Things You Need To Know
If you’re an international company about to enter the Thai market, there are several things you should know about the probationary period in Thailand before you set up shop. Thailand is by no means a difficult place to establish a business, but it’s definitely useful to be informed about general laws and policies before you do. One of these things is the Probationary Period, which all new hires are subject to complete by law in Thailand.
There are several issues surrounding the probationary period that are unique to the Thai market. It’s really important that you get to grips with it before you start hiring staff. Both preparation and knowledge are key to ensure a smooth ride when establishing a company in Thailand. To help you out, we have compiled a handy list of FAQs to guide you along the way…
What is probationary period in Thailand?
All newly hired employees serve an evaluation period, generally referred to as a probationary period. During this time, the contract between employer and employee can be terminated by either party without penalty. Why? This is a trial period for both parties to test whether you’re a good fit for each other. It’s beneficial for you because it avoids the hassle (cost, time etc.) of terminating an employee if it’s not working out.
How long does the probationary period last for in Thailand?
In Thailand, the maximum allowable probationary period cannot exceed 119 days. There is no mandatory minimum, and the majority of employers tend to stick with the whole 119 days. This is because the longer the trial period, the more time you get to decide if the new employee is the right fit. Once the initial 119 days has passed, then the employee becomes protected under the Thai Labor Law. This means that severance liabilities and notice periods automatically come into effect.
Can the probationary period be extended?
Legally, the probationary period can not be extended. You may choose to extend the period for several reasons (see no. 7 for an example), but just bear in mind that you’ll be liable to pay severance and serve the employee a notice period after the 119 days are up.
Will the employee be required to serve a notice period if she/he decides to leave during the probation?
No, there is no legal requirement to serve a notice period should either you or the employee decide to terminate the relationship. However, you may both reach a mutual decision for the employee to carry on working until the he/she finds a new job or a replacement employee is selected.
What are the upsides of a probationary period for me as an employer?
This trial period is an important element in any successful employer-employee relationship. For you as an employer, it provides a cheap and effective way to decide if the employee fits in with the position and company culture. In Thailand, severance pay can be very costly because labor law is generally in favor of the employee. So this period serves as a great way to avoid paying severance if the new employee isn’t working out.
As per Thai labor law, the severance pay for full-time employees is as follows:
How do I know if this person is the right fit during this period?
To make this determination, the employee's work performance should be monitored throughout the evaluation period and measured against set KPIs. You may choose to set targets for all new employees to reach during the trial period as a benchmark. If the new employees fail to hit targets set, then you may want to consider if they’re the right fit. You should also observe how well they interact with existing staff, and monitor how they adjust to the company culture.
What if the new employee isn’t performing as well as you hoped?
If you start noticing performance or behavior challenges during the probationary period, the Line Manager should address the situation immediately. The employee should be informed with immediate consultation of the problem. There is no legal requirement for how this is managed. However, you may choose to give a written warning if needs be, depending on the severity of the problem. They should be given ample time to correct it, and informed of the consequences if they don’t resolve the problem.
Another option you have is to extend the probation. As we mentioned earlier, legally the probationary period can’t be extended. However, you may choose to extend it as a psychological initiative to improve the new employee’s performance. Just bear in mind that notice period and severance liabilities will still be in effect if you decide to eventually terminate the employee.
How do I terminate the employment contract during probation?
If you have come to the decision that the employee isn’t the right match, you may choose to terminate the relationship. If you do decide to take this step, you must notify the employee of your decision in writing prior to the end of the probationary period. However, you will not be required to take any other action; after all, the point of this period is to have the flexibility to terminate with minimal effort or impact on the company.
Having said this, if you do decide to end the employment relationship, it’s crucial to consult with your organizations HR department or legal representative to ensure all labor law practices are adhered to under the Thai Labor Protection Act B.E. 2541
Are there any differences in the probationary period for an expat employee?
Both Thai and expatriate employees are required to serve a probationary period of 119 days. There is no difference in the regulations and requirements if you choose to hire an expat employee. Just bear in mind that you will need to provide legal employment status for an expat employee, even during the probationary period.
Is there anything else I should know?
Two important things to keep in mind as general policies during the initial probationary period are:
Once the probationary period expires, the employee cannot be placed on a subsequent probationary period.
Employees who are internally transferred to a position are not required to serve a new probationary period under the Thai Labor Law.
Where can I find more info about the probationary period?
More information on the Thai Labor Protection Act in both English and Thai -- including a complete copy of the Thai Labor Protection Act B.E. 2541 -- can be found on the Department of Labor & Welfare Protection Department’s website here: http://www.labour.go.th/
We hope that these FAQs have provided you with a useful introduction to the ins-and-outs of the probationary period in Thailand. Laws are changed regularly, so it’s best to check for updates on the Labor Department’s website as well.
If there’s anything we’ve left out, or if you have a question that you’d like to ask us, feel free to get in touch with our Director, Santi Campanella: email@example.com