The main elements of a probation of a new employee in an employment agreement that are widely used among employers in Thailand are:
- A 4-month probationary period; and
- A right given to the employer to terminate such employment agreement at the end of the probation
When considering to hire a new employee and set his probation period, the following three main concerns must be taken into account:
- Probation: First thing you need to know is that the term “probation” does not exist in any of Thai laws. An employment is an employment, no matter what status is given to an employee. As long as he works for you he is your employee under Thai Labour laws.
- Prior notice: A dismissal shall be made by giving an employee a prior notice before or within a due date of wage payment so that such noticed dismissal will take effect on the following wage payment due date. Failing to give such notice, the employer will then be obliged to pay a severance pay in lieu of advance notice. Up to this point, if an employer gives an advance notice on the 4th month –the last month of the probation –the employee will have to leave by the end of the 5th month. Anyway, this has not ended yet.
- Severance pay: Unless a dismissal is made under the conditions set out in Section 119 of the Labour Protection Act, the employer will have to pay not less than 30-day wage of the current rate to the dismissed employee who have worked for 120 days; and bad news, an unsatisfactory work performance is not in the list of those conditions.
This means if the employer wants to avoid this severance pay, he will have to make his decision and give the notice within the 2nd month so that the employee will leave by the end of the 3rd month. Wasting the 4th month of probation is clearly, not an effective approach.
Giving a prior dismissal notice and severance pay apply to an indefinite-term employment, but not to a fixed-term employment which will automatically terminate upon its expiry date. A fixed term is a good way out for probation and the employment agreement should be made in writing; so instead of using the wording “probationary period”, use “employment period”; and instead of using “the right to terminate”, use “the right to renew”.
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