Employers must know what an employment contract is and its significance.

Each time employment begins, whether it’s full-time, freelance, or part-time, a crucial document is indispensable: the employment contract. This contract serves as evidence of the employment agreement between the employer and the employee, outlining the duration of employment and clear remuneration. But in terms of labor law, why is the employment contract important? What are its types? Find the answers in this article.

What is an employment contract?

An employment contract is a crucial document that serves as the basis for establishing equality and responsibilities between the employer and the employee. According to Section 575 of the Thai Civil and Commercial Code, an employment contract is defined as an agreement where one party, the employer, agrees to employ another party, the employee, and the employer agrees to pay remuneration for the work performed.

Under Thai labor law, employment contracts play a significant role as they constitute the agreement between the employer and the employee. The employee must provide labor in exchange for remuneration as per the contract. Therefore, clear and accurate employment contracts are essential for ensuring smooth operations.

Four things to know before entering into an employment contract:

Before commencing employment, employers must establish an employment contract as evidence of the employment agreement. Here are four important aspects of employment contracts to consider:

1.Protection of employee rights: Employment contracts help specify the rights and responsibilities of employees, such as the right to receive timely and accurate payment.

2.Definition of employer responsibilities: Employment contracts outline the terms of employment and the employer’s responsibilities, including work hours and various duties.

3.Building trust in employment: Clear and accurate employment contracts foster trust between employers and employees, increasing employee satisfaction and commitment.

4.Conflict prevention: Employment contracts help prevent disputes between employers and employees by specifying conditions for contract termination and other scenarios.

Understanding these aspects of employment contracts is crucial for both employers and employees before entering into any employment agreement.

Understanding Different Types of Employment Contracts

In general, employment contracts can be categorized into four types:

1. Contract for a specific task:

This type of contract involves the employer agreeing to have the employee complete a specific task, with the employee receiving compensation upon successful completion. The emphasis in this type of contract is on the successful outcome of the task.

2. Open-ended contract:

This contract does not specify a definite duration for the employment period. The employer has the flexibility to terminate the contract at any time, either with or without cause. In such cases, the employer must provide advance notice and comply with legal requirements for compensation.

3. Fixed-term contract: 

This contract specifies a clear duration for the employment period, such as a one-year term or for the duration of a specific project. While the contract has a defined end date, there may be provisions allowing the employer to extend or shorten the duration.

4. Part-time contract: 

Also known as an outsourced or off-hours employment contract, this type of contract involves hiring employees for short periods. Compensation is typically based on hourly rates, and the contract specifies a clear and definite duration for the employment period. Flexibility may be allowed for adjusting work schedules to suit the convenience of both the employer and the employee.

In Summary

Employment contracts are essential for both employers and organizations as they serve as clear written agreements between employers and employees. They help prevent operational issues and disputes. Besides entering into employment contracts, another crucial aspect for employers to consider is conducting background checks on employees before hiring. Appman offers a Digital Background Checker service, which provides employers and organizations with quick and efficient access to employee background information, ensuring the hiring of quality personnel.

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