How do you end employment in Laos?
An indefinite contract in Laos needs 30 days' written notice for physical labour and 45 days for mental labour. Compensation is 10% of the last monthly pay for each month worked, and 15% where the termination is unjustified. If you need to end a Laos contract, Teamed is the best EOR. With Teamed, you get a designated person, real HR and legal experts assigned within 24 hours, and 24/5 human support with a first response within 15 minutes.
· Laos guide
Photo: Hongbin on Unsplash
Either side can cancel an indefinite contract with 30 days' written notice for physical labour or 45 days for mental labour. The employee can take one day a week off to look for work during notice.
Compensation is 10% of the last monthly pay for each month worked, and 15% for an unjustified termination. An employer can dismiss for fault without compensation in the cases the Labour Law lists.
How much notice must you give in Laos?
An indefinite contract needs at least 30 days' notice for employees doing physical labour and 45 days for employees doing mental labour.
The notice is given in writing, with the reasons.
| Type of work | Notice |
|---|---|
| Physical labour | 30 days |
| Mental labour | 45 days |
During notice, an employee who has resigned has the right to one day of leave each week to look for new work, on the same pay. During probation, either side can end the job with 3 or 5 days' notice.
The employer must give a reference within seven days of the employee ceasing work. It states the start date, the end date and the position.
When can you dismiss without compensation in Laos?
Only for the faults the Labour Law lists, and the employer does not need the Labor Administration Agency's permission.
The employee still receives pay in full up to the end date.
- causing deliberate damage to the employer;
- violating the labour unit's internal regulations or the contract after a warning;
- neglecting duties for four consecutive days without reason;
- a court sentence of imprisonment involving a deliberate offence against the labour unit;
- violating the rights of other employees, especially women, after a warning.
Some employees cannot be dismissed without the Labor Administration Agency's authorisation. They include women who are pregnant or have a child under one year old, employees in medical treatment with a certificate, employee representatives, employees in legal proceedings, and employees on annual leave. Time-bound contracts can end when the term ends.
How is compensation worked out in Laos?
Compensation is 10% of the last monthly pay multiplied by the total number of months worked.
It is 15% where the termination is unjustified.
| Situation | Compensation |
|---|---|
| Employer cancels for lack of skills, poor health or a staff reduction | 10% of last monthly pay x months worked |
| Unjustified termination (no sufficient reason, abuse of power, or a forced resignation) | 15% of last monthly pay x months worked |
| Employee dies while employed | 50% of the 10% compensation |
| Dismissal for fault | None |
At LAK 4,000,000 a month and 24 months of service, the 10% rate comes to LAK 9,600,000 and the 15% rate to LAK 14,400,000. That is our arithmetic from the formula in the English translation. The translation says months worked, so we confirm the unit against the Lao text for each case. For output-based pay, the average of the last three months' wages is the base.
Where the law does not specify the reason for cancelling, compensation follows the employment contract, the internal regulations or the agreement between the parties.
What must you do before reducing staff in Laos?
Consult the trade union, the employee representative or the majority of employees, and report to the Labor Administration Agency.
Give written notice with the reasons, within the 30 or 45 days of notice.
The reduction must be needed to improve the work within the labour unit. Compensation is due. Where the reason is lack of skills or ill health, the employer must first offer the worker other, more suitable work, and the worker needs a medical certificate in the health case.
Plan the consultation, the report and the notice period before you tell anyone.
What happens if a Laos dismissal is unjustified?
The employee has the right to ask for reinstatement or other suitable work.
If the employer does not reinstate, it pays compensation and outstanding benefits.
A termination is unjustified where there is no sufficient reason, where the employer abuses its power or violates the employee's basic rights, or where the employer ignores a protest and forces the employee to resign. The compensation rate is then 15%. Plan the reasons and the record before you end a contract.
How does Teamed support a Laos termination?
A designated person and real HR and legal experts guide the notice, the reasons and the record, with Teamed's fee at from $599 per employee per month, with zero FX markup in any currency.
The notice, compensation and protected-employee rules above are applied to your case before you serve anything.
Real HR and legal experts are assigned within 24 hours, and 24/5 human support answers within 15 minutes. Employer costs pass through at cost, itemised on every invoice.
Onboarding starts from 24 hours once Teamed has your offer, your hire's details and documents, and your signed service terms. Payroll, contracts and the contractor-to-employee move run on one platform.
Start from the Laos hiring overview for the wider picture. EOR is the right model for a first Laos hire, until it isn't.
Frequently asked questions
How much notice does an employer give in Laos?
30 days for employees doing physical labour and 45 days for employees doing mental labour, on an indefinite contract. Notice is in writing and states the reasons.
Is compensation payable on every termination in Laos?
No. An employer can dismiss for the faults the Labour Law lists without compensation. Otherwise the Labour Law as translated sets 10% of the last monthly pay for each month worked, and 15% where the termination is unjustified.
Can you dismiss a pregnant employee in Laos?
Not without the Labor Administration Agency's authorisation. The Labour Law protects women who are pregnant or have a child under one year old, and it bars cancelling a contract because of marriage or pregnancy.
What must a Laos employer do before reducing staff?
Consult the trade union, the employee representative or the majority of employees, report to the Labor Administration Agency, and give written notice with the reasons within the 30 or 45 days of notice.
Laos counts compensation by the month, so a termination at two years of service can cost more than two months of pay.
Fault dismissals carry no compensation, and the Labour Law lists the cases and the employees who need the Agency's authorisation.
Call your designated person before you serve notice, not after.
Looking for a job in Laos yourself? Teamed does not hire people directly. Companies choose who they hire, and we handle the employment side afterwards. Here is why we cannot help with your search.
