By Globalization Partners
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From beautiful temples, stunning beaches, and rich history to affordable business costs, a growing economy, and a wealth of vital exports, several features make Thailand an attractive place for international business expansion.
As your company begins to put its teams together, you will need some familiarity with the country’s hiring processes and requirements. This guide to hiring employees will explore essential employment requirements and offer some valuable tips for hiring in Thailand.
What to know before hiring in Thailand
Before you get started, you’ll need to learn the nuances of contracts, wages, time off, terminations, and other critical hiring topics.
1. Contract employment
Employment law in Thailand allows for either written or verbal contracts, as well as both fixed-term and permanent contracts. We recommend that you draft a detailed written contract for each of your employees. The contract should spell out employment details like these:
- Termination requirements
While there is no mandatory minimum or maximum probationary period, Thai labor law recommends probationary periods last no more than 119 days. During this time, if the relationship is not working out, the employer and employee can easily part ways. After that, termination requirements depend on whether the termination occurs with or without cause. If a company is terminating an employee without cause, it must provide written notice of at least one pay cycle. It must also pay severance as determined by the length of the employee’s time with the company:
- 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
In some cases, the employer may opt to pay additional compensation to shorten the notice period.
If a company terminates an employee for financial reasons rather than performance-related reasons and the employee has worked at the company for six years or more, the company must provide additional severance pay. This pay should equal 15 days’ salary for every year of employment, maxing out at 360 days’ salary.
2. Payroll and taxes
Thailand has a national social security fund, and employers and employees must pay into it. This fund assists employees with medical care, child care, and lost wages due to unemployment, disability, or childbirth. It also provides retirement pensions and assistance with funeral costs.
Both employer and employee must contribute approximately 5 percent of the employee’s salary into this fund every month. The minimum contribution is 83 baht per month, and the maximum contribution is 750 baht per month. Your company will also need to pay Thailand’s corporate tax, which is generally about 20 percent of the employee’s salary.
3. Wages and working hours
To some extent, working hours in Thailand are up to the company and its employees, through standard working hours cannot exceed 48 hours per week. Employees should have at least one day off per week, and they should not work more than six days in a row.
Overtime is permissible, though it may not exceed 36 hours per week. If employees work overtime on weekdays, they should receive 150 percent of their base salaries for those hours. If they work overtime on weekends, they should generally receive three times their base salary.
The minimum wage in Thailand varies by province. As of 2020, the country’s minimum wages ranged from 313 baht to 336 baht per day — about 10 to 10.80 U.S. dollars.
4. Time off
Legally, employees in Thailand must receive a minimum of six vacation days annually. In practice, however, most companies provide their employees with 10 to 15 days of paid vacation each year. This leave may carry into the next year if employees do not use it.
Employees in Thailand are also legally entitled to a few additional formal types of leave:
- National service leave: Male Thai employees may take national service leave to join the military or participate in military exercises. They should receive 100 percent of their regular salaries during this leave, which cannot exceed 60 days a year.
- Training or exam leave: Employees may take paid training or exam leave if they take training courses that are relevant to their careers or sit for government examinations.
- Family planning leave: Employees may take this paid leave if they wish to undergo medical sterilization procedures.
If their employers are willing, Thai employees may take a few additional leave types, including compassionate leave, hospitalization leave, marriage leave, Hajj pilgrimage leave for Muslim employees, and monkhood leave for Buddhist men.
Thai labor law also requires employers to provide employees with 30 days of paid sick leave separate from their vacation leave. A company may request a medical certificate if the employee misses three or more consecutive days of work. If employees become sick or injured because of job duties, however, they may take time off without using their sick leave.
Female employees in Thailand may take maternity leave for the birth of their children. Pregnant employees may take 98 days of paid maternity leave. The company pays 45 days, the social security fund pays 45 days, and the remaining eight days are usually unpaid, though sometimes the employer agrees to pay them. Companies may also provide paternity leave at their discretion.
In addition to this time off, paid leave in Thailand includes 13 public holidays. These add up to 15 paid days off, since Songkran, Thailand’s world-famous Buddhist New Year and water festival, lasts for three days.
5. Anti-discrimination law
Thailand’s Ministry of Labour Relations prohibits numerous forms of hiring and workplace discrimination. Employers may not discriminate against job candidates or employees for any of the following characteristics:
- Sexual orientation
- Marital status
- Political opinion
- Labor union membership
To minimize the appearance of discrimination, your company will want to keep its hiring processes free from questions on these topics. You should also tailor your job advertisement language so it reads inclusively for all candidates.
6. Incentives to hire Thai workers
Thailand’s laws require that every business hire at least four Thai nationals per international worker. Additionally, companies that want to employ international workers must obtain permission and licensing from Thailand’s Director-General of the Department of Employment. They must also provide a guarantee against any costs and damages associated with hiring an international employee.
