Hiring and Payroll in Thailand: All You Need to Know

Thailand has long been a hub for employers looking to take advantage of low infrastructure costs and easy access to the lucrative Far East markets. Add to this the influx of remote, digital-first companies that are increasingly setting up shop in the country, and the need for an employer’s guide to payroll in Thailand is essential.

Here are the important points for employers of all sizes to keep in mind when hiring workers in the Kingdom.

Payroll Contributions

An employer’s total payroll contribution amounts to anywhere from 5.2% to 6%. 3% of that amount goes towards pension, while 1.5% covers health insurance. A further 0.5% covers unemployment, and 0.2%-1% covers work-related injuries. Employees contribute 3% towards pension, 1.5% towards health insurance, and 0.5% towards unemployment, bringing their total contribution to 5%.

COVID-19 has affected the social security contributions for both employers and employees. The reduced rates of 0.5% for employees and 3% for employers will remain in place during the months of February and March.

Thailand charges income taxes based on a progressive tier system, with higher earners paying progressively more taxes. Those earning an annual income less than 150,000 THB are exempt from taxes. The rest pay taxes at 5%, 10%, 15%, 20%, 25%, 30%, and 35% upon earning more than 150,001 THB, 300,001 THB, 500,001 THB, 750,001 THB, 1,000,001 THB, 2,000,001 THB, and 5,000,001 THB respectively.

Thai payroll cycles are usually monthly, and workers are paid on the last working day as stipulated in work contracts. There is no requirement for a 13th salary to be paid. Thailand charges a standard VAT rate of 7% on all purchases. The national daily minimum wage varies by region, ranging from 313 THB to 336 THB.

Foreigners wishing to conduct short-term work activities for up to 15 days can apply for a UWP or urgent work permit, which can be extended for a further 15 days. Foreign nationals must obtain a non-immigrant B visa before applying for a UWP unless they’re visa-exempt.

Work activities exceeding 30 days require a work permit, which can be granted for up to 4 years. Like with the UWP, foreign nationals must apply for a non-immigrant B visa before entry.

Working Hours and Leave

The maximum number of work hours per day in Thailand is 8, extending to 48 hours per week. Employers must arrange a rest period during work hours for employees amounting to at least one hour per day after the employee has been working for more than 5 consecutive hours.

Work performed outside stipulated hours constitutes overtime and is compensated at a 150% regular salary rate. If overtime takes place on a public holiday, it will be compensated at 200% of the employee’s regular salary.

Paid leave times are stipulated in employment contracts and amount to at least 6 days per year after completing a year’s employment. Employers may provide employees who have worked for less than a year left on a prorated basis. Thailand has 16 public holidays during the calendar year.

Employees are entitled to unlimited sick leave, capped at a maximum of 30 days per year. Employers may ask employees to produce a certificate from a doctor for sick leaves exceeding 3 days. Thailand stipulates 98 days’ worth of maternity leave, paid at full salary for 45 days. The remainder is paid at 50% of the regular salary.

Paternity leave is sector-dependent. Private sectors don’t offer statutory leave, but public sector employees can claim 15 days’ paternity leave. There is no statutory parental leave in Thailand. Thailand has laws governing payment during military service.

Employers must pay wages for up to 60 days every year to employees undergoing military service.

Termination Processes

All termination notices must be sent in writing to relevant government authorities. If employers suspend their business for a cause that is outside Force Majeure, they must pay the employee half the daily wage they earned before the business suspension for the entire period left on the contract.

Thailand adheres to a standard 30 days notice period, although employers may specify longer periods within the employment contracts. Severance pay is mandatory for all employees with more than 120 days’ service. Those with less than 1 year of service are entitled to 30 days’ worth of pay.

Those who have worked for up to 3 years receive 90 days pay, up to 6 years receive 180 days pay, 10 years receive 240 days pay, 20 years receive 300 days pay, and those with more than 20 years of service receive 400 days of pay.

Thai law doesn’t specify any probation period for employees, although a 119 days period is common.

Transparent Laws

Thanks to clearly defined laws, Thailand is an attractive destination for employers of all sizes. As we have highlighted in this article, payroll and employment laws adhere to worldwide norms, and employers will find Thailand a source of abundant skill and labour.