COUNTRY GUIDE
As a bustling business hub in Southeast Asia, Thailand seamlessly blends tradition and culture with a thriving economy. Here’s what you need to know about payroll and HR in Thailand.
THB
+66
12
21
Bangkok
GMT + 7
Thai
Jan 1st – Dec 31st
7%
20%
10%
0 – 35%
Running payroll in Thailand without a legal entity can be challenging because employment regulations typically require a legal presence for employers. If you don’t have a legal entity and don’t wish to set one up, we can support you with our global payroll services or an employer of record. Or if you wish to go ahead with a full registration, our market entry services can handle the set-up process on your behalf.
Yes, you will need a local bank account. You’ll need to provide the necessary documentation such as company registration documents, tax identification numbers, and other relevant paperwork. The specific requirements may vary depending on the bank and local regulations.
Typically, people work up to six days a week, with about eight hours each day, not exceeding a total of 48 hours per week. If a workday is shorter than eight hours, it can be extended to nine hours if both the employer and employee agree, as long as the total weekly working time doesn’t go over 48 hours.
Employees should get a break of at least one hour after working for five hours in a row. The employer and employee can decide on a shorter break in advance, but when combined, the total break time should be at least one hour for each workday.
The overall working hours, including a one-hour break and any extra time worked, shouldn’t surpass 11 hours in a day.
There should be at least one paid rest day each week, usually on Sunday.
1.052 – 1.15 times employee’s salary plus any other benefits offered.
There are a range of statutory pay requirements in Thailand, governing minimum wage, sick pay, maternity pay, and severance pay. Let’s take a look at the core considerations for each:
As of January 1st 2024, the minimum wage in Thailand is THB353.00 to THB363.00 per day.
Overtime is set at the following rates:
Employees in Thailand are entitled to 30 paid sick days per year.
Female employees are entitled to a maternity leave period of 98 days for each pregnancy, which includes the time taken for prenatal care, such as attending medical appointments. Paid leave during this period is limited to 45 days, with the initial 45 days covered by the employer and the remaining period compensated through the government social security fund.
For female employees covered by the Thai Social Security system, there are additional benefits available under specific conditions, including a lump-sum payment of THB 15,000 per birth upon the child’s delivery. A cash benefit equivalent to 50% of wages (up to THB 15,000 per month) is provided for a duration of up to 90 days. This wage benefit is applicable only for the first two deliveries.
Severance pay is determined by the length of an employee’s service. If an employee is terminated without a valid cause as defined by law, they are entitled to the following severance pay based on their tenure:
Additionally, a terminated employee is entitled to the following compensation:
Severance pay is not provided to employees terminated for serious misconduct. Termination payments, covering the current month’s salary, unused annual leave, and severance pay (including overtime, if applicable), must be settled within three days of the termination date. However, payment in lieu of notice is to be made to the employee on the date of termination.
In Thailand, you’re responsible for making a number of deductions from an employee’s salary during payroll, as well as making your own contributions as an employer. Here, we’ll cover what you need to know about the Thai tax and social security system:
The current personal income tax in Thailand is as follows:
Income (THB) | Tax rate |
Up to 150,000 | 0% |
150,001 – 300,000 | 5% |
300,001 – 500,000 | 10% |
500,001 – 750,000 | 15% |
750,001 – 1,000,000 | 20% |
1,000,001 – 2,000,000 | 25% |
2,000,001 – 5,000,000 | 30% |
5,000,001 and above | 35% |
Tax on foreign income
As of January 1, 2024, Thailand’s new tax policy extends to taxing all income from abroad as personal income, irrespective of its source, meaning that the remittance system now taxes money brought into the country. Different visa options provide flexibility, impacting tax requirements for individuals residing in Thailand intermittently. While the new tax system may imply higher rates for expats, avenues for obtaining residency and citizenship are available. It’s crucial to note that living in specific countries without paying taxes is no longer a feasible option due to Thailand’s evolving tax code.
The current social security rate in Thailand is 10%, with employers contributing 5%, and employees contributing the remaining 5%.
The Ministry of Labor has introduced adjustments to the contribution ceiling of the Social Security Fund, implemented in three phases:
These adjustments align with the Ministry’s directive to review and update the contribution ceiling every three years to accommodate the rising cost of living.
