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An EOR in Thailand simplifies the process of onboarding international talent. They handle legal, administrative, payroll, and regulatory compliance, ensuring a smooth transition for your company and your employees. By partnering with an EOR, you can take full advantage of Thailand's dynamic economy while maintaining compliance and reducing operational complexities.
For employers building a distributed team, tapping into Thailand’s talent pool can greatly contribute to their business growth.
However, hiring around Thailand’s labor laws can be a bit tricky. For example, minimum wage rates vary by province and are determined based on the local cost of living and economic conditions. To stay current with these trends, employers may have to consult local experts.
Moreover, Thai labor law allows for collective bargaining. Employees have the right to form labor unions and participate in collective bargaining negotiations.
It is for these reasons, foreign employers will benefit from using a Thailand EOR/PEO for several key reasons. Firstly, these services handle compliance and employment matters, and allow businesses to enter the Thai market swiftly. In summary, employers gain efficiency, compliance, and cost savings when partnering with a Thailand EOR/PEO, enabling a seamless expansion into the Thai market.
The cost of Thailand EOR/PEO services in Thailand may differ based on various factors, such as the number of employees, the extent of services needed, and the intricacy of the project. The pricing structure for Thailand EOR/PEO services usually involves a monthly fee per employee or a percentage of the employee's salary. Extra charges may apply for additional services or customization.
Key Metrics For Foreign Employers
Thailand has implemented effective economic policies, advancing towards becoming a middle-income economy and making substantial progress in achieving Sustainable Development Goals.
The country has experienced significant economic growth over two decades, with professional reforms in 2018 streamlining aspects like acquiring electricity, tax payments, business startups, and international trade.
The table below depicts key indicators from the Global Talent Competitiveness Report for employers wishing to hire from Thailand.
Source: The Global Talent Competitiveness Index 2022
Through the Gloroots’ Recrew platform, you can discover amazing talent in Thailand.
Expanding your team necessitates the right hires at the right moment and in the correct roles. In Thailand, navigating compliance, payroll, tax, and benefits management can be complex. Our global Employer of Record (EoR) service at Gloroots takes the burden of these tasks off your plate, ensuring compliance and allowing you to focus on what truly matters: your employees and business growth. With us, you can streamline the process and thrive in Thailand's dynamic market.
"Risks of misclassification" refers to the inaccurate classification of workers, where employers label them as independent contractors or exempt from certain laws when they should be employees with legal rights. In Thailand, partnering with a PEO/EOR addresses these risks. It ensures compliance with labor laws, accurate employee classification, payroll processing, and benefits access, allowing employers to concentrate on core operations. By entrusting these responsibilities to experienced professionals, you can navigate the Thai labor market with confidence and efficiency.
Thailand's employment laws prioritize fairness and employee protection. The rights and obligations of employers and employees are outlined in Thai labor laws, governing the employment landscape in the country.
Employment contract
Under Thailand's labor laws, employment contracts can be established in written or verbal forms as per the Industrial Safety and Health Act. These contracts, governed by Thailand's Civil Commercial Code and Labour Protection Act, are required to include specific statutory elements:
1. Employee entitlements, such as rest days, sick leave, annual leave, and holidays.
2. Compensation details, covering wages, overtime pay, vacation allowances, and severance payments.
3. Provisions regarding notice periods and salary criteria upon employment termination.
4. Guidelines regarding suspension from employment, ensuring a clear understanding of the circumstances.
Employers should take note of these key contract components to ensure compliance with Thai labor regulations.
Working time
According to Thai labor laws, the legal limit for daily working hours is eight hours, and the maximum for a week is 48 hours. Additionally, on regular workdays, employers are required to provide their employees with a break of at least one hour after five consecutive hours of work.
Overtime
In a given week, employees can work up to 36 hours of overtime, which is compensated at 150% of their regular salary on standard workdays and at varying rates ranging from 200% to 300% of their regular salary on holidays. Overtime rules typically do not apply to individuals in managerial positions.
Public Holidays
The country observes 18 public holidays employees can take as paid days off.
Minimum Wage
The national minimum daily wage in Thailand differs depending on the region within the country. It ranges from 328 THB in areas like Narathiwat, Pattani, and Yala to 354 THB in regions like Phuket and Chonburi.
Annual Leave
In Thailand, paid leave is stipulated in the employment agreement, entitling employees to a minimum of six days of paid annual leave each year after they've completed a full year of employment. For employees who haven't yet completed a full year, employers have the option to offer leave on a pro-rata basis. An arrangement for carrying over unused leave can be prearranged through mutual agreement between the employer and employee.
Paid Sick Leaves
In Thailand, all employees have the right to take unlimited sick leave, but the employer is responsible for covering up to 30 days of paid sick leave per year. However, if an employee takes sick leave for three days or more, the employer may request a medical certificate from a qualified healthcare provider.
Maternity leaves
Workers are eligible for 98 days of maternity leave. During the first 45 days, they receive full pay, while for the remaining days, social security covers 50% of their regular salary rate.
Paternity leaves
The availability of paternity leave for employees depends on the sector they are employed in. In the private sector, there is no legally mandated paternity leave. In contrast, employees working in the public sector are entitled to 15 days of paternity leave.
Tax and Social Security contribution:
Employee Income tax
In Thailand, employment can be ended with "just cause," which includes:
- Criminal offenses
- Willful damage of property by the employee
- Negligence leading to serious harm to the employer or others
- Violation of work rules despite prior warnings
- Unexplained absence for three consecutive days
- Employee's sentencing to imprisonment
If termination occurs without "just cause," the terminated employee can file an unfair dismissal claim in the labor court, as Thai labor law tends to favor the worker in such cases.
Termination payments, which comprises of the current month's salary, unused annual leave, and severance pay, must be disbursed to the employee within three days of termination.
Once employment is terminated, the employer must notify the Social Security Office. In the case of foreign workers, the employer also needs to inform the Immigration Bureau and the Department of Employment.
Severance Pay
In Thailand, severance pay is obligatory based on an employee's tenure with the employer. Employees who have worked for the same employer for less than 120 days are not eligible for severance pay.
Severance pay is not required in cases of termination for just cause.
Notice Period
Typically, the notice period is around 30 days, but employers can define longer notice periods in the employment contract. This notice should be given before the next salary payment is due, to take effect for the subsequent salary payment date.
Additionally, employers can provide equivalent payment in lieu of notice is available.
In Thailand, notice periods must be communicated in advance in written form.
Probation period
While there is no obligatory demand to incorporate a probationary period, it is a common practice to include a probation period of up to, but not exceeding, four months.
When hiring globally, ensuring compliance comes with its own set of battles. Employers must ensure all hiring and onboarding activities adhere to employment laws, payroll procedures, DE&I compliance, GDPR and similar data protection, etc. If you think it is hard to set up local entities and start hiring, keeping up with a dynamic compliance landscape is far harder.
Gloroots helps you minimize all these efforts by providing a single window to manage all these tasks. Our in-house experts fully shield you from cross-border employment and payroll compliance risks. We do this by helping you with generating employment contracts, on-time payments, compliant benefits, while you focus only on screening talent.
Our promise is a stress-free global employment experience for both you and your employee.
Contact our experts today to kickstart your global hiring campaign.
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