How to hire employees in Thailand

Thailand stands out as a dynamic hub in Southeast Asia, offering a unique blend of tourist appeal and robust economic strides. With its economy ranking 21st in the Ease of Doing Business Index and experiencing significant GDP growth, Thailand presents a cost-effective yet quality talent pool, especially in the digital sector, making it an ideal locale for businesses aiming to leverage the Southeast Asian market.

What you need to know before hiring employees in Thailand

Job market in Thailand

When considering how to hire Thai employees, it’s crucial to recognize Thailand's dynamic job market, characterized by a low unemployment rate of 1.1% in 2020. The country boasts a skilled workforce primarily engaged in services and agriculture, with a digital economy fueled by over 50 million internet users and an 81.1% internet penetration rate in 2022, projected to reach 84% by 2026. These factors contribute to Thailand's appeal as a destination for hiring diverse and skilled workers.

As Thailand continues to evolve as a key player in Southeast Asia's economic landscape, understanding the local job market's nuances becomes crucial for businesses looking to hire effectively. This backdrop sets the stage for exploring Thailand's hiring trends for 2024, guiding employers in making informed decisions in this vibrant market.

Thailand Hiring Trends

Thailand's job market in 2024 is poised for dynamic changes, driven by digital growth and a push for diversity. A notable decrease in unemployment to 1.15% signals a competitive landscape, where digital acumen is key:

Rise in Digital Jobs: With internet use expected to reach 84% by 2026, demand for roles in digital marketing, cybersecurity, and tech development is surging, reflecting the global digital transformation trend.

Migrant Worker Impact: The contribution of 2.3 million registered migrant workers underscores the need for cultural adaptability and language skills, enriching Thailand's labor pool with diversity.

Emphasis on Inclusivity: The market demands practices that prioritize technical skills alongside the capacity to navigate a multicultural setting, addressing gender imbalances and promoting a diverse talent spectrum.

Strategic Digital Recruitment: Businesses leveraging online platforms for recruitment are positioned to excel, benefiting from Thailand's evolving digital economy and skilled workforce diversity.

For companies aiming to engage with Thailand's evolving job market, adapting to these trends is crucial. Establishing a legal entity or partnering with an EOR like Gloroots can offer strategic advantages, enabling effective navigation of Thailand's promising yet complex hiring environment.

How to hire employees from Thailand

1. Set up an entity in the country

To hire employees in Thailand, businesses may choose to establish a local entity such as a Private Limited Company or Public Limited Company. This approach enables direct oversight of the workforce and optimizes cost efficiency over time.

2. Hire independent contractors

Engaging independent contractors in Thailand offers a flexible approach for businesses aiming to address specific tasks or project demands efficiently. This method allows for agreements with professionals or entities on a per-project basis, perfectly suited for dynamic project landscapes or specialized needs.

Careful classification of such workers is vital to sidestep legal hurdles and avert fines, ensuring compliance with Thai regulations. Additionally, the level of commitment from contractors might differ from that of in-house employees, a factor worth considering for harmonious project integration and goal alignment.

3. Partner with an EOR in the country

Partnering with an Employer of Record (EOR) service, such as Gloroots, provides a seamless entry into Thailand's market without the complexities of establishing a legal entity. This method significantly reduces liabilities and offers a cost-effective solution. Collaborating with an EOR in Thailand ensures compliance with local labor laws, tax obligations, and regulatory requirements, effectively minimizing legal risks and facilitating a compliant operational framework.

Compliance risk while hiring in Thailand

Partnering with Gloroots in Thailand ensures compliance with local employment laws, effectively minimizing risks like those related to minimum wage, employee leave entitlements, and regulations on working hours and overtime. 

Gloroots aids in accurate leave management, adherence to wage laws, and the maintenance of proper work records, protecting businesses from legal issues and penalties, thus allowing them to concentrate on core operations.

