Employment Contract Types

What are employment contract types?

Employment contract types refer to the different categories of employment agreements that define the relationship between employer and employee, including the duration, terms, working arrangements, and legal obligations. The type of contract has significant implications for employee rights, employer obligations, and flexibility.

Main employment contract types

Indefinite/Permanent Contracts:

• No specified end date
• Continues until terminated by either party
• Strongest employee protections
• Most common for standard employment
• Default in many APAC countries
• Notice periods apply for termination
• Full statutory benefits and entitlements

Fixed-Term Contracts:

• Specific start and end dates
• Employment automatically ends on expiry date
• Used for projects, seasonal work, or temporary needs
• May have restrictions on renewals (country-specific)
• Different termination rules than permanent
• Often fewer protections than indefinite contracts
• May convert to permanent after certain renewals/duration

Part-Time Contracts:

• Fewer hours than full-time standard
• Pro-rated salary and benefits
• Same protections as full-time (in most countries)
• Clear specification of working hours/days
• Used for flexible workforce needs
• Growing in prevalence across APAC

Casual/On-Call Contracts:

• No guaranteed hours
• Work as needed/called in
• Pay per hours worked
• Minimal ongoing obligations
• Limited benefits (varies by country)
• Common in hospitality, retail, seasonal work

Zero-Hours Contracts:

• Employee available but no guaranteed hours
• Employer not obliged to provide work
• Employee not obliged to accept work offered
• Controversial and restricted/banned in some countries
• Limited use in APAC

Probationary Contracts:

• Initial trial period (typically 1-6 months)
• Allows assessment of fit
• Easier termination during probation
• Shorter notice periods
• Converts to permanent after successful completion
• Standard practice in most APAC countries

Apprenticeship/Training Contracts:

• Combination of work and training
• Specific duration
• Educational component required
• May have different minimum wage
• Certification upon completion
• Common in skilled trades

Contract types across APAC countries

Singapore:

• Permanent (indefinite) and fixed-term common
• Part-time contracts available
• Fixed-term cannot exceed 2 years for work permit holders
• Clear conversion rules after multiple renewals
• Probation typically 3-6 months

Australia:

• Permanent (full-time and part-time)
• Casual employment common (25% loading in lieu of benefits)
• Fixed-term/maximum term contracts
• Restrictions on successive fixed-term contracts
• Strong regulation of casual conversion rights

Hong Kong:

• "Continuous contract" threshold (4+ weeks) unlocks protections
• Fixed-term and permanent contracts
• Part-time available
• Casual work less regulated
• 418 hours across 4 weeks = continuous contract

Japan:

• Regular (indefinite) employment standard
• Fixed-term contracts (maximum 3 years, 5 years for specialists)
• Conversion to indefinite after 5 years of renewals
• Part-time and dispatch workers
• Lifetime employment culture (changing)

India:

• Permanent and fixed-term contracts
• Recent reforms allowing fixed-term without restrictions
• Contract labor through contractors
• Apprenticeship contracts
• Probation typically 3-6 months

Malaysia:

• Permanent and fixed-term contracts
• Part-time employment
• Fixed-term restrictions for certain visas
• Probation typically 3 months
• Contract conversions after multiple renewals

South Korea:

• Indefinite (regular) and fixed-term contracts
• Fixed-term limited to 2 years; converts to indefinite after
• Dispatch workers regulated
• Part-time employment
• Strong regular employee protections

Thailand:

• Permanent and fixed-term contracts
• Fixed-term common
• Automatic conversion to permanent after successive renewals (varying interpretations)
• Part-time available
• Probation up to 119 days

Philippines:

• Regular (indefinite) and fixed-term contracts
• Project-based and seasonal contracts
• 6-month probation standard
• Security of tenure principle (very strong)
• Restrictions on repeated fixed-term contracts

Vietnam:

• Indefinite, fixed-term (12-36 months), and seasonal (<12 months)
• Maximum two successive fixed-term contracts; converts to indefinite
• Probation periods specified by law
• Part-time employment
• Clear contract type requirements

Indonesia:

• Indefinite (PKWTT) and fixed-term (PKWT) contracts
• Fixed-term for maximum 5 years (including renewals)
• Probation only for indefinite contracts
• Outsourcing contracts
• Recent Omnibus Law changes

Choosing the right contract type

Permanent/Indefinite contracts when:

• Long-term employment relationship
• Core business functions
• Building stable team
• Attracting top talent
• Employee development investment

Fixed-term contracts when:

