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 hiring and paying workers worldwide. 

It’s the EOR’s job to understand local employment and labor law, so you don’t have to. You get all the benefits of a dynamic, global workforce, with less hassle and risk.

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

How to hire employees in Thailand

Businesses registered or located outside of Thailand have three main options for hiring 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 and pension. 

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

The government fee to establish a business entity in Thailand is 12,000 baht (around $365), plus an additional 6,000 baht for every million baht in capital. 

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, pension, or other funds. 

This option gives businesses more flexibility and fewer compliance obligations. However, misclassifying employees as contractors can 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 hiring Thai workers. An EOR solution in Thailand takes responsibility for the paperwork and processes required when hiring your Thai team. 

They act as your official employer within the country, giving you a fast track to securing the talent you need.

An EOR can hire employees in Thailand on your behalf via their local entity. It’s a completely legitimate route opted by many organizations when looking to grow internationally. 

An EOR will be knowledgeable about local employment laws, compliance, payroll operations, and other essential information to find and retain Thai workers.

Payoneer WFM is a leading EOR partner in 160+ countries, including Thailand.

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 31st. 
• Payroll cycles: Most Thai employees are paid monthly.
• Salary/minimum wage: Minimum wage differs depending on the company’s location. Phuket is among the highest, at 400 baht per day ($12.17). In Bangkok, it’s 372 baht per day ($11.32).
• Bonuses: Thai employees are entitled to a yearly bonus under Thai labor law.

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

• Social security: Both the employer and employee make a 5% contribution
• Pension: Both the employer and employee make a 3% 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 your local workers directly and carry the responsibility for 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 around 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

As mentioned, Thailand’s minimum daily wage differs across the country. Here are the minimum wages in each area: 

• Chachoengsao, Chonburi, Phuket, Rayong, Koh Samui: 400 baht per day (around $12.17) 
• Muang District (Chiang Mai) and Hat Yai District (Songkhla): 380 baht per day (around $11.56)
• Bangkok, Nakhon Pathom, Nonthaburi, Pathum Thani, Samut Prakan, and Samut Sakhon: 372 baht per day (around $11.32)
• Narathiwat, Pattani, and Yala: 337 baht per day (around $10.25)

Thai employees on a monthly or yearly salary might expect to receive anywhere between 20,000 to 25,000 baht per month (around $600 to $760) for entry-level positions and 50,000 to 100,000 baht per month (around $1,520 to $3,000) in more senior or specialized roles.

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

Your Employer of Record in Thailand can help shape and word your 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/how do you expect them to work?
• 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
• Unlimited sick leave (up to 30 days paid)
• 98 days of maternity leave (45 days at full salary, paid by the employer)

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 specializes in local employment law and the policies and practices that should be in place for compliant people management. 

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 and costing between 2,000 and 5,000 baht. 

There are also specialist visas, including the Smart Visa for highly-skilled professionals (10,000 baht) and the Non-Immigrant IB Visa for people employed under Thailand’s Board of Investors.

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

A work visa can usually be processed within 3 to 10 business days. However, the process can take up to 3 months in some cases, particularly for the Smart Visa, which requires additional paperwork.

Once their work visa is approved, workers must apply for a work permit. This typically takes 7 to 10 business days to be approved, with an additional cost of 3,000 to 5,000 baht. 

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

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. 

Any background checks must be done in accordance with the Thailand Personal Data Protection Act (PDPA). Any data gathered in the check must be used for legitimate purposes only.

Some background checks are illegal and should be approached with caution. 

For example, while an employer is legally allowed to check a potential employee’s credit history, any data gathered in this process cannot be used as a condition of employment. The same goes for union membership.

All background checks must be consensual and confirmed in writing with the potential hire.

Employment termination in Thailand

Employer of Record solutions in Thailand will advise you on employees’ rights and protections regarding termination. 

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.

After that, Thailand’s Labor Protection Act mandates a one-day notice (and 1 day’s pay) before termination. 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 their time with the company to date:

• 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
• 10 to 20 years of employment: 300 days at their last wage
• Over 20 years of employment: 400 days at their last wage.

Company registration in Thailand

Partnering with an EOR in Thailand isn’t your only option. It is possible to establish a local legal entity. This process typically takes 16 to 20 weeks.

Foreign companies must comply with several strict regulations when registering in Thailand. To register, a company must have at least 1 million baht (around $30,500) in capital, a Thai office address, and a unique and approved business name reserved through the Department of Business Development (DBD).

In some cases, the business must also be majority (51%) Thai-owned, a significant hurdle for most organizations founded outside of Thailand. You’ll also find that much of the registration paperwork is written in Thai.

Considering all this, using an Employer of Record is a faster, easier, and less demanding route to take.

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 full-service solution to hiring and paying workers in Thailand with minimal risk, you’ll want to work with an Employer of Record.

Work with Payoneer WFM for EOR solutions in Thailand

If you’re ready to grow your team in Thailand, Payoneer WFM is ready to be your EOR. Our specialists can help you align your team as per Thai labor laws and regulations. And with a local entity already established, we can hire employees on your behalf.

We’ll help onboard new hires quickly, process payroll securely, help you stay compliant.

FAQs about Thailand employer of record

1) What is an EOR in Thailand?

A Thailand Employer of Record (EOR) can hire Thai workers on your behalf using an established local legal entity. Working with an EOR is an effective and compliant way to build and manage an international team.

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. Your EOR in Thailand will manage 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.