Under Thai law employment contracts do not have to be in writing to be enforceable. Foreign employees, however, are advised to request a written contract to be certain of their employment terms and conditions. A foreign employee’s contract may be written in English, but will have to be translated into Thai if a copy is required when application for a work permit is made, or in the event that the contract must be produced in a court case.
The Labor Protection Act of B.E. 2541 (1998) and the Civil and Commercial Code lay out the rights and responsibilities of both employers and employees. Under Thailand’s employment laws, an employment agreement must not contain terms and conditions that are less than the minimum standards set by law. If the agreement contains a “non-competition” clause this part of the agreement falls under the Unfair Contract Terms Act.
The Labor Act covers all areas of employment, including working hours, holidays, overtime, sick pay, notice, permit when summary dismissal is not permitted, among others.
If an employee is dismissed for a reason that is not permitted under the Labor Act, in most cases they have a right to severance pay at rates set by the length of their employment period. The Act also provides for additional employee rights when dismissal is due to technological changes, and when it is due to a change in the location of the business or when a business ceases to operate. On a case-by-case basis, additional compensation for unfair dismissal can be considered by the Labor Court.
Both Thai and foreign employees are covered by the Act, whether they work for Thai companies or international companies doing business in the Kingdom. There are civil and criminal penalties that apply to employers failing to adhere to the law. Special rules apply to foreign employees and these are set out in the Foreign Employment Act.
A maximum probationary period of 120 days is allowed under Thai employment law. Employers are required to provide their employees with a minimum of 13 official public holidays per year, and an additional six vacation days after they have completed one full year of service. Employees are also entitled by law to 30 working days of sick leave per year, with full pay. In addition to the sick leave allowed, a woman who is pregnant is entitled to 90 days’ maternity leave, including 45 of those days at full pay. In addition to salary or wages, all benefits that are related to employment are considered assessable income for withholding tax purposes.
Terminating employment with cause, meaning without notice and compensation, is governed by both the Labor Act and Thailand’s Civil and Commercial Code. Causes applicable include gross negligence by the employee, willful disobedience, dishonesty or committing a criminal act. When employment is terminated without cause, the employer is obligated to make a severance payment to the employee, in addition to the required notice, according to the length of the employee’s continuous service.
Contact Juslaws & Consult for advice and assistance in the preparation of employment agreements and also in the event of any conflicts that may arise in the employer-employee relationship.