Employers are required to make an annual contribution to the Workers’ Compensation Fund (WCF), ranging from 0.2% to 1% of their employees’ annual wages. The specific rate is determined by the risk levels associated with the nature of the business. According to the Workmen’s Compensation Act, employers are required to provide benefits to employees who sustain injuries, illnesses, or fatalities while engaged in their work.
For the purpose of calculating this contribution, the annual wage per employee is capped at THB 240,000, covering all payments such as holiday pay, overtime pay, and bonuses.
The compensation, paid monthly, amounts to 60% of the employee’s monthly wages, with a range from THB 2,000 to THB 9,000. For serious injuries, medical expenses are covered up to THB 50,000, and rehabilitation expenses are covered as necessary, up to THB 20,000. In the unfortunate event of an employee’s death, funeral expenses are provided, reaching a maximum of 100 times the minimum daily wage.
Moving onto to the key areas you need to consider to make sure you stay fully compliant with Thai employment law, now, we’ll cover the various rules and legislation governing payroll and HR compliance in Thailand:
Employers with a workforce of 10 or more people are required to maintain employee records in the Thai language covering the following details:
These employee records must be retained by the employer for a minimum of two years following the end of employment.
Employers with a staff size of 10 or more are mandated to submit an annual report on employment and working conditions to the Director-General every January.
While not obligatory in Thailand, it is recommended to provide employees with a payslip regularly, typically on a monthly or payment period basis. The payslip should include essential details such as the net salary and specific deductions like social security contributions and withholding tax.
Key information to be featured on the payslip includes:
In July 2018, a labour law capped foreign employees in Thailand’s industrial and service sectors at 20% of the workforce. Exemptions apply for specific expertise or Board of Investment endorsement.
The standard “non-immigrant visa B” for foreign nationals requires:
The non-B visa and work permit have a one-year duration, with renewal options. Required documents include education records, work history, and financial statements, taking around seven business days for processing.
Thailand’s Long-Term Resident Program (LTR) from September 2022 caters to different categories:
An employer overseeing a workforce of 10 or more people is mandated to submit work rules to the Thailand Ministry of Labor. Additionally, the employer is obligated to maintain an employee register with specific criteria in the Thai language. The work rules should encompass, at a minimum, the following details:
These work rules must be publicised within 15 days of the company’s workforce reaching 10 or more employees. A copy of these rules should be readily available at the workplace, and each employee must be provided with a copy.
There is no mandatory national pension scheme for private sector employees in Thailand. The social security system covers certain employees, providing benefits such as medical care, sickness, maternity, disability, death, child allowances, and old age pensions. However, this system applies to specific categories of employees, and participation is generally mandatory for those covered.
For public sector employees, there may be different pension arrangements, and government employees often have their own pension schemes.
Employment contracts: While a written employment contract is not legally required in Thailand, both employers and employees can be bound by an oral agreement. However, it is highly advisable to have a written contract in place to mitigate potential disputes and safeguard the interests of both parties. Although Thai labour laws do not necessitate employment contracts to be written in Thai, it is recommended, especially for Thai nationals, to make sure that the nuances can be fully understood by all. In the case of an employment relationship, the employer and employee can opt for either an indefinite-term or fixed-term employment contract.
Indefinite term: When there is no specified end date, either party can terminate the contract with notice or payment in lieu of notice. Termination by the employer without advance notice is permissible only with just cause.
Nature of work: Thai labour laws differentiate between the hire of work (independent contractor relationship) governed by the Thai Civil and Commercial Code and the hire of service (employment relationship) primarily governed by the Thai Labour Protection Act BE 2541 (1998).
Probationary period: A probationary period is permitted with no specified maximum duration, although it is generally recommended not to exceed 119 days to avoid triggering severance at 120 days. If the probation period is extended, and the combined length surpasses 120 days, the employee may be entitled to severance pay in the event of termination.
Termination by notice: Termination of an employment contract can be initiated by either the employer or the employee by giving one month’s written notice. This standard notice period can be adjusted if different terms are specified in the employment contract. If the employer opts for immediate termination without notice, they are required to pay the employee salary in lieu of notice.
Termination without cause: Terminating an employee without cause increases the likelihood of the employee filing an unfair termination claim with the labour court. This may lead to substantial claims, including final settlement and legal fees, surpassing any compensation provided.