Key Aspects of Thailand Labor Law:

Employment Contract:

Under Thailand's labor laws, contracts of employment may be verbal or written, adhering to the stipulations of the Industrial Safety and Health Act. Such contracts, regulated by the Civil Commercial Code and the Labour Protection Act, necessitate the inclusion of specific legal requisites:

• Entitlements for employees, like rest days, sick leave, annual holidays, and observance of public holidays.
• Details on remuneration encompassing salary, overtime compensation, holiday pay, and severance entitlements.
• Guidelines on notice periods and the criteria for salary disbursement upon the termination of employment.
• Clear provisions for the suspension of employment, outlining the specific situations that warrant such action.

Employers must ensure these fundamental aspects are covered in employment contracts to meet the compliance standards set by Thai labor legislation. This attention to detail in contract formulation paves the way to understanding and adhering to regulations surrounding working hours, the focus of the ensuing discussion.

Working Hours:

Thai labor regulations stipulate that the maximum allowable working hours are eight per day, culminating in a total of 48 hours across the week. Furthermore, it mandates that employers must grant a minimum one-hour break to their employees after every five continuous hours of work during regular working days.

Overtime:

Throughout the week, employees may accumulate a maximum of 36 overtime hours, receiving 150% of their normal wage for extra hours worked on standard days. For overtime on holidays, the compensation escalates to 200% to 300% of the regular pay. Typically, these overtime compensation rules do not extend to managerial staff.

Minimum Wage:

In Thailand, the minimum daily wage varies by region, with rates from 328 THB in provinces such as Narathiwat, Pattani, and Yala, up to 354 THB in places like Phuket and Chonburi.

For detailed wage structures by zone and more on employment regulations in Thailand, click here to read more.

Payroll laws in Thailand

In Thailand, salaries are disbursed on a monthly basis, and full-time employees are to be paid in the local currency, Thai Baht (THB, ฿).

Employment benefits in Thailand

Leave Policies in Thailand

1. Paid Time Off:

In Thailand, labor regulations mandate that employees receive a minimum of six days of paid annual leave after completing their first year of employment. This is outlined in the employment contract. Before completing a full year, employers may offer leave on a pro-rata basis at their discretion. Furthermore, arrangements for carrying over any unused leave into the next year can be made through an agreement between the employer and the employee.

2. Public Holidays:

The country recognizes 18 public holidays, during which employees are entitled to paid leave.

3. Sick Days:

In Thailand, employees are entitled to take sick leave as needed, with employers providing up to 30 days of paid sick leave annually. For instances where sick leave extends beyond three days, employers have the discretion to request a medical certificate from a certified healthcare professional, ensuring the well-being of their workforce while maintaining operational integrity.

4. Maternity Leave:

Employees in Thailand are granted 98 days of maternity leave, with the initial 45 days compensated at their full salary by the employer. For the subsequent period, social security provides for half of their regular salary, ensuring support and financial stability for mothers during this significant time.

5. Paternity Leave:

Paternity leave provisions for employees vary according to their employment sector. In the private sector, there's no statutory requirement for paternity leave. However, those in the public sector benefit from an entitlement to 15 days of paternity leave, reflecting the support for new fathers within this employment domain.

Public Health Insurance 

In Thailand, the public health insurance system is designed to ensure comprehensive medical access for all citizens and eligible residents. Funded by the government, it encompasses the Civil Servant Medical Benefit Scheme for government employees, the Social Security Scheme for the private sector, and the Universal Coverage Scheme for the broader population. This structure supports Thailand’s commitment to universal healthcare, offering a range of services from preventive care to critical treatments, ensuring health and well-being across the nation.

Filing tax in Thailand

Other Tax and Social Security Contributions:

In Thailand, the tax and social security contribution system is designed to provide comprehensive support across various sectors, including pension, health insurance, unemployment, and work injury coverage. This balanced approach ensures both employers and employees contribute to the welfare system, promoting a secure and supportive environment for the workforce. The contributions are strategically structured to cover essential services, reflecting Thailand’s dedication to social security and healthcare for its citizens. For a comprehensive understanding of the specific rates and contribution types, please refer to the detailed guide here.