Cost of hiring an employee in Thailand
The costs to hire employees in Thailand will vary with your company’s positions, recruitment strategies, and policies toward bonuses and supplemental benefits. Below are a few of the direct and indirect hiring costs you may incur:
- Expenses from recruitment fairs and job advertisements
- Time spent choosing new hires
One important consideration is that the unemployment rate in Thailand is incredibly low — below 1 percent for most of the past decade. Job candidates tend to have an easy time finding jobs, and qualified applicants may have their choice of offers with different businesses. Your company can improve its chances of attracting talented candidates by focusing on ways to stand apart from similar organizations — such as by offering more appealing benefits or bonuses.
For instance, in Thailand, 13th-month bonuses are optional. Still, many companies provide them as gestures of appreciation for their hard-working employees. For sales employees in Thailand, generous commission plans often replace the standard 13th-month bonus.
Your company may want to provide quality health insurance coverage to remain competitive in the job market. Thailand has a three-tiered universal health care system that provides free medical care for civil servants, private employees, and all other Thai nationals. However, the available health care facilities differ substantially in the quality of the care they offer. For this reason, many companies provide supplementary health insurance for their employees.
Many companies also offer provident funds, which promote savings by allowing employees to deposit their pre-tax earnings into a dedicated fund that they can access upon retirement or termination. Employees may deposit between 2 percent and 15 percent of their paychecks as the employer permits, and the employer contributes an equal or lesser amount.
Hiring practices in Thailand
Hiring someone in Thailand may be similar to hiring new employees for your parent company. Still, you will want to be aware of potential differences so you can shape your company’s practices accordingly. Below are a few best practices to keep in mind:
- Use the local language and currency: Even if your Thai employees have studied some English in school, you should use the Thai language in your essential business communications, particularly critical documents like your contracts and hiring letters. In these documents, you’ll want to use Thai baht for all monetary figures as well. These practices will make your new hires feel more comfortable and help them understand the essential details of their employment.
- Use popular employment websites to your advantage: If sending representatives to Thailand for in-person recruitment presents a challenge, your business can try posting on popular job boards. Even if you do plan on in-person recruitment, online job postings provide an excellent complementary strategy. Try posting on LinkedIn, jobthai.com, jobsDB.com, and jobtopgun.com for the greatest success.
What does a company need to hire employees in Thailand?
Hiring new employees in Thailand can be a lengthy and complicated process, especially if your company elects to set up a subsidiary. You’ll need to decide how to incorporate, develop a budget, and learn the dozens of legal requirements you must adhere to. Establishing a business presence in Thailand is particularly complicated because of the Foreign Business Act, which restricts international operations, often requiring special permissions before international companies can start doing business in Thailand.
If you decide to set up a subsidiary, here are a few of the requirements you will need to fulfill:
- Choosing official promoters and subscribers
- Selecting a board of directors, at least two-fifths of whom must be Thai nationals
- Preparing, signing, and registering a memorandum of association
- Collecting and depositing share capital
- Submitting all required forms to the registrar
- Registering the company’s establishment
- Developing annual audited financial statements
- Filing the audited financial statements and shareholder list each year
An alternative option is to work with a professional employer organization (PEO), also known as an Employer of Record (EOR). A reliable global EOR will take on the administrative, legal, and human resources work of hiring new employees for you, so you’ll be able to focus on other aspects of your business. Because a good EOR already has an established presence in the country, you can skip entity setup and start hiring right away.
Hiring remote employees in Thailand
As you add new employees to your team, your obligations in your home country may require you to interview and hire remotely. Here are a few tips for convenient, streamlined remote hiring:
- Set up established processes: You’ll want to make a positive, professional impression on your job candidates, even from several time zones away. One way to do that is to develop tried-and-true processes to fall back on. Become familiar with a dependable online interview platform, and strategize about the topics you’ll cover to maximize the time you get with your applicants.
- Streamline your scheduling and rescheduling processes: Use technology to your advantage so you can schedule your interviews quickly and save time for more pressing matters. Give your candidates an easy, automated way to sign up for time slots and reschedule if they need to.
- Ensure consistency: As you meet with your remote candidates, be sure to treat them all consistently. Try to keep your interviews to the same length and ask each applicant similar questions. You’ll likely vary your conversations a bit to probe into your candidates’ various backgrounds, strengths, and weaknesses. Still, you’ll want to ensure the same equitable treatment you would strive for with in-person hiring.
Additional tips for how to hire in Thailand
Here are a few more steps to hiring in Thailand for your company to consider:
- Check in with your province: Thai provinces have different laws and criteria for establishing a business. You’ll want to research your chosen region to determine what special laws, requirements, and expenses you’ll need to consider.
- Check in with CBAs: Collective Bargaining Agreements (CBAs) are less common in Thailand than in many other countries. Still, your company should check to see if your industry has a CBA with additional employment requirements you must follow.
Build international teams with Globalization Partners
When you’re ready to expand into Thailand, Globalization Partners is here to make building your teams simpler and easier. Our comprehensive, AI-driven solution allows us to shoulder the work of recruiting, hiring, and onboarding new employees, so you’ll gain the talented in-country team you need and have the time and energy to focus on your most critical business endeavors.