Entity Closure Without Chaos: How EOR Ensures Business Continuity in Thailand

Entity Closure Without Chaos: How EOR Ensures Business Continuity in Thailand

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Winding down a business in Thailand is never simple. Between lengthy regulatory procedures and strict labor laws, companies often struggle to exit cleanly—especially when it comes to employee termination and preserving key talent.

But closure doesn’t have to mean disruption. With an Employer of Record (EOR), businesses can retain talent after closing down and continue operations without a legal entity on the ground.

Here’s how it works—and why EORs are becoming a strategic exit tool for companies in Thailand.

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Navigating the Legal Closure Process in Thailand

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Closing a Thai company involves more than just stopping operations. According to Thailand’s Department of Business Development (DBD), a legal dissolution requires:
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• A special shareholders' resolution (with at least 75% approval)
• Filing the dissolution notice with the DBD within 14 days
• Publishing a creditor notice in a local newspaper for 30 days
• Liquidating assets, paying off debts, and finalizing tax obligations with the Revenue Department
• Deregistering the company and obtaining a formal certificate of dissolution

Depending on the structure and complexity of your business, the full process can take several months (DBD Thailand).

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Thai Labor Law: Termination Is Heavily Regulated

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Beyond the administrative work of shutting down a company, terminating staff in Thailand requires close adherence to the Labour Protection Act B.E. 2541 (1998).

Here’s what you’re obligated to do:

• Notice of termination: Employers must give written notice at least one full wage cycle in advance (usually 30 days), or pay salary in lieu of notice (Section 17). 
• Severance pay: Compensation is calculated based on tenure. For example:
  • 120 days to <1 year: 30 days’ pay
  • 1–3 years: 90 days’ pay
  • Over 20 years: up to 400 days’ pay

(Sections 118-122) | Thailand Law Library)

• Unused leave: All accrued but untaken leave must be compensated. 
• Payment deadline: All amounts owed must be paid immediately or within 7 days of termination (Benoit & Partners). 

Failure to comply with these provisions may result in legal disputes or claims for unfair dismissal, even if severance is paid.

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The Real Cost of Closure: Losing Your Team

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For many companies, the greatest risk during entity closure isn’t regulatory—it’s losing talent. Letting go of trained, experienced staff means losing institutional knowledge, customer relationships, and momentum.

For global companies with regional projects, this can result in missed deadlines, revenue loss, and higher costs when re-entering the market in the future.

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The EOR Solution: Retain Talent Without a Thai Entity

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This is where an Employer of Record (EOR) becomes a strategic asset.

An EOR legally employs your staff on your behalf, ensuring full compliance with Thai labor laws. While your Thai entity is closed, your employees continue working—just under the EOR’s legal structure.

Here’s how it works:

1. You complete the required employee termination process in compliance with Thai law. 
2. The EOR immediately rehires your staff under compliant employment contracts.
3. The EOR takes care of payroll, tax contributions, social security, and benefits.
4. Your business retains operational control—your people, your systems, your work.

This allows you to retain talent after closing down and keep your Thailand operations running without legal or administrative risks.

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Why EOR Is a Smart Move

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Compared to other approaches, EOR provides a fast and flexible way to ensure continuity:

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EOR is often the only viable way to keep employees without a Thai legal entity—especially if your business requires local expertise or ongoing service delivery.

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Best Practices for a Smooth Transition

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To successfully close your Thai entity while protecting your workforce, consider the following:
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• Plan your timing carefully: Engage an EOR before issuing termination notices to avoid employment gaps. 
• Communicate transparently: Reassure employees that their employment will continue under a new structure. 
• Document everything: Termination letters, severance calculations, and new contracts via the EOR. 
• Work with experts: Choose an EOR provider with proven knowledge of Thai labor law, payroll compliance, and HR operations. 

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In Summary

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Closing a Thai entity doesn’t have to mean shutting down your business.

With a compliant EOR arrangement, you can:

• Fulfill all employee termination obligations under Thai law 
• Retain talent after closing down your company 
• Use an EOR to keep employees legally and productively employed 
• Maintain business continuity without disruption or delay

For businesses exiting Thailand but looking to preserve their team and operations, an EOR isn’t just an option — it’s a strategic advantage. Speak with us today to find out how you can retain your talent in Thailand.

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