An Australian hotel owner was allegedly murdered on his birthday by his furious employee's husband during an argument over her severance pay in Thailand.

Peter John Heppell, 57, a businessman behind Melina's Monkey House and Whale Bar, was celebrating with family and friends when the crazed attacker burst in on Sunday afternoon April 2.

The Aussie boss was repeatedly stabbed by the husband of a disgruntled former employee at his sprawling beachfront resort in Krabi province, where rooms cost around 20,000 Baht (580 USD) a night.

Peter died later in the hospital. Officers have now arrested Peerachut Songsri, 24, and were today questioning him over the murder.

Staff said their wealthy Aussie employer, from Perth, had begun talking with hot-headed Peerachut the husband of a sacked resort worker, to negotiate his wife's pay after she was fired from her job.

Peerachut was allegedly infuriated when the money he was offered was less than he expected. However, Peter's offer is understood to have followed state employment laws.

The attacker allegedly refused to listen and then grabbed a knife from the kitchen, stabbing at Peter and plunging the blade into his right abdomen before fleeing the scene on his motorcycle.

Resort staff told police they were on a break that time and did not see what happened, leaving a shocked customer to rush the bleeding Australian to a hospital, where he later died from his injuries.

His lung had been punctured from a stab through his ribcage, while his arms had also sustained multiple wounds.

One worker said that Peter was 'bleeding a lot' following the attack. He was rushed to hospital but could not be saved.

They added: 'Everybody is shocked and sad because Peter was such a nice man. He was kind to everyone.'

Police Captain Thirakorn Thaiyarit from the Ao Nang district police station received a report about the attack at 3 PM on Sunday afternoon.

Cops inspected the resort and found puddles of blood and a 12-inch kitchen knife covered in blood some 50 metres away from a bar pavillion.

Peerachut later turned himself in at the Ao Nang police station and reportedly confessed to the alleged murder.

Police Captain Thirakorn said: 'The suspect came to the station and admitted he was the attacker. However, he refused to disclose any other details during interrogation. We will also question his wife.

'The suspect has been kept at the station and will be questioned more before any charges are made.'

Officers said that they were also waiting for a detailed post-mortem examination report to asses how Peter was killed.

Police Captain Thirakorn added: 'If the victim had multiple wounds it is stronger evidence for the charges.'