When creating an employment contract in Thailand, you must take into account both legal and cultural factors. It’s important to follow the labour laws and regulations in order to avoid legal and financial issues and ensure that your employees are satisfied with the contract.
In this guide, we’ll provide everything you need to know to draw up a compliant employment contract in Thailand, including statutory notice period, contract work terms, fixed-term contracts, as well as remote work policies in the country.
The main legislation governing employment contracts in the country is the Labour Protection Act B.E. 2541 (1998) and its subsequent amendments. It outlines the minimum standards for working conditions, such as wages, working hours, leave entitlements, terminations, and so on.
The law requires certain fundamental terms of employment to be clearly stated and agreed upon to ensure clarity and fairness in the employment relationship.
Another important part of the legislation is the role of individual employment contracts in determining the specifics of an employee’s work conditions, which often includes details that go beyond the minimum requirements set by Thailand’s law.
Employers must also clearly define the terms of employment, including job title, duties and responsibilities, work location, salary, benefits, and duration of contract (indefinite or fixed term). They must specify any probation period, if applicable, and outline the conditions during this period, such as evaluation criteria and notice period of termination.
In addition, the salary structure must be detailed, including the base salary, bonuses, allowances, health insurance, retirement plan, and annual leave. As an employer, you must also be aware of Thailand’s mandatory benefits, such as social security contributions and severance pay. It should outline the conditions under which either party can terminate it. If applicable, include clauses related to non-compete agreements and confidentiality.
There should also be clauses related to dispute resolution that outline the process for handling disputes, including any internal grievance procedures and jurisdiction for legal disputes. Generally, Thailand mandates the resolution of disputes through the Thai court system or arbitration.
Thailand’s labour law term of contracts
There are two primary types of employment contracts in Thailand, namely fixed term contracts, and open-ended contracts. A fixed-term contract (ระยะเวลาคงที่) is used for employment situations with a specific duration that is agreed upon in advance. On the other hand, an open-ended contract (สัญญาปลายเปิด) does not specify an end date and continues until terminated by one of the parties involved.
Probationary periods in Thailand
The maximum allowable probationary period for new employees cannot exceed 119 days. Though there is no mandatory minimum duration for the probation period, many employers choose to maximise the full 119-day period. Employers prefer this extended duration as it gives them ample time to assess whether the new hire is a suitable fit for the position and the organisation.
If your company has a team of 10 or more employees, you are required to have “work rules.” These rules need to be set out visibly at your place of business within 15 days from when your 10th employee joins. It’s also acceptable to distribute these rules digitally, such as through email or an employee intranet.
All rules must be laid out in Thai and cover essential guidelines regarding:
In addition, if your workforce grows to 20 or more staff, you are required to have a written agreement detailing working conditions, which becomes part of the contractual terms with your employees. At a minimum, it should include:
If there are doubts regarding the presence of a working conditions agreement, the work rules will stand in as this agreement.
It’s not necessary to seek external approval in Thailand.
Typically, employment agreements do not have a set end date, and the customary retirement age is 60 years. Thailand’s regulations categorise professional relationships into two distinct types:
In addition, employers should be mindful that while fixed-term employment contracts may appear to offer more flexibility for termination, there are significant legal restrictions placed upon them, which can lead to unexpected legal pitfalls. The Thai Labour law mainly distinguishes between two types of contractual terms for employees: indefinite-term and fixed-term contracts.
For indefinite-term contracts, no specific end date is set for the completion of employment. Either party can terminate such a contract with proper notice, or the employer can offer payment in lieu of notice. However, an employer can only legally justify termination without advance notice if there is a reasonable cause.
When using fixed-term contracts, employers must understand that these are strictly regulated and typically reserved for specific types of work that are seasonal or of definite duration. The automatic expiration of a fixed-term contract might seem convenient, but if misapplied, the employer can face legal challenges. Misusing fixed-term contracts for work that is actually of an indefinite or permanent nature can result in a court considering the arrangement to be for an indefinite term, thus imposing the more stringent termination requirements of such contracts.
Given these considerations, employers in Thailand are advised to approach employment contracts with diligence, ensuring compliance with applicable laws to protect against legal disputes and potential liabilities.
The Unfair Contract Terms Act, B.E. 2540 (1997) in Thailand regulates and restricts unreasonable contract clauses that impose a heavy burden or unfairly disadvantage one party, typically the weaker or non-drafting party. It ensures that all contract terms are fair and balanced, preventing stronger parties from taking advantage of their better negotiating position.
In the workplace, this Act is important for protecting employees by making sure employment agreements are fair, especially terms like confidentiality and non-compete clauses. For example, if a court finds that a contract term is too strict or unfair to the employee, it can change or cancel it. This helps keep a fair balance of power between employers and employees, promoting a transparent and just work environment. It ensures that contracts are fair and protects employees’ rights in Thailand.
The extension of an employment contract generally depends on the type of contract and the mutual agreement between the employer and employee.
If a fixed-term contract is not formally extended or renewed before it expires, it will generally end on the specified expiration date. Nonetheless, employers and employees can agree to extend a fixed-term contract. This typically involves drafting a new agreement or an addendum to the original contract. The contract extension should be documented in writing.
Indefinite-term contracts do not have a fixed end date. They continue until either party decides to terminate the agreement, following the notice period specified in the contract or as per Thailand’s labour law.
