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Fixed period employment contracts for a wise employer
Trade wants government’s security assurance
Fixed period employment
contracts for a wise employer
Employers have been using fixed period employment contracts on
employees to avoid having to pay severance and provide prior notice of
employment termination to employees (when the employer terminates the
employment contract not due to employee’s serious misconduct). With the
commencing date and ending date of the employment contract clearly specified
in the written contract, the employee’s employment will just cease on the
ending date of the employment contract. There is no need for the employer
to pay severance and provide prior notice of employment termination.
In fact Paragraph 3 of Section 118 of the Labor Protection Act B.E. 2541
(1998) provides: “Payment of severance pay is not applicable to employees
who have a fixed term of employment and whose employment is terminated in
accordance at the end of the specified term.”
This means that for employees with employment contracts that specify
clearly the starting date and ending date of employment, the employment
contract will lapse at the ending date of employment. Given that the
employment contract had ended and not terminated, there is no need for the
employer to pay severance and provide prior notice of employment termination
to the employee.
However, to be wise, the employer needs to be aware that Section 118
itself and Supreme Court decisions have narrowed down the meaning of a fixed
period employment contract.
According to Paragraph 4 of Section 118, the following kinds of
employment are considered fixed period employment contracts:
(1) Employed to work in a specific project that is “not normal for the
business or trade of the employer, and where the schedule for commencing and
ending of work is fixed”; or
(2) Employed in work that is of a “temporary nature that has a fixed
schedule for its ending or successful completion of work”; or
(3) Employed to work in “seasonal labor for which employment is engaged
during such season.”
Also, the employment under (1), (2) or (3) above must not be longer than two
years and the employment contract must be made in writing at the
commencement of employment.
Supreme Court decisions have also provided further guidance on the meaning
of a fixed period employment contract. In Supreme Court precedent Nos.
5180/2542 and 10432/2546, the employment contracts in both cases have a
clause which provides for either contractual party to have the right to
terminate the contract prior to its ending date. In both cases, the Supreme
Court ruled that the employment contract is not a fixed period employment
As a result of the above, the number of cases whereby the employer does not
have to pay severance and provide prior notice of employment termination to
the employee is reduced.
Employers need to ensure that their fixed period employment
contracts entered into with employees do fall within its legal meaning.
Otherwise, the employment contract may be considered as an ongoing contract
and the employer is subjected, upon termination of contract by the employer
(not due to employee’s serious misconduct), to pay severance and provide
prior notice of employment termination to the employee.
David Tan is a Lecturer of Business Law at Asian University and author of
the book “A Primer of Thai Business Law”, available online at
www.chulabook.com or by calling 038 233 490 to order. In Bangkok, the book
is available at Asia Books and Kinokuniya bookstores. Any questions or
comments to David should be sent to firstname.lastname@example.org
Watchiranont Thongtep (TTG Asia, Bangkok)
The Thai travel trade is asking for measures on tourist security at
Suvarnabhumi Airport to be the government’s priority before re-starting their
Jetour (Thailand) deputy managing director, Pornsri Visavachaipan said, “We want
concrete government measures to assure no one can shut down Thailand’s main
gateway airports again.”
Ms Pornsri said even if hotels discounted their room rates to win back tourists,
tactical promotions by the agents would not be effective unless international
airlines and tourists regain their confidence in the country. So far, she said,
new bookings with her company have not increased.
The Association of Thai Travel Agents vice-president and CCT Express managing
director, Vichit Prakobkosol said he would tentatively complement and push more
direct sales to partners who could keep Thailand’s brochure at their counters.
He added while the flight resumption at Suvarnabhumi Airport would help the
industry maintain 30 to 50 percent on suspended bookings until year-end, the
trade also needs road shows to regional markets such as China and Taiwan to draw
tourists for 2009’s Chinese New Year.
Thai Hotels Association vice-president, Surapong Techaruvichit said estimated
average occupancy rate for December might remain around 50 to 60 percent,
against 80 to 90 percent received in the same period last year.
The Tourism Authority of Thailand (TAT) and Airport of Thailand (AoT) also
invited foreign diplomats, airline representatives, tour operators and the local
and international media for an inspection trip on re-opening day at Suvarnabhumi
Airport, in a bid to rebuild the country’s global image.
AoT acting president and Suvarnabhumi Airport general manager, Serirat
Prasutanond told TTG Daily News after the re-opening of the airports, the road
shows would be discussed soon with TAT, the Ministry of Tourism and Sports,
Royal Thai Embassy, Thai Airways and travel trade members.
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