Employment Contracts HR Must Know Under Thai Labour Law
What an employment contract should contain, where disputes usually start, probation, termination and non-compete clauses, with a checklist for HR and owners.
Many small companies start hiring with a LINE chat: agree the salary and start date, and the person starts work. Then one day something goes wrong. An employee asks about overtime pay, resigns and disappears immediately, or moves to a competitor with the customer list. At that point both sides often find there is no document that says clearly what was agreed. This article summarises what HR and business owners should know about employment contracts in Thailand. It is general information to help you ask the right questions before consulting an expert.
What is an employment contract?
An employment contract is an agreement in which the employee agrees to work for the employer and the employer agrees to pay wages. The main laws are the hire-of-service provisions of the Civil and Commercial Code and the Labour Protection Act B.E. 2541 (1998), which sets minimum standards employers must meet. A contract can exist even if it is not in writing, but a written one greatly reduces disputes, and terms that give employees fewer rights than labour protection law requires generally cannot be enforced.
What the contract should state
- The parties: the legal entity, the employee's name and the start date.
- Position and core duties: clear enough, while leaving room for related work as assigned.
- Place and mode of work: office, remote or hybrid.
- Working hours and holidays, including how overtime is approved.
- Pay and benefits: amount, pay cycle, how commission or bonus is calculated, and whether it is an entitlement or discretionary.
- Probation: its length and how performance is assessed.
- Resignation and termination: advance notice and handover.
- Confidentiality and intellectual property: who owns work created during employment.
- Personal data protection: what employee data the company collects and why, under PDPA.
Where disputes usually start
1. Probation
Many companies assume probationary staff are not yet full employees and can be let go without conditions. In fact, probationary staff are employees under the law, and labour protection rights still apply to them. A probation period written in the contract does not remove the employer's obligations. Set clear assessment criteria, review along the way and keep records.
2. Termination and severance
When an employer terminates an employee who has not committed one of the offences specified by law, the employee is entitled to severance pay based on length of service under the Labour Protection Act, and the employer must give advance notice as the law requires. Check rates and conditions directly with the Department of Labour Protection and Welfare, because the law is amended from time to time. Do not rely on figures from old articles or memory.
3. Non-compete clauses
Post-employment non-compete clauses that are too broad, such as banning work anywhere in the same industry nationwide for a long time, may be judged unfair. Clauses limited reasonably in scope, duration and geography, and tied to trade secrets that really exist, are more likely to be enforceable.
4. Bonuses and commission
If the contract says a bonus of 2 months per year without conditions, the employee may treat it as an entitlement. If you intend it to depend on company or individual performance, state the conditions clearly.
A good employment contract is not there for suing each other. It is there so you do not have to argue.
Contracts for other types of workers
Fixed-term contracts, freelance agreements and contracts for a specific piece of work have different legal characteristics. If in practice you control working hours, assign tasks daily and provide company equipment, the relationship may be treated as employment even if the contract says freelance. Choose the contract type that matches how the work is actually done.
How to start
- Gather every employment contract in use and check whether any employee has no written contract.
- Compare against the checklist above and note what is missing or unclear.
- Check the latest severance and notice rules with the Department of Labour Protection and Welfare.
- Have a lawyer or labour law adviser review your contract template before use.
- Walk new employees through the contract on day one, rather than just asking them to sign.
This article is general information, not legal advice. For specific cases, consult a lawyer or labour law professional. Read more on probationary employees' rights in Thailand and PDPA and employee data, and if you are hiring, post your roles on the employer page.