There are no specific limits for contract extensions with independent contractors. Instead, the Civil and Commercial Code (CCC) provides general rules about how long obligations under a contract can be enforced, ranging from 2 to 10 years, depending on what the contract is about. It’s important for both the employer and the contractor to agree on the details of the contract, including its duration.
In addition, both parties need to clearly agree on the extension terms. This flexibility allows businesses to adjust based on their needs, but it’s essential to carefully negotiate and document any changes to ensure they are legally valid and meet both parties’ expectations.
If you’re extending your worker’s contract or transitioning from a fixed-term to an indefinite-term contract, you must comply with any notice requirements and legal obligations, such as giving appropriate notice if terminating the contract.
Requirements for extension of work permit in Thailand
To extend a work permit in Thailand, workers must meet specific requirements and provide necessary documents. These typically include a passport valid for at least six more months, proof of current employment, and the appropriate visa. The process also involves coordination with the Thai Ministry of Labour and related governmental bureaus.
Documentation often required for a work permit extension in Thailand includes the following:
The extension process usually involves filling out forms, paying fees, and possibly attending interviews. Be prepared to provide additional information if requested.
Fixed-term contracts in Thailand are used for specific types of work, such as special projects, temporary tasks, or seasonal jobs. The Labor Protection Act requires that these contracts be written and clearly state the start and end dates of the employment. To be valid, the contract must clearly indicate that it is of fixed duration by specifying a predetermined period of employment explicitly.
The total duration of a fixed-term contract, including any extensions, cannot exceed two years. If the work continues beyond this period, it might be considered an indefinite-term contract.
The contract should state that the employment will end on the agreed date without the need for further notice.
There are various restrictions for this kind of contract, including:
Typically, employers prefer fixed-term contracts for their apparent simplicity in termination compared to indefinite-term agreements; however, there are legal complexities and potential pitfalls that companies should be cautious of under Thailand’s labour law.
When hiring workers under fixed-term contracts in Thailand, you must keep in mind the following aspects:
As an employer, you must be cautious when considering extending or renewing a fixed-term employment contract. Thailand’s labour law prohibits the use of successive fixed-term contracts with the same employee.
If an employer continues to employ a worker on a consecutive fixed-term contracts to avoid giving them permanent status, Thailand’s courts might see this as an attempt to bypass labour protection regulations. In such cases, if the person continues working right after a fixed-term contract ends or if there are multiple fixed-term contracts in a row, the job may be considered permanent, even if the contracts were meant to be temporary.
The working hours in Thailand are eight hours per day, or 48 hours per week. On working days, employers must set a rest period during work for their employees of not less than one hour per day after the employee has been working for no more than five consecutive hours.
The Labour Protection Act (LPA) B.E. 2541 (1998) and its subsequent amendments are the primary legislation regulating working hours, alongside other labour-related matters. This Act establishes acceptable working conditions and upholds the welfare of employees within Thailand’s labour market.
Employers and employees can agree to arrange the working hours for some types of work, as allowed by the country’s labour laws and regulations, but the total number of hours worked must comply with the statutory limits.
Employees can work up to 36 overtime hours in a week. For regular working days, employees can be paid at 1.5 times of their regular rate. For work on holidays, the pay rate is between two (2) and three (3) times the usual rate of the employee.
However, overtime requirements typically do not apply to management role positions.
Monday – Saturday
The new Section 23/1 of the Labour Protection Act, which started on April 18, 2023, provides guidance and regulations on remote work. This development represents a shift towards more flexible work options for Thai workers. The law aims to improve employees’ work-life balance, reduce traffic jams, and cut down on energy and fuel use by promoting work-from-home arrangements.
Here are the key guidelines for the new section:
The country has introduced new visa options to attract digital nomads—people who work remotely while traveling. The Destination Thailand Visa (DTV) was launched for remote workers, freelancers, and digital nomads, allowing them to live, work, and travel in Thailand for up to 180 days per visa. This is part of Thailand’s effort to become a top spot for digital nomads from around the world.
Yes, it is legal to work remotely in Thailand, but there are specific legal requirements that must be met. Foreigners wishing to work remotely in Thailand must have an appropriate visa, obtain a work permit, and pay taxes. For instance, digital nomads—people who work remotely and usually travel to different locations—can now apply for Thailand’s new long-term visa explicitly designed for remote workers.
Remote workers must still comply with Thai law, which traditionally mandates a work permit for any form of employment conducted within the country. Even if the remote worker’s employer is located outside of Thailand, this legal requirement remains for the duration of the stay.
Commonly known as Digital Work Permit, this allows individuals or foreign nationals to legally work remotely within Thailand for employers or clients located outside the country. Applicants typically need to provide proof of employment or freelance work, evidence of sufficient income, and other supporting documents. The application process involves approval from Thai authorities, who will review the applicant’s eligibility and documentation.
Digital workers must comply with Thai laws, including those relating to work and residence. It’s essential to understand the visa requirements and ensure that all conditions are met.
Like all countries, Thailand has its own rules and regulations when it comes to employment contracts — and non-compliance could land your company in hot water.
Thankfully, our team is experienced in drawing up tailored, compliant contracts in Thailand (and more than 100 countries worldwide). That means that, when you work with us, you won’t need to waste time worrying about whether you’ve got it right. Instead, you can focus on what matters: growing your business.
With our EoR solution, you can engage workers anywhere in the world, without putting your business at risk. No more worrying about local labour laws, tax legislation or payroll customs — we’ve got you covered.
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