Understanding Probationary Periods in Overseas Employment

When companies expand their business overseas, setting a probationary period is often part of the consideration when hiring new employees. A probationary period is a time period during which both the employer and employee can evaluate their working relationship. Different countries have varying regulations concerning the issues including duration of probationary period, the termination of employment during this period etc. It is crucial for businesses to pay close attention to these regulations to be compliant while protecting the rights of both parties.

Setting the Duration of the Probationary Period

The length of a probationary period can be determined based on local labour laws. For instance:

• Australia: Probationary periods will often reflect the "minimum employment period" for purpose of unfair dismissal jurisdiction. If an employee’s employment is terminated during this minimum employment period, he/she cannot bring an unfair dismissal claim. Hence, employers normally set probationary periods not exceeding the minimum employment period, which is 12 months for small business employers and 6 months for other employers in Australia.

• Singapore: Probationary periods in Singapore usually do not exceed 6 months, especially for employees in managerial or professional roles (“PMEs”). This is because these employees are not able to file unfair dismissal claim if their employment is terminated within 6 months.

• Thailand: A recommended probationary period in Thailand is no longer than 119 days. If the employment last for 120 days or more, employees are entitled to statutory severance pay.

In some countries there is statutory maximum duration for probationary period. For example:

• Bangladesh: Probationary periods, depending on job nature, typically range from 3 to 6 months.

• Philippines: Probationary periods in the Philippines cannot exceed 6 months.

• Vietnam: The length of probationary periods in Vietnam varies depending on job nature, ranging from 6 days, 30 days to 60 days.

Termination of Employment during the Probationary Period

Notice periods applicable for termination during the probationary period may be different than those for termination of regular employment. For example:

• Hong Kong: Employers can immediately terminate probationary employees within the first month. After the first month, a 7-day notice or payment in lieu is required.

• Indonesia and the Philippines: By law, termination during the probationary period does not require advance notice or payment in lieu.

However, in some Asian countries like China, Japan, and South Korea, terminations during probationary period do not imply that employers has the right to terminate employees without valid ground. In case dispute arises, employer must be able to provide valid reason and proof for not granting the employee a permanent employment.

Extension of Probationary Periods

In some countries, the law permits or does not restrict agreement to extend probationary period by mutual consent or unilateral decision by the employer. This is the case in Malaysia, Myanmar, and Singapore. However, in countries like China, Japan, and Indonesia, the law limits or prohibits extending probationary periods unilaterally.

Other Special Regulations

Certain countries have other peculiar regulations regarding probationary periods. For instance, in Indonesia and Thailand, only indefinite-term employment contracts can include probationary periods, while fixed-term contracts cannot.

In Vietnam, probationary contracts can be negotiated separately, i.e., independent of the regular employment contract. However, in some countries like China, probationary periods must be included as part of the employment contract's duration.

In Sri Lanka, employers are obligated to provide written notice to employees who are acknowledged of permanent status.

When venturing into overseas recruitment, it is important to understand the applicable regulations on probationary period . Companies are encouraged to navigate the diverse labour laws and regulations of each country they operate in. Consulting with local legal experts is also advisable to ensure full compliance with the local laws. In addition, partnering with professional human resource service providers, such as Employer of Record (EOR) service provider like Atlas, can help companies streamline the overseas hiring process and ensure legal compliance, allowing companies to focus on their core operations while mitigating associated legal risks.

Join us in the latest Ask Atlas episode as June JI, APAC Senior Manager for Employment Law & Compliance at Atlas, to learn more about key legal considerations for Chinese companies hiring employees abroad. We answer your top searched questions on global workforce compliance.

*Disclaimer: This article provides general information and does not constitute legal advice. It is recommended to consult with legal professionals to address specific legal concerns related to your business.