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HR Insight
Published:
September 9, 2026
Last updated:
Thailand asks more of foreign employers than most of its neighbours do before the first hire. A foreign-owned Thai company generally needs THB 2 million in registered capital for every work permit it issues, and in many cases four Thai employees on payroll for each foreign one. A modest first team, two salespeople and a country manager, triggers all of it several months before the market has had a chance to prove itself.
You can hire employees in Thailand without setting up a company, but you still need a legal presence in Thailand in order to register the employee with the Social Security Office, withhold and remit personal income tax through monthly returns, contribute to the Workmen's Compensation Fund, and meet the obligations set out in the Labour Protection Act B.E. 2541, the central piece of Thailand labour law.
An Employer of Record (EOR) that already holds a Thai entity can employ your staff through its own registered Thai entity and carry the statutory obligations: employment contracts, monthly payroll, Social Security Fund contributions, withholding tax and Thailand labour law compliance. All you have to do is direct the work and manage the employee.
A provider with its own registered Thai entity employs the person on your behalf, holds the employment contract, runs payroll and carries the statutory registrations, while you decide who to hire and direct the work day to day. Timeline is usually two to four weeks, extending where a work permit is needed. