Using an employer of record in Thailand

Millions of expats now call Thailand home, adding even more talent to the country’s growing labor force. Hiring in Thailand is a smart move for many businesses, but it isn’t always easy. That’s where an Employer of Record in Thailand comes in.

Employer of Record (EOR) services are designed to support businesses in onboarding and paying workers globally. 

EORs assist with navigating local employment and labor law, so you don’t have to. You get all the benefits of a dynamic, global workforce, with less administrative burden and supported risk mitigation.

Keep reading our guide to using an Employer of Record in Thailand and learn more about Payoneer Workforce Management’s EOR solutions in Thailand.

How to hire employees in Thailand

Businesses registered or located outside of Thailand have three main options for engaging Thai workers. 

1) Set up a local entity

Employees in Thailand are entitled to certain benefits and protections under local employment law, and employers must contribute towards funds like social security. 

That’s why, for a business to hire a full-time employee in Thailand, it must be registered as a local legal entity. 

However, setting up a local entity in a new country is generally cumbersome and time-consuming, and not suitable for companies looking for a quick and streamlined solution.

2) Hire independent contractors

In Thailand, independent contractors don’t receive the same employee benefits as full-time workers. Employers don’t need to contribute to their social security or other funds. 

This option gives businesses more flexibility and fewer compliance obligations. However, misclassifying employees as contractors may lead to fines and potential legal issues.

3) Partner with an Employer of Record in Thailand

As you can see, there’s a lot to consider when engaging Thai workers. An EOR solution in Thailand can offer assistance with the paperwork and processes required when onboarding a Thai team. 

They act as the legal employer within the country, helping you engage with local talent compliantly and quickly.

An EOR can help engage employees in Thailand via its local entity, enabling you to access local talent. It’s a completely legitimate route opted by many organizations when looking to grow internationally. 

An EOR is usually familiar with local employment laws and assists with compliance, payroll operations, and managing Thai workers.

Payoneer Workforce Management offers EOR services in 160+ countries, including Thailand.

For more information, check out our Thailand guide.

Payroll in Thailand

An EOR can advise on best-practice approaches to payroll and payroll management. In Thailand, this includes:

• Planning for the fiscal year: The Thai fiscal year runs from October 1st to September 30th. 
• Payroll cycles: Most Thai employees are paid monthly.
• Salary/minimum wage: Minimum wage differs depending on the company’s location. It is typically 330–370 baht/day.
• Bonuses: Annual bonuses are not mandatory under Thai labor law. The employer may act as per the company policy.

A Thailand EOR will also help with tax compliance. Thai employers must contribute towards:

• Social security: Both the employer and employee typically make a 5% contribution
• Other benefits: Including the Workers’ Compensation Fund (WCF) (ranging from 0.2% to 1%) and the Employee Welfare Fund (EWF)

Thai employees must pay income tax on their earnings. Tax rates range from 0% to 35% depending on their salary. Employers must withhold income tax from each month’s pay.

Companies can save time and minimize payroll risks by partnering with an EOR in Thailand. An EOR will pay local workers and offer assistance with managing benefits and tax compliance.

Employment laws in Thailand

We’ve mentioned Thailand’s labor laws several times, so let’s clarify what the law says and where. Thailand has several key legal acts and policies you should consult for compliant employment practices:

• Labor Protection Act (LPA): This outlines the rights and responsibilities of Thai workers and employers.
• Labor Relations Act: This act contains guidance on workers’ unions, rights, and disputes.
• Social Security Act: See this policy for information regarding Thailand’s social security and benefits system.
• Workmen’s Compensation Act: Employers are required to protect and support employees in the case of injury, illness, or fatality at work.
• Minimum Wage Act: This contains the most up-to-date requirements regarding minimum pay.

Here are some essential highlights all employers in Thailand must follow:

• Working hours: A 48-hour work week is the standard (and legal maximum) in Thailand.
• Overtime: Thai law mandates that overtime must be paid beyond the standard 48 hours per week. Thai workers are allowed to work up to 36 hours of overtime per week.
• Probation period: Full-time employees can be asked to undergo a probationary period of up to 119 days.

Minimum wage in Thailand

Thailand’s minimum daily wage differs across the country and is typically in the range of 330 – 370 THB/day. 

Thai employees on a monthly or yearly salary might expect to receive anywhere between 9,900 to 11,100 THB per month. However, this may also vary depending on the roles and experience level.

Thailand’s minimum wage is reviewed annually. Employee expectations are important to consider, too. Speak with an Employer of Record in Thailand to discuss fair and competitive pay for the Thai team.

Employment contracts in Thailand

Thai employers are not obliged by law to provide an employment contract, but it’s certainly best practice and a good way to avoid risk and confusion further down the line.

An Employer of Record in Thailand can help shape and word local employment contracts (in Thai). These should typically cover:

• Contract type: Is it open-ended full-time/part-time, or a project contract with a fixed end date?
• Employee classification: Is the worker a full-time employee (with benefits) or an independent contractor in the eyes of the law?
• Compensation, benefits, and bonus eligibility: What benefits is the worker entitled to?
• Start date, work hours, and location: When does the contract begin and where is the location of the work arrangement?
• Allocated leave: How much paid and unpaid leave are employees entitled to?
• Length of probation: What policy will you follow for probation and performance reviews?
• Termination requirements: How much notice do you require, and how much will you offer in return? Outline the worker’s entitlement regarding severance pay in the event of redundancy.

Leave policy in Thailand

Thai workers are entitled to:

• 6 days of paid vacation a year (after 1 year of employment)
• 13 public holidays a year
• Up to 30 days of paid sick leave annually.
• 120 days of maternity leave (60 days are paid by the employer, and remaining days are paid depending on the agreement).

Thailand’s leave policy is written into employment law. Failure to comply with these legal requirements not only risks poor employee satisfaction and retention but also makes the company vulnerable to legal action and fines.

An Employer of Record in Thailand can assist with understanding local employment laws and leave policies. 

Work permit in Thailand

Anyone working for a Thai organization must have the legal right to work in the country. For Thai citizens, their right comes with citizenship. 

For foreign workers and expats, a work visa and work permit will likely be required.

Foreign nationals must obtain a work visa before a permit can be issued. A Non-Immigrant B Visa is the most common type of work visa, covering most roles. 

To secure a work visa, the employee or contractor will need an official letter of employment and the company’s registration documents.

Once their work visa is approved, workers must apply for a work permit.

It’s an employer’s responsibility to ensure all workers have the appropriate work visas and permits in Thailand. 

Both employers and candidates should refer to official government sources to verify the specific rules, documentation, and procedures involved.

Background checks in Thailand

It’s common for Thai employers to run employee background checks. These checks can confirm the employee’s work authorization as well as employment history, education history, and criminal record, before sending an official employment offer. 

Employers generally must obtain the candidate’s consent and clearly outline what will be reviewed. It is essential to consult local laws and guidelines before initiating any checks.

Employment termination in Thailand

An Employer of Record solution in Thailand may offer advice on rights and protections regarding employee termination in the country. 

For example, if an employer wants to terminate a contract on the grounds of underperformance, the employee must have been made aware of the issue well in advance and have had the opportunity and support to improve.

Thai law mandates a minimum of 30 days’ notice or pay in lieu for termination after probation. In cases of repeated misconduct or instances of fraud, theft, or other deception, this notice period can be waived.

In the event of redundancy, a Thai employee is entitled to severance pay based on length of service in Thailand:

• Less than 120 days of employment: No severance pay
• 120 days to 1 year of employment: 30 days at their last wage
• 1 to 3 years of employment: 90 days at their last wage
• 3 to 6 years of employment: 180 days at their last wage
• 6 to 10 years of employment: 240 days at their last wage
• Over 10 years of employment: 300 days at their last wage, or 10 months’ salary

Company registration in Thailand

Foreign companies must comply with several strict regulations when registering in Thailand. To register, a company must have a Thai office address and may require a unique and approved business name reserved through the Department of Business Development (DBD).

Typically, setting up a company in Thailand involves significant hurdles for most organizations in the form of local regulations. You’ll also find that much of the registration paperwork is written in Thai.

Using an Employer of Record may offer a more streamlined alternative for companies not ready to establish a local entity.

PEO in Thailand

When learning about EORs in Thailand, you might also come across PEOs (professional employer organizations). These are two distinct solutions with crucial differences to consider. 

To put it simply, your company remains legally responsible for all employees under a PEO partnership. PEOs can help with limited HR support services, like payroll and tax filings.

For a more comprehensive solution to engaging and paying workers in Thailand, an Employer of Record may offer broader support across compliance, payroll, and employment administration.

Work with Payoneer Workforce Management for EOR solutions in Thailand

If you’re ready to onboard talent in Thailand, Payoneer Workforce Management is equipped to serve as the Employer of Record in Thailand.

Our specialists are well-versed in Thai labor laws and regulations. With a local entity in place, Payoneer Workforce Management can facilitate the engagement of employees in compliance with Thai regulations.

Talk to us today to get started.

FAQs

1) What is an EOR in Thailand?

A Thailand Employer of Record (EOR) acts as the legal employer for local talent in Thailand, enabling companies to compliantly access talent without setting up a local entity. Working with an EOR may offer a supported and structured way to compliantly engage local talent.

2) Do employer of record services in Thailand help with Thai tax filing?

An Employer of Record service will help with relevant tax filings and payroll management in Thailand. Thai employers must contribute to Thai social security and the Workmen’s Compensation Fund. They must also deduct the appropriate income tax from an employee’s pay. The EOR in Thailand may offer assistance with both.

3) How much does it cost to hire an employee in Thailand?

The total cost of employment in Thailand depends on several factors, including role specialism and seniority. Employers should factor in legal requirements, such as social security and contributions to other employee benefits, as well as administrative expenses for payroll and recruitment.