Thailand – PEO & Employer of RecordReading Time: 7 minutes
Globalization Partners provides PEO and employer of record services in Thailand for clients that want to hire employees and run payroll without first establishing a branch office or subsidiary. Your candidate is hired via Globalization Partners’ Thailand PEO in accordance with local labor laws and can be onboarded in days instead of the months it typically takes. The individual is assigned to work on your team, working on your company’s behalf exactly as if he or she were your employee to fulfill your in-country requirements.
Table of Contents
- Hiring, Negotiating and Doing Business in Thailand
- Employment Contracts in Thailand
- Thailand Working Hours
- Vacation Leave in Thailand
- Sick Leave in Thailand
- Maternity and Paternity Leave in Thailand
- Termination of Employment and Severance in Thailand Country
- Thailand Tax
- Health Insurance Benefits in Thailand
- Additional Benefits in Thailand
- Thailand Holidays
- Annual Bonuses in Thailand
- Why Globalization Partners
Our Global Employer of Record Platform™ and Global PEO service enables clients to run payroll in Thailand while HR services, tax, and compliance management matters are lifted from their shoulders onto ours. As a Global PEO expert, we manage employment contract best practices, statutory and market norm benefits, and employee expenses, as well as severance and termination if required. We also keep you apprised of changes to local employment laws in Thailand.
Your new employee is productive sooner, has a better hiring experience and is 100% dedicated to your team. You’ll have peace of mind knowing you have a team of dedicated employment experts assisting with every hire. Globalization Partners allows you to harness the talent of the brightest people in 170 countries around the world, quickly and painlessly.
Hiring, Negotiating and Doing Business in Thailand
Thai cultures often seem traditional or conservative to westerns at first, when in fact the Thai people are often easy-going and do not expect foreigners to know Thai etiquette. That being said, it is helpful when hiring, negotiating, and doing business in Thailand to have a certain understanding of Thai culture.
Thai culture places a strong emphasis on being polite and respectful. You want to speak softly and avoid open conflict or criticism. If you do need to bring up a negative topic, it is best to do so indirectly.
Hierarchy is very important in Thai society, so do not be surprised when first time you meet someone they ask you several questions to establish your status. This can often seem very personal to westerners, but should be taken in stride as it is common practice in Thailand. When negotiating terms of an employment contract and offer letter with an employee in Thailand, it may be useful to keep the following in mind:
Employment Contracts in Thailand
In Thailand, employment contracts can be oral or written, but it is best practice to put a strong, written contract in place, in the local language, which spells out the terms of the employee’s compensation, benefits, and termination requirements. An offer letter and employment contract in Thailand should always state the salary and any compensation amounts in Thailand THB rather than a foreign currency. The employment contract template is part of the service with Globalization Partners; no need to draft a separate template if you use our employer of record and PEO service in Thailand.
Thailand Working Hours
In Thailand employees and employers can agree on normal working hours as long as they do not exceed 48 hours a week. Overtime cannot exceed 36 hours a week. Employees are entitled at minimum to one holiday per week and the interval between holidays must not exceed six days. On weekdays, the overtime is 1.5 times base salary. On weekends, it is 3 times base salary. If an employee is not eligible for overtime, such as an officer of the company, they should get 2 times their salary for overtime payment.
Vacation Leave in Thailand
Employees are entitled to a statutory minimum of 6 vacation days per year, after the first year of service. In practice, many employers of professionals provide 10-15 days of paid vacation per year. For employees who work a completed year or depended on the agreement between employer and employee. The leave entitlement can be carried forward. Employees are entitled minimum 6 days which based on company’s policy.
Employees in Thailand are entitled to National Service Leave, Training/Exam Leave and Sterilization Leave (family planning). A male employee is entitled to National Service Leave if they are required for military practice, check military status, and joining the military. The wages for military leave are the same as normal work, and the leave cannot exceed 60 days per year. Training/Exam leave is for when employees take a training course that involved their career or do the examination that held by government. Sterilization leave is available for both men and women who go through a sterilization procedure. It is a paid leave, and the leave period will be stated on the employee’s medical certificate.
Any other leaves are at the discretion of the employer. Below is a list of some other leaves you might find in Thailand:
- Monkhood Leave => This leave type is only eligible for men who are Buddhism and should not over 120 days.
- Hujj Leave => This leave type is only eligible for employees who are Islam and should not over 120 days.
- Compassionate Leave => This leave type will be based on company’s policy.
- Marriage Leave => This leave type will be based on company’s policy.
- Hospitalization Leave => This leave type will be based on company’s policy.
Sick Leave in Thailand
Annual vacation leave in Thailand must be held separately from sick leave. Under Thai labour law, an employee is entitled to annual sick leave of up to 30 paid working days per year. If the employee is out for 3 or more consecutive days, the employer has the right to request a medical certificate. If the employee was injured or became ill at work, the days out cannot be deemed sick leave.
