Employment Contracts - Overview


• Definition: All of the GMS countries stipulate that an employment contract is a contract agreed to by an employer and an employee (or an employee’s legal representative in Lao PDR and China).

• Oral or Written: Cambodian legislation stipulates that employment contracts may be written or verbal, but a contract of fixed duration must be in writing. Laotian and Chinese legislation provides for written contracts only, and Vietnamese legislation states that employment contracts must be in writing, although contracts for some temporary work of under three months may be concluded orally. In Thailand, employment contracts may be written or verbal, expressed or implied.

• Length of Obligation: Cambodian legislation allows for employment contracts that cover a specific work on the basis of time, that are of a fixed duration or that are for an undetermined period. In China, the terms of a labour contract can be either fixed, flexible in relation to the completion of a specific amount of work as a term. Under Laotian labour legislation, the length of obligation under employment contracts may be either fixed or indefinite. Vietnamese labour legislation allows for indefinite or definite time periods in employment contracts, or covering a specific or seasonal job of less than 12 months in duration. The period of time that a contract is in force in Thailand is to be specified in the contract of employment.

• Content: Cambodian legislation stipulates that the content is to be agreed by both parties, whereas Laotian and Vietnamese legislation specify some particulars that must be contained in an employment contract. In Lao PDR these include: the place of work, the work to be performed and the level of wages. In Vietnam, employment contracts must contain the following main provisions: an outline of the work to be performed, working hours and rest breaks, wages, the location of the job, the duration of the contract, conditions on occupational safety and hygiene, and information on social insurance. Similar provisions apply in China, where contracts must include information on wages, the duration of the contract, a job description, remuneration, labour disciplines, liabilities for violations of the contract, conditions for termination of the contract, the location of the workplace, and the name, place of residence and the number of the resident ID card or other valid identity document of the employee. Thai legislation states that a contract should include details about working time, holidays, sick leave, rest periods, and over-time.

• Termination of Contract: In Vietnam, a contract is terminated upon its expiration, where the tasks stated in the contract have been completed, where both parties agree to terminate the contract, where the employee is sentenced to serve a jail term or is prevented from performing his former job in accordance with a decision of a court, or where the employee dies or is declared missing by a court. An employment contract can be terminated by dismissal in Vietnam where a worker lacks specialised skills or is not in good health and thus cannot continue to work, or where the employer considers it necessary to reduce the number of workers in order to improve the work within the labour unit. In Lao PDR, employment contracts may be terminated by agreement between both parties, or by one party unilaterally, provided that they give 30 – 45 days notice. In Cambodia, a labour contract of specific duration can be terminated before the ending date if both parties are in agreement. If both of the parties fail to reach agreement, a contract of specified duration can be cancelled before its determination date only in the event of serious misconduct or acts of God. A labour contract of unspecified duration can be terminated at will by one of the contracting parties.

In China, a labour contract automatically terminates upon the expiration of its designated term, or where parties to the contract have agreed to terminate it through consultation. A labourer who intends to revoke his labour contract has to give written notice to the employing unit 30 days in advance. Employers can unilaterally revoke a labour contract with a labourer if they have proved to not be up to the requirements for recruitment during the probation period; where they have seriously violated the rules and regulations of the employing unit; where they have caused significant losses to the employing unit due to serious dereliction of duty or engagement in malpractice for selfish ends; or where the employee is being investigated for crimes.

In Thailand, a contract automatically terminates when the period specified expires without any further requirement for advance notice. Where no expiration date has been specified in the contract the employer or employee may terminate the contract by giving advance notice on or before their next pay date. The employer is also entitled to dismiss an employee without having to give them severance pay where they have been dishonest, intentionally caused loss to the employer, where there have been gross acts of negligence, neglect of duty or imprisonment.

You are here: Section 2 - Employment Contracts