Employment Contract

An employment contract is a contract between an employee and an employer. In the employment contract, the employee undertakes to perform work (provide a professional capacity) for the employer in exchange for a defined remuneration. The employment contract is legally binding for both the employee and the employer and defines the subordination of the employee to the employer in the performance of his or her work. This contract is governed by Thai law, the Labor Protection Act. In Thailand, there are four different types of employment contracts:

An open-ended contract is the standard and general form of the relationship with your employer. Its end date is not initially set out in the contract. It can be terminated at any time by either the employer or the employee in the following ways:

A fixed-term contract is an employment contract concluded for a limited period. It automatically ends on the date or at the end of the period fixed at the time of hiring. This is also known as the “term” of the contract. This term is either precisely defined by a date or linked to the purpose of the agreement. Neither the employer nor the employee may terminate the fixed-term contract before the term set.

A temporary employment contract is drawn up for an employee to carry out a specific assignment in a company for the duration of the assignment. Each assignment gives rise to a temporary employment contract between the employee and an employer. This is also known as an assignment contract.

A part-time contract is a contract where the working time is less than full-time. It can apply to all types of contracts: open-ended contracts, fixed-term contracts, temporary work, etc.

Companies in Thailand often do not protect themselves sufficiently against possible future conflicts with their employees. With Themis Partner, our employment contract sample ensures that the employee is fully informed of his or her obligations and has agreed to the employer’s terms. It can also protect the employer from unfair competition, through a non-competition clause, or against the disclosure of confidential information related to his or her business or working methods.

You should have conducted interviews and filled in employment application forms, selected the ideal candidate or already given them an employment offer letter, and decided on the type of contract you are offering: permanent, fixed-term, full-time or part-time. The drafting of an employment contract is not mandatory in Thailand. In any case, it is strongly recommended to formalise any employer-employee relationship in writing to avoid any conflicts.

Before drafting, gather the information that must be stated on the employment contract:

This information is often completed by one or more optional clauses or contracts negotiated between the employer and the employee, such as a non-competition contract, a confidentiality agreement.

Depending on the type of contract, the contractual conditions of an employment contract may be different. Your employment contract should also take into account the position and tasks of the employee.

Avoid certain practices prohibited by Thai law. There are many illegal clauses. Among the practices that are not allowed are a salary that is lower than the minimum monthly wage and financial penalties if your employee is late, for example. Finally, it is also not legal to include a unilateral change clause in the employment agreement. Any changes to the employment contract must be agreed between the employer and the employee.

In Thailand, it is not mandatory to have a written employment contract between the employer and the employee. However, it is strongly recommended to have a written contract to avoid any difficulties in case of a dispute with your employee and to protect your business. Without a written contract, the employer will face many risks. Indeed, in the event of a dispute with an employee in the absence of a written contract, the judge will have to determine all the terms between the employee and the employer. Thus, in the absence of a written contract, the employer will have to provide all the evidence relating to the employee’s salary and financial compensation, the working hours, the tasks to be carried out, confidentiality, non-solicitation of clients and partners.

In Thailand, it is not mandatory to have a written employment contract between the employer and the employee. However, it is strongly recommended to have a written contract to avoid any difficulties in case of a dispute with your employee and to protect your business. Without a written contract, the employer will face many risks. Indeed, in the event of a dispute with an employee in the absence of a written contract, the judge will have to determine all the terms between the employee and the employer. Thus, in the absence of a written contract, the employer will have to provide all the evidence relating to the employee’s salary and financial compensation, the working hours, the tasks to be carried out, confidentiality, non-solicitation of clients and partners.

The employment contract creates obligations for both the employee and the employer. The main responsibilities of the employer are:

1. Paying the employee a salary: The employer must pay the employee as agreed. The term “salary” is used here in a broad sense: salary, bonuses, holidays, company car, insurance. Subject to laws of public order, including the Labour Standards Act, the employer must pay the employee the amount and frequency agreed upon. As a general rule, the employer cannot unilaterally change the remuneration agreed between the parties. However, for serious economic reasons the employer may have to freeze or reduce the income. The main condition is that this is done in good faith and without discrimination. The employer is not obliged to give a pay rise unless he has agreed to do so.

