Expand Your Business with an Employer of Record in Thailand

Thinking about bringing Thai talent onto your team? Great choice!

Thailand's booming economy and skilled workforce make it an attractive destination for international businesses.

But how can you navigate the complexities of Thai employment laws and cultural intricacies?

Enter the Employer of Record (EOR) in Thailand.

In this article, we'll explore how collaborating with an EOR in Thailand can be your key to a smooth and compliant business expansion.

Ready? Let’s roll.

What is an Employer of Record in Thailand?

An Employer of Record in Thailand is a third-party service that legally employs workers on your behalf and handles all local legal, HR, and payroll responsibilities.

Essentially, the EOR becomes the official employer, handling compliance and administrative tasks while you manage your team's daily operations.

Quick tip: If you're new to this concept, check out my guide on What Does EOR Stand For for a deeper understanding.

So, why do companies opt for an EOR in Thailand?

Here are the main reasons:

• Efficient Market Entry: Bypass the time-consuming process of establishing a legal entity in Thailand.
• Regulatory Compliance: Navigate Thailand's complex labour laws with expert assistance.
• Cost Savings: Minimise overhead and administrative burdens associated with setting up locally.

As you can see, EOR services enable you to hire Thailand's top talent swiftly and compliantly, sidestepping the usual hurdles.

But what makes Thailand's labour market unique, and how can an EOR help you thrive?

Let's explore.

The Thai Employment Landscape

When I first considered hiring in Thailand, I was impressed by the country's robust labour laws and rich cultural traditions.

While these laws offer substantial protections for employees, they can pose challenges for foreign companies unfamiliar with local regulations.

Here's a breakdown of what you need to know:

Standard Working Hours and Overtime

In Thailand, the typical workweek is 48 hours, usually 8 hours per day over 6 days. However, many companies operate on a 5-day workweek, totalling 40 hours.

Overtime is regulated. Employees should not work more than 36 overtime hours per week. 

Overtime compensation varies, but here’s a general rule of thumb:

• 150% of the regular hourly rate for standard overtime.
• 200% for overtime on holidays.
• 300% for overtime performed on holidays beyond regular working hours.

Refer to the Thai Labour Protection Act for detailed information.

So, how does compensation look like? Let’s find out.

Compensation and Currency

The local currency is the Thai Baht (THB).

Thailand has established minimum wages that vary by province, ranging from THB 328 to THB 354 per day as of 2022. 

The Thai government plans to increase this to a possible THB 400 in 2025, but they’ve been slow to pass regulations.

Here’s what you can expect regarding other common compensation practices:

• Bonuses: While not legally required, annual bonuses are customary in many industries.
• Allowances: Transportation, meal, and housing allowances are standard perks employers offer.

Up next, let's discuss public holidays and annual leave in Thailand.

Public Holidays and Annual Leave

Depending on the calendar, Thailand recognises 13 to 16 national public holidays each year.

Employees are entitled to paid leave on public holidays. If a holiday falls on a weekend, the following weekday is typically observed as a substitute.

Employees are entitled to a minimum of 6 working days of paid annual leave after one year of continuous service. Employers often offer more generous leave policies as part of their benefits package.

Tax Obligations and Social Contributions

Understanding Thailand's tax system is crucial when hiring in Thailand:

Personal Income Tax

Employers must withhold personal income tax from employees' salaries, with progressive rates ranging from 5% to 35%.

Social Security Contributions

Both employers and employees contribute to Thailand's Social Security Fund:

Employers must withhold 5% of the employee's salary (up to a salary cap). While employees must deduct 5% of their salary.

For detailed information, consult the Social Security Office of Thailand.

So, what are the leave policies and parental benefits in Thailand?

Let's find out.

Leave Policies and Parental Benefits

Here's what you should know about employee entitlements in Thailand:

Sick Leave

Employees are entitled to 30 days of paid sick leave per year. A medical certificate may be required for absences of 3 days or more.

Maternity Leave

Female employees are entitled to 98 days of maternity leave. This includes prenatal and postnatal leave. Employers must pay for 45 days of the leave at full pay; the remainder may be covered by social security benefits.

Paternity Leave

Not mandated by law, but some employers offer paternity leave as part of their company policies.

Next, let’s look at probation periods and termination in Thailand.

Probation Period and Termination

Here’s what you can expect when hiring a Thai employee:

Probation Period

Commonly up to 120 days. During probation, employees have the same rights as regular employees.

Notice Period for Termination

If employment is terminated without cause employers must give the following notice periods:

• Less than 120 days of service: No notice required.
• 120 days to 1 year: At least 30 days' notice.
• 1 year or more: Notice period may be stipulated in the employment contract, but generally 30 days.

And what about severance pay?

In Thailand, severance pay varies based on length of service, ranging from 30 days' pay for less than one year of service to 400 days' pay for over 20 years of service.

As you can see, Thailand's labour laws are employee-friendly, making it essential to handle terminations carefully to avoid legal complications. Navigating these regulations can be complex.

That's where an Employer of Record in Thailand becomes invaluable, managing compliance and administrative tasks so you don't have to.

Selecting the Right EOR Partner in Thailand

Choosing the right Employer of Record is crucial for your success in Thailand.

Consider these factors:

1. Expertise in Thai Labour Laws

Your EOR should have comprehensive knowledge of:

• Employment Contracts: Understanding fixed-term and indefinite agreements.
• Regulatory Compliance: Staying up-to-date with Thai labour legislation.
• Cultural Nuances: Advising on local business etiquette and practices.

2. Full Range of Services

Look for an EOR that provides:

• Payroll and Tax Management
• HR Support and Employee Relations
• Legal Compliance Assistance
• Benefits Administration

A provider that offers end-to-end solutions will streamline your operations.

3. Transparent Pricing Model

To avoid unexpected expenses:

• Request a clear breakdown of fees.
• Understand what's included and any additional costs that may arise.

4. Customised Solutions

Your EOR should offer flexibility to accommodate:

• Industry-Specific Requirements
• Company Size and Growth Plans
• Unique Business Needs

5. Proven Experience

Assess potential EORs by:

• Reviewing client testimonials and case studies.
• Verifying their track record in Thailand.
• Checking for any legal or compliance issues in their history.

6. Local Presence with International Standards

An EOR with a strong local team offers:

• Insightful Cultural Guidance: Enhancing team integration and collaboration.
• Prompt Support: Quick resolution of any issues or concerns.

But if partnering with an EOR in Thailand isn't the right fit, there's another option.

Considering Alternative Labour Markets

While Thailand offers immense opportunities, it's worth exploring other markets that might align with your business objectives.

For instance, South Africa presents a rapidly growing economy and a young, skilled workforce.

If you want to hire South African employees, collaborating with an experienced Employer of Record in South Africa can facilitate your expansion.

Final Thoughts

To sum it up: Hiring employees in Thailand doesn't have to be complicated.

By partnering with a reputable Employer of Record in Thailand, you can confidently manage the complexities of local labour laws and cultural practices.

Concentrate on what you excel at—growing your business—while your EOR takes care of the rest.