An Overview of The Probationary Employment Under Thai Law

Probationary employment is a common practice worldwide, including in Thailand. The main laws governing probationary employment are stipprobationaryulated in the Labor Protection Act B.E. 2541 (1998) and the Civil and Commercial Code. Probationary employment also refers to employment in which the employer agrees to hire the employee to work and assess the employee’s performance during the probationary period. If the employee’s performance meets the employer’s standards, the employer shall continue to hire the employee. On the other hand, the employer may terminate the employment agreement if the employee’s performance does not meet the employer’s expectations.

1.      Condition and Probationary Periods

The Thai Labor Protection Act does not specifically stipulate the character of the probationary employment. Therefore, both the employer and the employee can freely negotiate and agree on the terms and conditions of employment during the probationary period, e.g., duration, allowance, benefits, etc. For example, specific benefits, such as a house rental allowance and medical checkup, may only be granted to those who have passed the probationary period. Please note that, although the probationary duration can be freely agreed upon between the parties, it should not be excessively long (particularly longer than 120 days), as it is not necessary to use such a long duration to evaluate an employee’s performance. Additionally, excessively long probationary periods may be perceived as a bad-faith intention by the court if the employer has a dispute and needs to present the case to the court.

2.      Evaluation

Typically, to pass probation, the employer evaluates the employee’s performance after a specified period has elapsed. It is recommended that the employer have standard evaluation forms to review employees’ performance. The criteria for evaluating should include skills, responsibilities, quantity/quality of work, level of care, ability to work as a team, etc. Having a standard performance evaluation can be a good indication that the employer has clear criteria for reviewing employees’ performance and does not make judgments randomly based on personal preferences or biases.

3.      Protection Under the Laws

Employees under a probationary period have protections under labor protection laws, just like other general employees, including sick leave, overtime pay, and annual vacation. However, the employer may stipulate that employees on a probationary period receive fewer benefits/incentives than others who have passed their probationary periods (such as sales commissions, travel allowances, or apartment rent) because these benefits are in addition to the minimum required to be provided under the laws. This is determined by the company’s working regulations and the employment agreement between the parties.

4.      Advance Notice

Even though the employment is under a probationary period, the employer is required to provide an advance notice of termination to the employee under the Civil and Commercial Code. The advance notice must be given to the employee in the current salary payment cycle to take effect on the following salary payment date (or later, if the agreement stipulates otherwise). Nevertheless, advance notice will not be required in case the employee commits serious breaches such as absent from work for 3 days or more, committing criminal offences against the employer, or other breaches as stipulated in section 119 of the Labor Protection Act.

The employer may require an agreement termination effective date sooner than the duration mentioned above, provided that the payment in lieu of advance notice is paid to the employee (amount equal to salary if the employee works until the next salary payment date).

5.      Severance Pay

The labor protection law requires employers to pay severance pay to employees if the employer terminates the employment agreement without cause, as prescribed in Section 119 of the Labor Protection Act, regardless of whether the employee is under a probationary period or not. If the employee works for the employer for 120 days or more, the severance pay would be at the rate equal to 30 days’ wages.

6.      Compensation for the Unfair Dismissal

Under the Establishment of Labor Court Act, the court has the discretion to award the employee if it is of the opinion that the termination of the employment agreement is unfair. There is no specific term for “unfair” in the law. However, according to precedent judgments, “unfair” would refer to termination without fault on the part of the employee.

During the probationary period, if the employee’s performance does not meet the standard prescribed by the employer, the employer should be able to terminate the employment agreement without having a liability for unfair dismissal compensation. However, employer must be able to present that it has clear evaluation criteria and has performed evaluation session(s) with the employee. This is to demonstrate to the court that the employee’s performance does not meet standards, thus, the agreement termination is fair.

7.      Tips

Employers can freely determine the length of the probation period as they see fit. Nevertheless, it does not mean that employers are not required to give advance notice (or pay the payment in lieu of advance notice), pay the severance, and/or compensation for unfair dismissal. Therefore, employers should plan ahead if they believe the particular employees on a probationary period are not suitable for the organization, as there are specific timelines to meet in order to minimize financial liabilities. For example, terminating the agreement before the employment reaches the 4th month will not trigger the liability for severance pay, while it is crucial to serve the advance notice as required by law.