Does a fixed-term contract really end without severance or other exit payments?

Businesses often use the labels:

• “fixed term”;
• “service contract”;
• “seasonal employee”;
• “intern”; or
• “project staff”

and assume the label determines the exit cost.

It does not.

A company hires an employee under a 12-month or two-year employment contract.

The employee performs a normal continuing function in the business.

At expiry, management says:

“The contract ended automatically, so there is no notice and no severance.”

Only the first half of that statement may be correct.

That does not mean every fixed-term employee loses severance rights.

The severance exemption has its own test under section 118.

a specific project outside the employer’s normal business, with definite start and end;

occasional work, with a defined completion or end; or

seasonal work, where the employee is hired for that season.

The work must satisfy the statutory conditions, including the prescribed duration and a written fixed-term contract made from the start of employment.

Although the contracts had definite dates, the Court held that the section 118 exemption did not apply because the work formed part of the employer’s ordinary hotel business.

That distinction is commercially important for recurring operating roles.

Section 20 of the Labour Protection Act and Supreme Court Judgment No. 1821/2545 address situations where successive periods are used in a way intended to deprive employees of statutory rights.

Supreme Court Judgment No. 14260/2558 distinguished early termination from expiry at the agreed fixed date and required the notice issue to be analysed accordingly.

The contract may also create claims relating to the unexpired period.

“No notice” and “no money owed” are not the same statement.

We review the actual duties, employer’s normal business, project or seasonal facts, written contract date, start and end dates, renewals, service continuity, early-termination rights, compensation structure and the reason employment is ending.

Typical mistakes are treating any end date as a severance exemption, repeatedly renewing ordinary roles, calling a permanent operating job “seasonal,” signing the fixed-term document after employment starts and confusing automatic expiry with early termination.

Before classifying an expiry as “no severance,” complete this test:

employee or contractor? → genuine fixed term? → statutory work category? → written from start? → work duration within statutory limit? → expiry at agreed date? → service continuity? → remaining exit payments?

If one element fails, price the exit under the ordinary employment rules.

• Labour Protection Act B.E. 2541 (1998), sections 17, 20 and 118.
• Supreme Court Judgment No. 4111/2564, on repeated fixed-term contracts for work forming part of the employer’s normal hotel business.
• Supreme Court Judgment Nos. 2403–2430/2543, on the statutory two-year condition applying to the qualifying work under section 118.
• Supreme Court Judgment No. 1821/2545, on expiry without notice and aggregation of successive employment periods where short contracts were used to avoid employee rights.
• Supreme Court Judgment No. 14260/2558, distinguishing early termination from expiry at the agreed fixed date.