Thailand Employment Contracts

Thailand Contracts

Internationally minded companies hiring employees in Thailand must operate within a strict framework of legislation.

Most aspects of employment regulations in Thailand are based on the Employment Protection Act, the Employment Relations Act and the Civil and Commercial Code, with some aspects set by provinces.

These considerations come into play during the first stages of hiring, onboarding, and drawing up contracts with your new employees. Once Bradford Jacobs’ Professional Employer Organization (PEO) recruitment networks have located the best talent for your company, we step in to steer you through this crucial element of recruitment.

General requirements applying to all contracts include:

• The Employment Protection Act and the Civil and Commercial Code do not specify that a contract must be written, but it is advisable to put the key terms in writing as they form the working conditions
• If the contract is in English, for example, there should be a Thai translation if the employee is local. The Thai-language contract will be used in any legal disputes
• The Employment Protection Act says blue- and white-collar workers have the same protection under the law
• Employment contracts are generally either open-ended and indefinite, or fixed term
• Fixed-term contracts cannot include a probationary period and must specify an end date. If the end date is exceeded, it can be deemed to have become open-ended. Fixed-term contracts do not require an ‘advance notice’ of termination
• Probation periods are permitted but usually do not exceed 119 days, as employees are entitled to severance pay once they have worked for 120 days

In addition to individual contracts, employers must also apply workplace policies.

• Once a workforce reaches 10 employees the employer has 15 days to publicize workplace rules (in hard copy or electronically) detailing workdays, hours and breaks, vacation regulations, overtime, pay rates and schedules, disciplinary procedures, termination, and severance terms

In a workplace with more than 20 employees, the workplace agreement forms part of the employee’s contract

Employment Contracts in Thailand

Employers are recommended to put contracts in writing as they include the working conditions, but this is not legally required by the Civil and Commercial Code or the Employment Protection Act. Employers and employees are free to agree terms for their contract, but the Civil Code does not allow contracts that are disproportionately advantageous to the employer. Thai employees must be given a Thai version of the contract if it has been drawn up in English or another language. In the case of disputes, the Thai contract will be the valid version for the courts. Contracts that contravene statutory minimums will be considered invalid by the courts.

Main contract types include:

• Open-ended, Indefinite Employment Contracts: The most common type of employment agreement gives the start date and details of the agreement. These must include names and addresses of both parties; location of work; any probationary period (generally not exceeding 119 days); salary and working hours, breaks and vacations; any information regarding confidentiality and intellectual property if relevant. Open-ended contracts require ‘advance notice’ of termination, usually 30 days, unless termination is with due cause.
• Fixed-term, Definite Employment Contracts: These stipulate the start and end dates of the agreement and end on the expiry date without needing ‘advance notice’ of termination. They cannot be terminated before the end date unless there is due cause. The Thai Supreme Court ruled that if the contract includes provisions for it being terminated prematurely, it becomes an open-ended contract. The contract also automatically converts to open-ended if the employee is paid for continuing to work after the end date. Fixed-term contracts cannot include a probationary period.
• Probation Periods: These are allowed but generally do not exceed 119 days, as employers are required to make severance payments after 120 days of employment.
• Collective Bargaining Agreements (CBAs): Generally known under Thai law as ‘agreements relating to conditions of employment’ these apply at workplace level and must be implemented if the company has 20 or more employees. Once in force, the employer cannot enter any contract that does not comply with the agreement, unless it is beneficial to the employee. If employers want to change the collective agreement, they must negotiate with employees’ representatives under the terms of the Labor Relations Act.