example 30 days for an employee who has worked 120 days but less than 1 year, and 90 days for 1 year but less than 3 years. See the full table in severance pay on termination.
- A PIP does not remove notice under section 17 or pay in lieu under section 17/1.
- A PIP does not stop a claim of unfair dismissal. The Labour Court still examines under section 49 whether the reason and the method were fair. The result depends on the facts and the court's discretion.
5. What outcomes are available at the end?
- Pass. Record the result and keep monitoring. Do not reopen the same issue without a new reason.
- Extend. Where there is progress but not yet the standard, or an outside factor intervened. State the reason and the new period in writing.
- Redeploy. If the issue is fit for the role. A move that significantly affects the terms of employment should have the employee's written consent.
- Mutual separation agreement. In writing, with time to consider and no pressure. The payment terms must not fall below statutory rights. See restructuring and redundancy planning.
- Dismissal with severance. Pay severance under section 118, give notice under section 17 or pay in lieu under section 17/1, and settle all outstanding wages and entitlements.
A sample PIP form you can adapt:
PERFORMANCE IMPROVEMENT PLAN (PIP)
Employee / position: ____________ Manager: ____________
Plan period: from ____ to ____ Check-in meetings: every ____ weeks
1. Performance issues found (facts and figures, with supporting documents)
2. Expected standard at the end of the plan (measurable, notified in advance)
- Measure 1: ____ Target: ____
- Measure 2: ____ Target: ____
3. Support from the company (training, mentor, tools)
4. Employee's comments
5. Record of each check-in (date / summary / signatures of both parties)
6. Outcome at the end: pass / extend / redeploy / mutual agreement / other
Note: this is a performance improvement plan, not a written warning under the work rules.
Acknowledged by the employee: ____________ Date: ____
6. How do we keep records and employee data safely?
Performance notes, scores and related emails are the employee's personal data. The employer has controller duties under section 37 of the Personal Data Protection Act B.E. 2562, including security and not keeping more than necessary.
- Limit access to the manager, HR and the relevant executives.
- Record work facts only, not personal opinions or unrelated family matters.
- Notes about health need particular care under section 26 and are often better kept separately.
- Set retention periods and a disposal method in policy.
See employee personal data and the PDPA for detail.
7. If it reaches court, which documents help?
The employer must be able to show that the reason for dismissal had substance and that the process was fair. Have ready: the job description and the targets notified, performance compared with peers, the signed PIP, notes of each check-in, evidence of training or help given, and proof that all entitlements were paid. See preparing the employer's Labour Court defence and when HR should get a lawyer to review.
Checklist before starting and before closing a PIP
Before starting
- Confirmed it is a performance problem, not misconduct
- Criteria written down, measurable, and the same for the same role
- Checked that the targets are achievable in the period given
- Employee informed and has signed to acknowledge
During the plan
- Training or mentoring provided as stated
- Check-ins held on schedule and recorded each time
- Employee's views heard
Before closing and deciding
- Assessed against the original criteria, with no new criteria added midway
- Severance and notice cost already assessed
- Documents stored securely in line with the PDPA
Further reading
- What to do if you are dismissed — the employee's view and what courts treat as unfair
- Severance pay on termination — the table of severance by length of service
- Designing sales KPIs and commission — write targets clearly from the start
- Reducing wages, workdays or benefits — when you consider changing terms instead of dismissing
- Annual bonus vs performance bonus — linking performance to reward correctly
- Employee resigns without handover — when the employee chooses to leave
- Preparing the employer's Labour Court defence — the documents and witnesses you need
A good PIP is not a shortcut to dismissal. It is a process that gets both sides to the same facts and gives the final decision a reasoned basis.
We help review and prepare PIP forms, work rules and mutual separation agreements to suit your business, and assess the severance exposure before you decide. For an initial consultation, call +66 92 254 2045 or send us the details. See also HR documents.
This guide is published by Suwanvara Law Firm — a Khon Kaen law firm established in 1986. General information only, not legal advice on a specific matter.