Employee misconduct: Advance notice or payment in lieu of notice is not required when employment is terminated due to serious misconduct by the employee. Such misconduct includes instances of dishonesty, committing a criminal offense, causing intentional damage, negligence leading to significant harm, violation of work rules despite prior warnings, unexplained absence for three consecutive days, or being sentenced to imprisonment.
Notification requirements: Upon terminating an employment contract, employers must fulfill certain notification obligations. This includes notifying the Social Security Office. In the case of foreign employees, additional notifications are required at the Department of Employment of the Ministry of Labour and the Immigration Bureau.
As the social security contributions in Thailand cover a wide range of benefits, plus additional benefits that employers must offer, mean employees in Thailand will receive:
Competitive supplementary benefits in Thailand can vary depending on the industry, company policies, and the preferences of the workforce. Here are some popular choices:
Minimum of 6 days per year after 12 months employment, in addition to 16 public holidays.
Note that some holidays are based on the Thai lunar calendar, so their exact dates may vary from year to year. It’s always a good idea to check for updates closer to the current date or consult an official Thai government source for the most accurate and up-to-date information on public holidays in Thailand.
In Thailand, maternity leave spans a minimum of 98 days, with the initial 45 days being paid. Surrogate mothers are entitled to the full 98 days of maternity leave, but individuals becoming parents through surrogacy or adoption are not entitled to maternity leave benefits.
Pregnant employees hold the right to request less strenuous duties to support their health during their pregnancy.
While government employees are entitled to 15 days of paternity leave annually, private sector employees have no rights to time off work for parental or paternity leave under Thai employment law.
Sick leave entitlement is up to 30 days per year. If an employee takes medical leave for three working days or more, the employer may request a medical certificate from a doctor or a government medical facility. In cases where the employee is unable to provide a medical certificate from a doctor of first-class modern medicine or a government medical facility, an explanation must be provided.
Personal business leave allows employees three days annually to address personal matters.
Sterilisation leave is available for employees seeking paid time off for a medically necessary sterilisation procedure, certified by a medical practitioner.
Military service leave permits employees to take up to 60 days off for military exercises, with compensation at the basic pay rate.
Thailand offers various business structures, including sole proprietorship, partnership, limited partnership, limited company, and public limited company. The most common choice for foreign investors is a limited company due to its flexibility and limited liability.
A limited company must have at least three shareholders, and a minimum of one director is required. Foreign nationals can hold shares, but the majority must be owned by Thai nationals. Directors and shareholders can be the same individuals.
It will also require a unique and approved business name. The name must be reserved with the Department of Business Development (DBD) to ensure exclusivity and compliance with Thai regulations.
Once you’ve reserved your company name, registered a Thai address, deposited the minimum capital requirements into a Thai bank account, and appointed shareholders and directors, the next step involves submitting the company registration application to the Department of Business Development. This includes the memorandum of association, list of shareholders, list of directors, and other relevant documents. Once approved, the company is officially registered.
Upon registration, your company must obtain a tax identification number and register for value-added tax (VAT) with the Revenue Department.
If foreign nationals will be employed, work permits must be obtained from the Department of Employment within the Ministry of Labor. This process involves proving that the company generates revenue and complies with Thai labour laws.
Typically, between 16-20 weeks.
For most industries, the requirement is to have a local Thai shareholder hold at least 51% of the share capital.
There are some options whereby a Thai partner is not required such as a US-Thai treaty whereby US nationals or US companies can be fully owned without a Thai shareholder. The conditions to exercise the treaty is:
The minimum capital requirements for a limited company in Thailand is 1 million baht.
Yes, you can establish a branch of your company in Thailand. You'll need to go through the process of registering with the Department of Business Development. This involves submitting required documents, including proof of the parent company's existence, financial statements, and details about the branch's intended activities.
Want to find out more about Cintra Global? We’d love to hear about your global expansion plans and tell you about how we can support you with your international payroll, HR, and expansion needs.
Maling Exchange, Hoults Yard
Walker Road, Newcastle upon Tyne
NE6 2HL
Phone: 0191 4787000
Email: info@cintra.co.uk
Registered in England and Wales
Company No. 03248469
