How do draft an employment contract in Thailand?

Employment Contract

Under Thai law, it is not necessary to have a written contract to enter into a legally binding employment agreement but it is obviously strongly recommended to have a written contract to specify the details of the employment relationships.

The employment contract can be written in Thai or in English as long as the employee understands it. In practices, foreign owned companies tend to have a contract template in Thai and English for local employees and a template in English for their foreign employees.

New employees must be registered with the Social Security Office within 30 days from their first day of employment. If a company has 10 or more employees, it is required to prepare work rules and file them with the Labour department.

What details must be included in the work rules?

Work Rules

When a company has 10 or more employees, it is required to prepare work rules. The work rules will complement the employment contract of the employees and must contains details on the working days, overtime, leave, holidays, disciplinary measures and termination of employment.

The work rules must be displayed a the office and filed with the Labour department.

How to fire an employee in Thailand?

Termination of an Employee

Employment contract for an indefinite period (most of the contracts) can be terminated as follows:

• At any time by the employee by giving a written notice to the employer at least one payment cycle in advance (one month in practice) or more if the employment contract provides otherwise.
• At any time by the employer by giving a written notice to the employee at least one payment cycle in advance (one month in practice) or more if the employment contract provides otherwise. If the employer wants to terminate the employee immediately, a payment in lieu of the notice is required.

It is important to consult an expert before proceeding to the termination of an employee to avoid labour disputes. A statutory severance pay is due to the employee who has worked for at least 120 consecutive days (from 30 days salary to 400 days of salary depending on the duration of the employment). The calculation of the amount of compensation is not easy as severance pay is based on the wages whose definition is large (depending on the case it may includes allowances, benefits and bonus). When an employer wants to terminate an employee for cause without paying any compensation, it will likely be sued by the employee before the labour court. It must then collect evidence such as warning letters to mitigate this risk.

Labour Dispute Resolution

In Thailand, most of employment contracts are terminated by employees due to the high turnover. But when an employer wants to terminate an employee without paying any compensation, it is common for the employee to sue the employer for wrongful termination before the labour court. It should be note that even is the statutory severance pay is paid to the employee, the employee may still sue the employer for unfair termination and seek additional compensation.

In case of dispute, a mediation is organised between the employer and the employees. If it fails, the case goes to the labour court which tends to be in favor of the employee.