How to Hire in Thailand

If your business wants to hire in Thailand, you’ll need to operate through some sort of entity. This includes working through a local office, an address registered as a subsidiary, and an account with a local bank. The process of setting this up can take months, especially when businesses need to navigate regional benefits, payroll, tax, and HR laws.

Thailand also has different requirements for contractors vs. employees. Misclassifying these workers can result in legal penalties and fines. Global PEO Services lets you hire employees in Thailand faster, easier and with all the regulatory compliance.

With that said, if you’d still like to hire in Thailand, this guide will help you navigate the regulatory complexities and requirements.

Employment Contracts

Written or verbal contracts are permissible within Thailand’s employment law, which includes fixed-term and permanent contracts. Although not required, it is always recommended to create a strong employment contract for any new hires in Thailand.

Contracts protect both the employer and employee from any potential disputes. However, the judicial system in Thailand often rules in favor of the employee if there isn’t a clearly defined contract in place. Avoid using general online templates, as these can be more risky for international hiring if they don’t include in-country requirements.

Employment contracts should include basic parameters, such as:

• The employee’s role and responsibilities
• Compensation expectations
• Benefit packages
• Termination requirements

Probationary Period

When you hire in Thailand, probationary periods are not required, but Thai labor law recommends no more than 119 days. This provides enough time for both parties to determine how they feel about the employment relationship.

Terminations

Terminations can sometimes create challenges when dealing with foreign workers. If a company terminates an employee without cause, it must provide written notice of at least one pay cycle. The employer will also be forced to pay severance based on the employee’s time spent with the company. Here is a severance breakdown:

• Less than one year: 30 days’ compensation
• One to three years: 90 days’ compensation
• Three to six years: 180 days’ compensation
• Six to 10 years: 240 days’ compensation
• 10 to 20 years: 300 days’ compensation
• 20 years or more: 400 days’ compensation

Terminations for financial reasons, instead of performance issues, may result in additional severance pay. For employees working at a company for over six years, they are entitled to 15 days’ salary for every year of employment, maxing out at 360 days’ salary.

Payroll and Taxes

Employers are required to pay into Thailand’s national social security fund. These taxes support employees with medical care, child care, unemployment benefits, disability, or childbirth. This fund also provides retirement pensions and assistance with funeral costs.

These social benefits comprise 5% of the employee’s salary from both parties. The other tax to be aware of is Thailand’s corporate tax, which is generally about 20% of the employee’s salary.

Income tax rates in Thailand range from 0% for the lowest-earning employees, to 35% for those earning over 4,000,001 Baht. All tax must be reported to the Thailand Revenue Department. Businesses must also provide payslips for each pay period, with payroll records kept for at least 7 years.

Wages and Working Hours

Work-life balance is an important part of the recruitment when you hire in Thailand. The standard working hours can’t exceed 48 hours per week and they shouldn’t work more than six days in a row. Not only is this a requirement, but it can help you retain your employees for longer.

Thailand does allow overtime, but it can’t surpass 36 hours per week. For weekdays overtime, they should receive 150% of their base salaries for those hours worked. Weekends generally are more expensive, with employees receiving three times their base salary.

Because Thailand is divided into provinces, the minimum wage varies. But in general, the minimum wages range between 313 baht to 336 baht per day, which is about $10 U.S. dollars.

Time Off Requirements

Although Thailand only requires companies to offer six vacation days, it’s customary to offer 10-15 days off each year. Without offering that, you may miss out on recruiting top-tier talent to your business. The leave typically carries into the following year if it’s unused.

In addition to vacation time, Thailand workers may also be entitled to a few other types of leave, including:

• National service leave
• Training or exam leave
• Family planning leave
• Compassionate leave
• Hospitalization leave
• Marriage leave
• Hajj pilgrimage leave
• Monkhood leave

Employers will also need to provide their Thai employees with 30 days of paid sick leave, which is separate from the vacation leave. However, it’s important to note that if an employee is sick or injured because of their job functions, they are entitled to time off without using their sick leave.

Maternity leave is another area to be aware of. Pregnant employees can take 98 days of paid leave, with the company funding 45 days and the social security fund paying 45 days. The remaining eight days are unpaid, unless the employer chooses voluntarily to pay for it. Paternity leave is up to the discretion of the employer.

But it doesn’t end there. Thailand also has 13 paid public holidays, which adds up to 15 days with Songkran lasting for three days.

The costs of international hiring includes much more than a worker’s salary. Companies will need to anticipate the compliance factors, legal requirements, benefits packages and more. We’ve listed just a few of the direct and indirect hiring costs you should plan for:

• Recruitment efforts
• Vetting qualified candidates
• Payroll and taxes
• Competitive salary compensation
• Benefit packages
• Bonuses and incentives
• Insurance
• Legal entity establishment
• Outsourced vendors

Due to the demand for qualified workers, the unemployment rate in Thailand sits at about 1%. This means it will cost companies more to hire in Thailand because they will be trying to recruit workers away from their existing positions.

If you want to improve your chances of hiring top talent, you’ll need to offer employment packages that stand out from the competition. For instance, 13-month bonuses are optional, but companies provide this as a customary benefit to show appreciation. For sales employees, it’s common to offer generous commission structures instead of these bonuses.

Consider also offering additional health insurance coverage for the Thai market. They have a three-tiered universal health care system that provides free medical care for civil servants, private employees, and other Thai nationals. But by offering additional health insurance, workers can gain access to higher quality care and facilities.

Many employers also offer a type of retirement savings plan called provident funds. This allows employees to deposit pre-tax earnings into a dedicated fund they can access upon retirement or termination. Employees can deposit 2%-15% of their paychecks, depending on the employer’s policies, with the employer matching that amount.

Hiring employees in Thailand can be a time-consuming and challenging process, especially for companies setting up their own entity. In that case, businesses need to decide their company structure, develop a budget, and adhere to all the legal requirements. Incorporation in Thailand has become more difficult because of the Foreign Business Act, which restricts international operations. With that said, here are some tips on how to hire in Thailand.

1. Use the local language and currency

If possible, use the Thai language with your employees, even if they know English. This is especially important when it comes to hiring documentation like employment contracts or offer letters. For these documents, businesses should use the Thai baht for all monetary figures. This will help your new hires feel welcome and comfortable as they begin their job tasks.

2. Use popular employment websites

If you don’t have a big budget for recruitment, your business can leverage popular job boards like LinkedIn, JobThai.com, JobsDB.com, and JotTopGun.com. However, it’s important to note that because of the low unemployment rate, this strategy may take more time to find the right hire. Additionally, the descriptions on your listing should clearly outline the benefits, salary and advantages of a potential candidate working for your company.

3. Create structured and established processes

Making a positive, professional impression is critical for the recruitment process. From recruitment to onboarding, your business should have a very clear structure and processes for new hires. Developing an onboarding plan will help new global employees learn the ropes and integrate with the team. An effective plan will start before the employee ever starts their first day of work. Use technology to your advantage so you can schedule your interviews quickly and save time for other important initiatives.

4. Use a Global PEO Provider

Global PEO Services, a Safeguard Global company, is constantly monitoring international HR trends for businesses. We help companies expand globally without setting up legal entities or dealing with related talent acquisition, HR, benefits, payroll, tax, and compliance issues. Hire employees fast, test new markets, and respond to growing business needs quickly while leaving the compliance and operational burden to us. With our Professional Employer Organization (PEO) or Employer of Record (EOR) services, you get full control. All without taking on legal entity liabilities, contractor risks, or sacrificing on talent and speed to market.