2. Provide the work as agreed with the employee: This obligation includes the obligation to provide the workplace, to make it accessible and to provide the tools, equipment and other means necessary to perform the work. It should be noted that this obligation can be modified by contract.

3. Respecting the legal provisions: The employer must perform the contract in good faith. He must therefore respect the conditions of the contract: provide the work and the means to carry it out, pay the salary, allow the employee to benefit from the company’s regulations. The employer may be held civilly liable in case of non-compliance with his obligations. The employee can claim compensation from the employer for the damage caused by the employer’s fault or negligence. The employer is liable for damages caused by third parties exercising authority over his employees.

4. The performance of work: It is also possible to engage the employee’s responsibility since the employer is not the only one who has to respect his obligations. Thus, in return for the obligation to provide work, the employee must conscientiously carry out the task. This implies that the employee adopts an attitude that avoids mistakes or negligence.

Furthermore, given the subordination relationship between the employee and the employer, the latter must respect the discipline and directives of his superiors. The employee also has a duty of loyalty which can be reinforced by the inclusion of a non-competition clause.

Therefore, the violation of any of these obligations can lead to various sanctions ranging from a warning to liability of the employee. As far as sanctions are concerned, failure by the employee to comply with these obligations may have disciplinary consequences as provided for in the internal regulations and may even lead to dismissal, as failure to comply with the obligations may constitute grounds for dismissal. If your employee is negligent or fails to fulfil certain duties and/or obligations, we recommend that you write an employee warning letter to avoid problems in the future in the event of dismissal. The letter will show your good faith.

5. Compliance with working hours: Working hours are defined as the arrival and departure times from the company as well as the break times for each working day. An employee who frequently arrives late or leaves too early is at fault. The manager must then ask the employee to respect the working hours. If the employee continues to be late, the manager can initiate a disciplinary procedure. Occasional lateness is not sufficient to justify dismissal.

To protect your business, managers need to know and master the key terms of the employment contract. This could enable the company to avoid costly legal setbacks.

1. The employee’s remuneration: This must be determined according to objective and precise criteria that do not depend solely on the employer. The salary cannot be lower than the minimum imposed by Thai law. In general, Thai law does not allow changes to be made to an employee’s salary without their agreement. The agreement of both parties is required, even for the method of remuneration. Variation clauses are possible in the employment contract, as long as they do not reduce the income below the legal minimum.

2. The exclusivity clause: The exclusivity clause allows the employer to prohibit the employee from carrying out an external activity, even a non-competitive one, during the period of execution of the employment contract. It differs from the non-competition clause, which concerns the period after the end of the employment contract. On the other hand, it can only be validly included in a part-time employment contract if it is essential for the protection of the legitimate interests of the company, justified by the nature of the task to be performed and proportionate to the aim sought. Themis Partner has lawyers specialised in employment law who can add these clauses to your contract if necessary.

3. Confidentiality clause: The confidentiality clause, or discretion clause, obliges the employee to keep certain information that he/she may have knowledge of in the course of his/her duties. It protects the interests of the company by prohibiting the employee from disclosing certain essential details.

Other clauses can be added to a Thailand contract depending on the function your employee will perform. In any case, we recommend that you seek legal advice in drafting employment contracts for your employees, especially for managerial and executive positions, in order to protect the company’s databases, customers and resources.

According to the Ministry of Labour, a rider is necessary when one or more essential elements of the employment contract (salary, qualification, working hours and place of work, etc.) are changed or when a “clear and precise” clause (non-competition, mobility, standby duty, etc.) is added. Its application requires the employee’s agreement. Only the modification of the constituent elements of the initial contract (assimilated to an adaptation of the contract itself) requires the conclusion of a rider. It is not necessary in the case of a change in working conditions (new environment, clothing, etc.) decided by the employer in the context of his power of direction. The employee has agreed to be bound by it when signing the employment contract. And he/she can be sanctioned, or even dismissed, if he/she opposes it.

Improvising the drafting of an employment contract means taking a lot of risks for the uninitiated. With Themis Partner, download your employment contract in Thai and in English and have a lawyer specialised in Thai employment law assist you in drafting your agreement if necessary.