Maternity and Paternity Leave in Thailand
In addition to sick days, female employees are entitled up to 98 days of maternity leave. 45 days are paid by the employer, and the remaining 45 days are paid by the social security fund. 8 days are unpaid, or paid by the employer if agreed.
There are no statutory requirements for paternity leave. In addition to Maternity Leave there are statutory requirements for Military Leave and Sterilization Leave.
Termination of Employment and Severance in Thailand Country
Probation period of no more than 120 days may generally be agreed to in the employment contract. This is not a statutory requirement.
Terminating an employment contract in Thailand: for termination without cause, it is required that an employer give written notice of no less than one month, and make a severance payment to the employee according to the employee’s length of service:
- 120 days but less than 1 year – 30 days of salary and allowances
- 1-3 years – 90 days of salary and allowances
- 3-6 years – 180 days of salary and allowances
- 6-10 years – 240 days of salary and allowances
- 10 years + – 300 days of salary and allowances
- 20 years + – 400 days of salary and allowances
In addition, an employer may wish to pay out the notice period with the employee rather than having the employee work the notice period.
In the event of termination for economic reasons, an employee with at least 6 years of continuous service shall receive in addition to severance pay, a special compensation equal to 15 days’ wages for every year of employment, with a maximum amount equal to 360 days’ wages. With respect to this additional payment, a period of work of more than 180 days is counted as 1 full year of service.
Social security fund is available to all employees and reduces the cost risk for medical care, child allowance, and loss of wages due to sickness, maternity, death, invalidity, old age and unemployment. An employer is responsible for registering new employees with the social security office. Employer is also responsible for informing termination/resignation employees in the month as well as the monthly submission. The submission deadline should not over 15th of the following month. The employer and employee contribution is 5%, with the minimum monthly contribution of 83 THB for a wage of 1,650 THB and maximum monthly contribution is 750 THB for a wage of 15,000 THB.
If someone makes less than 15000 THB a year, they are exempt from taxes. After that the income taxes ranges from 5% to 35 % (for an annual salary of 4,000,000 THB and above).
Health Insurance Benefits in Thailand
In Thailand they have universal healthcare that is provided through three systems: the civil welfare system for civil servants, social security for private employees (expats and nationals), and a universal health scheme available to all other Thai nationals.
The social security fund assigns employees a local hospital that they can receive care at no charge. The quality of care varies between the different hospitals, and often they are crowded and do not have a customer service model.
Supplementary health insurance may be provided by an employer to an employee as a supplementary benefit. Most executives and expats request supplementary health and life insurance, or a small company may provide an allowance in lieu of arranging insurance. When employing individuals under our global PEO and global employee leasing in Thailand, we can put the employee on our group health insurance plan.
Additional Benefits in Thailand
While not mandatory, a provident fund is a common employment benefit to promote retirement savings. The employer contributions are required to always be equal to or greater than the employee contribution. Employee’s contribution benefits them because it is pre-tax. Employee’s contribution will be considered as saving deposit that is pre-tax. The contribution rate should be not less than 2% percent but not over than 15% of wages (which is depended on an agreement between employer and trustee. Employer’s contributions will be considered as subsidy to the employee’s. The benefit offering can be made under several conditions, such as working period, membership, job title, salary rate The cumulative balance of the Provident fund will be paid in lump sum amount at the term of membership in case of retirement or termination.
Employers by law are required to provide 13 paid public holidays (15 days) per year:
- New Year’s Day
- MakhaBucha Day
- Chakri Day
- Songkran Day (3 days)
- Labor Day
- Coronation Day
- VisakhaBucha Day
- AsarnhaBucha Day
- M. Queen’s Birthday
- Chulalongkorn Day (Rama V Day)
- M. King’s Birthday
- Constitution Day
- New Year’s Eve
If the holiday falls on a weekend the following work day will be granted as a public holiday.
The Thai King Bhumibol Adultadej passed away on October 12th, 2016. The king’s birthday is a national holiday (December 5th) so it is probable that this date will change in the near future.
Annual Bonuses in Thailand
A 13th month or annual bonus is not required but is market norm in Thailand. A commission plan may be seen as replacing this for a sales employee.
Why Globalization Partners
Establishing a branch office or subsidiary in Thailand to engage a small team is time-consuming, expensive and complex. Thai labor law has strong worker protections, requiring great attention to detail and an understanding of local best practices. Globalization Partners makes it painless and easy to expand into Thailand. We can help you hire your candidate of choice, handle HR matters and payroll, and ensure that you’re in compliance with local laws, without the burden of setting up a foreign branch office or subsidiary. Our Thailand PEO and Global Employer of Record Platform provides you peace of mind so that you can focus on running your business.
If you would like to discuss how Globalization Partners can provide a seamless employee leasing or PEO solution for hiring employees in Thailand, please contact us.