Your guide to payroll in Thailand

Organizations have legal requirements around payroll and employee remuneration. 

If you’re hiring employees in Thailand, you need to know the local laws around payroll in Thailand, taxes, employee benefits, and more.

Thailand payroll: Wages and other payments

Payroll management in Thailand requires a deep understanding of the payroll cycle, minimum wage, sick pay, maternity leave, and severance packages. Let’s take a closer look at each element of payroll.

1) Payroll cycle

Employees are usually paid monthly in Thailand, and payday is often the last working day of the month.

2) Minimum wage

Thai law mandates a daily minimum wage of 330 to 370 baht, which is 9,900–11,100 baht per month, depending on the company’s location. 

The minimum wage may be higher in areas with lots of economic activity (and expensive living costs) and lower in rural areas.

If an employee is asked to work more than the standard 48-hour work week or 8-hour working day, the organization must pay them overtime. 

On a regular working day, overtime pay is 1.5 times the employee’s normal wage. This jumps to 2 times their wage for rest days or 3 times for public holidays.

3) Sick pay

Employees in Thailand are entitled to up to 30 days of paid sick leave per year. Depending on the company policy, a doctor’s note may be required after 3 consecutive days of illness.

4) Maternity pay

Thai employers are obligated to provide 120 days of maternity leave for each pregnancy. This leave can be taken before and after the birth. 

Employees receive pay for 90 of those days, with the first 60 days paid by the employer and the rest covered by Thailand’s social security fund.

Thai employees are entitled to other types of paid and unpaid leave. The leave policy in Thailand is something that all local employers need to be aware of.

5) Severance packages

In Thailand, employees are owed severance pay based on their length of tenure:

• 120 to 365 days of service: 30 days of pay
• 1 to 3 years of service: 90 days of pay
• 3 to 6 years of service: 180 days of pay
• 6 to 10 years of service: 240 days of pay
• 10 to 20 years of service: 300 days of pay
• 20+ years of service: 400 days of pay

Payroll in Thailand: Contributions and deductions

When paying employees, employers are required to withhold salary tax in Thailand. 

Other contributions to the Thai social security, Workers’ Compensation Fund, and Employer Welfare Fund (optional) are also deducted. 

1) Salary tax in Thailand

Thai workers pay taxes on their earnings, ranging from 0 to 35%.

2) Social security

We mentioned above that some maternity pay is funded by Thailand’s state social security fund. Contributions to this fund also cover pensions, health insurance, and unemployment benefits.

Both the employer and the employee must contribute 5% of the employee’s monthly salary to the Thai social security, totaling 10%. 

3) Workers’ Compensation Fund

Thai employers must make annual contributions to the Workers’ Compensation Fund (WCF). This fund helps support employees and their families in the case of work-related illness, injury, or death.

Employers contribute 0.2% to 1% of their employees’ annual wages to WCF, depending on how risky the work is (the higher the risk level, the higher the contribution).

Mandatory Thai employee benefits

Thailand’s social security pays out the following employee benefits:

• Pension: Thai workers can retire at age 55. They must have contributed to social security for at least 15 years to be eligible for a state pension.
• Child allowance: Working parents with at least 1 year of social security contributions can access an allowance of 600 baht per month per child (aged 15 and under), for up to 3 children.
• Medical benefits: If an employee gets sick (and it’s not work-related), the government will support them with half their core wage to help pay for medical exams, rehabilitation, and other hospital expenses.
• Disability benefits: Disability cover provides up to half an employee’s wage for medical exams, medication, supplies, and other medical expenses related to their disability.
• Death benefits: The family of a deceased Thai worker can access funds for funeral expenses and other associated costs.

Some employers will offer additional benefits to help attract and retain top talent. 

In Thailand, this can include health insurance, paid time off beyond what’s mandated by law, flexible working, and additional training and development.

How to pay employees in Thailand

When it comes to running a payroll in Thailand, companies have few options, like:

1. Setting up a local entity: This can be costly and time-consuming as it requires a lot of administrative overhead. Additionally, you’ll take on responsibility for Thai work permits and visas, as well as payroll management, taxes, and benefits as per Thailand’s laws.
2. Using international payment platforms or wire transfers.
3. Partnering with an EOR in Thailand: An Employer of Record (EOR) like Payoneer Workforce Management helps streamline how you engage and pay employees in Thailand. They act as a legal employer and offer support for staying compliant as per local labor law and payroll management in Thailand. 

Book a demo to learn how Payoneer Workforce Management can help.

FAQs  

1) What is the payroll system in Thailand?

In Thailand, payroll typically runs month to month. Employees receive base pay for up to 48 hours a week (working up to 8 hours a day). Overtime pay must be provided for longer days or weeks.

2) What is the payroll tax in Thailand?

In Thailand, payroll-related obligations include:

• Personal income tax: Employees pay tax on a progressive scale ranging from 0% to 35%.
• Social Security contributions: Both employers and employees contribute 5% each, capped at THB 750 per month per party, to the Social Security Fund. These contributions fund benefits such as pensions, medical coverage, disability, death benefits, and unemployment support.

3) What is the Thai basic wage?

Thailand’s minimum wage is 330 to 370 baht per day, depending on the company’s location.