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Compliance
Published:
September 18, 2026
Last updated:
Salary is typically the first thing all employers look at, but it's only part of a bigger picture in payroll, especially when it comes to APAC.
Across Southeast Asia, mandatory employer contributions range from under 7% of salary in Thailand to more than 23% in Vietnam. Two hires on identical salaries in neighbouring countries can differ by a fifth of their annual cost. That gap is where budgets break.
This is what the true cost of an employee is actually made of, market by market, and how to estimate employee cost before you make an offer:
Hiring costs quoted in most benchmarks stop at layer one. The compliance exposure sits in layers two and three.
Two adjustments worth knowing:
The statutory contributions are identical either way. The true difference is setup time and management.
An EOR is usually cheaper below roughly ten to fifteen employees per market, and an entity usually wins above that, assuming you intend to stay. The crossover moves with how complex the market is and how much local HR capability you already have. Test both against your three-year headcount plan per country, not for the region as a whole.
Rather than rebuild the tables above every time a role opens, use our free AYP Employee Cost Calculator to get an estimation on how much your new future employee will cost on top of their basic salary.
The cost calculator serves as a preliminary indicator rather than a formal quote, and it is built on current country regulations rather than a single-market template.
To learn more about AYP and our services, see our website or book a call now ➔ contact us
Figures reflect published rates as at September 2026. Contribution rates, ceilings and minimum wages are reviewed regularly. Confirm the current position for your market and industry risk class before finalising an offer.
Budget for gross salary plus 2% to 24% in mandatory employer contributions, depending on the market. Thailand sits at the low end because contributions stop at a THB 17,500 monthly wage ceiling. Vietnam sits at the high end, with 21.5% in social, health and unemployment insurance plus a 2% trade union fee. Singapore, Malaysia, Indonesia and the Philippines all land between roughly 15% and 17% once mandatory bonuses are included.
Four layers: gross salary, statutory employer contributions, mandatory extras such as 13th month pay and severance provisioning, and administrative costs such as entity maintenance, payroll and work permits. Most salary benchmarks capture only the first layer, which is why hiring costs are routinely underestimated by 15% to 25%.
Thailand, for salaries above the ceiling. The Social Security Fund rate is 5%, but it applies only to the first THB 17,500 of monthly wages, so employer cost stops at THB 875 per person per month. From 1 October 2026 the new Employee Welfare Fund adds 0.25% with no wage ceiling.
Vietnam. Employers pay 17.5% social insurance, 3% health insurance and 1% unemployment insurance, totalling 21.5%, plus a 2% trade union fee. A Tet bonus is not required by the Labour Code but is standard market practice, which pushes the effective cost higher again.
It depends on the market. It is statutory in the Philippines and in Indonesia, where it is known as THR. It is not statutory in Singapore, Malaysia, Thailand or Vietnam, although bonuses are widely expected in several of those markets. A statutory 13th month adds roughly 8.33% to annual cost, which is enough to change a market comparison.
In most markets, yes, and the ceilings matter more than the rates. Singapore caps CPF at an S$8,000 monthly Ordinary Wage from January 2026. The Philippines caps the SSS salary credit at ₱35,000. Indonesia caps health contributions at an IDR 12m salary base and pension at IDR 11,086,300. Because of these caps, a flat percentage overstates cost on senior salaries and understates it on junior ones.
Usually, with variations. Foreign employees in Vietnam are exempt from unemployment insurance, bringing the employer rate to 20.5%. Foreign nationals working in Indonesia for six months or more participate on the same basis as local employees. In Malaysia, EPF became mandatory for foreign workers at 2% from each side in October 2025. Work permit fees and levies sit on top of all of this.
Use a cost to hire employee calculator built for the specific market. AYP's free Employee Cost Calculator covers 12 Asia-Pacific countries and returns what you pay alongside what the employee takes home, itemised by contribution line.
