Hire in Thailand

Contracts are generally indefinite, with a fixed retirement age at 60.

Thai labor laws distinguish between the following:

• Hire of work (independent contractor relationship), governed by the Thai Civil and Commercial Code.
• Hire of service (employment relationship), primarily governed by the Thai Labour Protection Act BE 2541 (1998).

For an employment relationship, employer and employee can agree on indefinite term or fixed-term employment contract:

Indefinite Term

When there is no specified end date, the contract can be terminated by either party with notice or with payment in lieu of notice. An employer can terminate the contract without advance notice only with cause.

An employer with 10 or more employees is required to file work rules with the Thailand Ministry of Labor. The employer is also required to maintain an employee register with specific requirements in Thai. The work rules must contain the following details at minimum:

• Normal working days, normal working hours and rest periods
• Holidays and rules for taking holidays
• Rules governing overtime and holiday work
• Date and place for payment of wages (including overtime, holiday and holiday overtime pay)
• Leave and rules for taking leave
• Discipline and disciplinary measures
• Lodging of grievances
• Termination of employment and severance pay

Work rules must be announced within 15 days of the company employing 10 or more persons. A copy of such rules must be kept at the place of business and a copy must be distributed to employees.

An employer with 10 or more employees must maintain employee records in Thai language containing the below information:

• Name, surname and gender
• Nationality
• Date of birth and age
• Address
• Start date of employment
• Position and duties
• Rate of wages and other benefits
• Date of termination

The employer must keep the record of employees for not less than two years from the date employment was terminated.

An employer with 10 or more employees must file a report on the conditions of employment and working conditions to the Director-General every January.

Probation period is allowed and no maximum period is stipulated. However, it should generally be for not more than 119 days as severance will be triggered at 120 days.

If the probation period is extended – and if the combined length of the initial and extended probation be 120 days or more – the employee may be entitled to severance pay in the event of termination.

In general, the maximum working hours is six days a week with up to eight hours a day. The working week is not to exceed 48 hours. If a working day is shorter than eight hours, it can be extended to nine hours by mutual agreement, as long as the total working time does not exceed more than 48 hours a week.

An employer must provide employees with a rest period of at least one hour for every period of work of five consecutive hours or more. An employer and employee can agree in advance that a rest break will be less than one hour. However, when combined together, the total break time cannot be less than one hour for each workday.

Total working hours, including one hour rest and any overtime, must not exceed 11 hours in a day.

At least one day a week must be designated as a paid rest day, which is usually Sunday.

For overtime on a regular work day, overtime pay is at 1.5 times the hourly wage.

For overtime on a rest day, public holiday or annual leave day, the rate is:

• Normal working hours on a holiday: two times the normal hourly wage
• Overtime hours on a holiday: three times the normal hourly wage

A bonus or extra month of salary is not required and is considered to be an extra benefit an employer can provide to an employee. The employer decides the amount of such a discretionary bonus.

An employer or employee can terminate an employment contract by giving advance notice in writing to the other party. It is generally a one-month notice period, unless other terms are provided for under the employment contract.

If the employer wishes to terminate the employment contract with immediate effect, without an advance notice period, the employer must pay salary in lieu of notice.

For termination without cause, the chances of the terminated employee filing a claim of unfair termination with the labour court is very high. In such a scenario, the claims including the final settlement and lawyers’ fees will exceed any compensation.

Advance notice or payment in lieu of notice does is not required if employment is terminated due to serious misconduct by the employee, for example in the below cases:

• employee was dishonest in carrying out their duties or if a criminal offence was committed
• employee caused wilful damage
• employee’s negligence caused serious damage to employer/put others at risk
• employee violated work rules, regulations or orders even with written warning from employer
• employee was absent for 3 consecutive days without notice or any justifiable reason
• employee sentenced to imprisonment

When an employment contract is terminated, the employer must notify the termination to the Social Security Office. When the termination concerns a foreign employee, the employer must notify the termination to the Department of Employment of the Ministry of Labour, and the Immigration Bureau.

The advance notice period in Thailand is 30 days or payment of 30 days in lieu.

The amount of severance is based on the employee’s length of service. If an employee is terminated without a valid cause as stipulated by law, he or she is entitled to receive the following severance pay:

• 30 days’ wages where the employment period is at least 120 days but is less than one year (120 days – 1 year)
• 90 days’ wages where the employment period is at least one year but is less than three years (1 – 3 years)
• 180 days’ wages where the employment period is at least three years but is less than six years (3 – 6 years)
• 240 days’ wages where the employment period is at least six years but is less than 10 years (6 – 10 years)
• 300 days’ wages where the employment period is at least 10 years but is less than twenty years (10 – 20 years)
• 400 days’ wages where the employment period is twenty or more (20 years and above)

A dismissed employee is also entitled to all of the following compensation:

• outstanding salary or other expenses
• payment in lieu of advance notice (if no advance notice is given)
• payment for accumulated holidays from previous year
• payment for pro-rated unused leave for current year

Severance payment is not paid to employees terminated for serious misconduct.