Income Tax:

In Thailand, the employee income tax structure is progressive, ensuring that individuals are taxed according to their income levels. This approach aims to promote fairness and equity within the tax system, with higher earners contributing a larger percentage of their income in taxes. This progressive taxation system reflects Thailand's commitment to a balanced and just financial policy, supporting social services and infrastructure while considering individuals' ability to pay. For a detailed breakdown of all tax brackets and specific rates, please refer to the full tax rate table here.

Business culture in Thailand

• Thai business culture values respect and hierarchy, emphasizing deference to authority.
• Communication is polite and indirect, aiming to maintain harmony and avoid confrontation.
• Building personal relationships is crucial before engaging in formal business matters.
• Decision-making prioritizes consensus, often resulting in a slower process.
• Saving face is paramount, with efforts made to avoid embarrassment for all parties involved.

Top sectors to hire from in Thailand

Service Sector

As the backbone of Thailand's economy, contributing approximately 56.19% to the GDP and employing 45.9% of the workforce in 2021, the service sector offers vast opportunities for employers. This sector spans tourism, finance, retail, and more, highlighting a diverse range of hiring needs.

Industry Sector

With a substantial 35% contribution to the GDP and 22.51% of employment in 2021, the industrial sector, especially manufacturing, presents significant prospects for employers. This sector's pivotal role in Thailand's economy underscores the demand for skilled labor and specialized roles.

Top cities to hire from Thailand

Bangkok:

Thailand's bustling capital, stands as the heart of its economic and technological innovation, making it an ideal location for sourcing diverse talent in business, technology, and creative fields.

Chiang Mai:

Known for its tech-savvy community and digital nomad culture, offers a rich pool of professionals in IT, digital marketing, and startups, supported by a lower cost of living and vibrant expat community.

Pattaya:

With its rapid development and strategic location, is becoming a hub for hospitality, real estate, and service industries, providing opportunities to hire in these growing sectors.

Phuket:

Renowned for its tourism industry, also harbors a growing community of digital and creative professionals, making it a unique spot for companies looking to blend lifestyle with professional expertise.

Hire in Thailand  compliantly with Gloroots

Gloroots offers an efficient pathway for hiring in Thailand through its Employer of Record (EOR) services, designed to fulfill all compliance demands both within the country and internationally. Our EOR platform facilitates swift onboarding, allowing your business to initiate operations with ease. Gloroots provides a versatile solution that accommodates businesses of any size, handling payroll, benefits, and tax responsibilities without the need for establishing a local legal presence. This strategy enables your business to effectively build a remote workforce in Thailand, streamlining the process of team expansion.For detailed insights on how Gloroots can support your hiring strategy in Thailand, we invite you to get in touch.

Frequently Asked Questions 

1. What types of employment contracts are commonly used in Thailand?

In Thailand, employment agreements are typically distinguished by their duration: indefinite-term contracts, definite-term contracts (ranging from a few months up to a maximum defined by law), and project-based or seasonal contracts for tasks expected to last less than a year. Familiarity with these contract types aids in aligning with Thailand’s employment standards.

2. How can foreign companies hire employees in Thailand compliantly?

Foreign entities can engage workers in Thailand by establishing a local entity, such as a private limited company or a public limited company, or through partnership with an Employer of Record (EOR) like Gloroots. An EOR simplifies the process by managing legal employment contracts, payroll, and ensuring adherence to Thailand's labor laws, eliminating the need for a direct legal presence.

3. What are the main challenges of hiring in Thailand and how can they be addressed?

Key hurdles in hiring within Thailand include deciphering intricate labor laws, ensuring precise payroll and social security contributions, and proper classification of workers. Overcoming these challenges requires diligent compliance with local regulations, accurate payroll management, or engaging with an EOR service like Gloroots, which can streamline employment processes and guarantee legal compliance.