• Specific project with defined timeline
• Temporary increase in workload
• Covering employee absence (maternity, sabbatical)
• Seasonal business needs
• Trial before permanent commitment (where legal)

Part-time contracts when:

• Role doesn't require full-time hours
• Flexible workforce needed
• Cost management
• Specific availability needs (evenings, weekends)
• Shared role arrangements

Considerations:

• Local legal restrictions
• Employee preferences and expectations
• Cost implications (different benefits)
• Administrative complexity
• Termination flexibility vs. security
• Market practices and norms

Legal restrictions on contract types

Successive fixed-term limitations:

• Many countries restrict consecutive renewals
• Automatic conversion to permanent after X renewals or Y years
• Prevents abuse of temporary contracts
• Examples: Korea (2 years), Vietnam (2 contracts), Japan (5 years)

Prohibited purposes:

• Cannot use fixed-term for permanent needs (many countries)
• Cannot avoid statutory benefits
• Cannot circumvent termination protections
• Must have genuine temporary need

Equal treatment principles:

• Part-time workers entitled to same benefits (pro-rated)
• Fixed-term workers cannot be discriminated against
• Equal pay for equal work
• Same legal protections

Maximum durations:

• Some countries limit fixed-term contract length
• Cumulative limits across renewals
• Industry-specific restrictions
• Position-specific limits

Contract drafting requirements

Essential terms for all contracts:

• Parties' names and details
• Job title and description
• Start date (and end date for fixed-term)
• Workplace location
• Working hours and schedule
• Salary/wage and payment terms
• Benefits and allowances
• Leave entitlements
• Notice period requirements
• Probation period (if applicable)
• Governing law and jurisdiction

Fixed-term specific:

• Clear end date
• Reason for fixed-term nature
• Renewal conditions (if any)
• Conversion provisions
• Early termination clauses

Part-time specific:

• Specific working days/hours
• Pro-rata benefit calculations
• Overtime provisions
• Scheduling arrangements

Contract conversion

Fixed-term to permanent:

• Automatic conversion after renewals/duration (by law in many countries)
• Voluntary conversion by employer
• Employee request and negotiation
• Changes in employment terms
• New contract or amendment

Probation completion:

• Confirmation of employment
• Salary review often included
• Benefit changes
• May be automatic or require notice
• Document the confirmation

Part-time to full-time:

• Change in hours
• Adjustment of benefits
• Contractual amendment
• Mutual agreement

Contract termination differences

Permanent contracts:

• Notice periods (often longer)
• Severance may be required
• Just cause requirements
• Strong protections
• Due process expectations

Fixed-term contracts:

• Automatic expiry at end date
• Early termination may require payment through end
• Less notice required (often)
• Severance rules vary (some countries require, some don't)
• Cannot terminate just before natural expiry to avoid conversion

Probationary contracts:

• Shorter notice periods (sometimes as little as 1 day)
• Easier termination standards
• Limited severance typically
• Performance-based assessment

Best practices

For employers:

• Choose appropriate contract type for genuine business need
• Comply with local restrictions on fixed-term renewals
• Clear, written contracts in local language
• Consistent application across similar roles
• Plan for conversions and transitions
• Regular contract reviews
• Legal compliance verification

For employees:

• Understand your contract type
• Know your rights under each type
• Conversion entitlements
• Documentation of all terms
• Seek clarification on ambiguous terms

Common mistakes:

• Using wrong contract type for the need
• Repeated fixed-term renewals without tracking conversion thresholds
• Unclear contract terms
• Not translating to local language where required
• Inconsistent practices across employees
• Missing mandatory clauses
• Not updating contracts when terms change

How EOR providers handle contract types

When using AYP:

• Advises on appropriate contract type for client needs
• Ensures compliance with local laws on contract types
• Drafts locally compliant contracts
• Manages probationary periods and confirmations
• Tracks fixed-term expiry and conversion requirements
• Handles contract renewals and amendments
• Navigates complex country-specific rules
• Provides templates and guidance

Contract type trends in APAC

Fixed-term restrictions tightening:

• More countries limiting successive renewals
• Automatic conversion becoming common
• Pressure to use permanent contracts for ongoing work

Part-time growth:

• Increasing acceptance and use
• Regulatory frameworks improving
• Work-life balance demands
• Gig economy influence

Flexibility demands:

• Employers want flexibility
• Employees want security
• Balancing both through regulations
• Hybrid arrangements emerging

Remote work considerations:

• Contract types for remote employees
• Cross-border employment contracts
• Location flexibility clauses
• New contract categories emerging

‍