Termination payments, including current month salary, unused annual leave and severance pay (and overtime, if any), must be paid to the employee within three days of the date of termination. However, payment in lieu of notice is payable to the employee on the date of termination.

The law in Thailand does not prohibit the employer from restricting an employee’s activities during employment and after termination.

Non-competition and non-solicitation clauses are considered to protect commercial rights and benefits of both parties. This must be a reciprocal agreement where:

• Enforcing it does not obstruct the employee from making a living.
• It is enforced for specific businesses only and for a defined period that is considered to be fair.
• The restriction can be for a time period or by geographical area.

Fixed-term contracts can only be used for certain types of work (e.g. special projects for up to two years or work of a temporary nature and seasonal work). The Labor Protection Act governs fixed-term employment contracts and stipulates that it must be in writing when the employment commences. Fixed-term contracts must explicitly state that they are ‘fixed’ by defining the start and end date of employment. In the contract, it must be clearly stated that the employment will be terminated at the end of the period.

An employment contract may be deemed to be for an indefinite term if it is used for work other than the above.

A fixed-term contract:

• cannot have a probation period
• cannot be terminated before the stipulated end date, unless either party is in default
• cannot be extended

Salary payment is to be made at regular intervals based on the contract of employment, whether on an hourly, weekly, monthly or other period of time basis.

The payslip is not mandatory in Thailand but it is advisable to send a payslip to employees on a monthly basis or according to the period of payment.

It should show the net salary and the details of deductions, such as social security contributions and withholding tax.

Other information that should be on the payslip include:

• Employer information: company name, tax ID and address
• Employee information: name and position
• Employer and employee social security contributions
• Withholding tax
• Hours worked, including any overtime or holiday work hours
• Salary, including overtime wages, bonus, advance payments and commissions

An employee in Thailand is entitled to a minimum of six days of annual leave after working consecutively for one full year. This can be taken consecutively or separately.

For an employee who has not completed one year of service, the employer may provide an annual leave on a prorated basis.

Annual leave may be accumulated and carried forward to the next year, as agreed between the employer and the employee.

An employee is entitled to take 30 days of paid sick leave per year. If the sickness lasts longer, the employee is entitled to take unpaid leave with a supporting medical certificate.

An employer may request a medical certificate if an employee is absent for three consecutive days.

Days on which the employee cannot work because of injury or illness caused by work must not be deemed as sick leave.

Employees are statutorily entitled to personal business leave of three working days per year.

Employees are entitled to take leave for training. However, an employer may refuse permission if the employee has already taken training leave three times or for a total of 30 days.

Female employees are entitled to maternity leave for 98 days per pregnancy. This includes leave taken for prenatal care, such as to attend medical appointments.

Full paid leave is capped at 45 days. This maternity leave is in addition to 30 days’ sick leave.

A female employee insured under the Thai Social Security can also receive other benefits under certain conditions. These include:

• a lump-sum payment of THB 15,000 per birth (upon the birth of a child)
• a cash benefit of 50% of wages (for wages up to THB 15,000 per month) for up to 90 days; this benefit is only available for the first two deliveries.

Paternity Leave

There are no paternity rights for male employees in Thailand.

Surrogacy Leave

A surrogate mother has the right to a maximum of 98 days of maternity leave. However, employees who become a parent through surrogacy (e.g. through adoption) do not have any rights to maternity or paternity leave.

An employee is entitled to take military service leave for mobilization exercises for inspection, military training or testing of combat readiness. This is in accordance with laws governing military service. The employer should pay the wages at the same rate as normal work throughout the leave period but not exceeding 60 days per year.

Sterilization leave is available for both men and women employees.

The employer should pay the wages for the leave period as stated in a medical certification.

An employee who is a committee member of a labor union is entitled to take leave to carry out his or her responsibilities (e.g. to participate in meetings as required by the government).

Apart from above, other leaves, such as ordination leave, compassionate leave, paternity leave, leave of absence, and leave for education will be up to employer’s discretion and without pay unless the employer agrees otherwise.

An employer must grant the employee no less than 13 public holidays per year, in accordance with the annual official holidays, religious or local traditional holidays.

If a holiday falls on a weekly holiday of an employee, the employee is entitled to take a day off to substitute for the holiday.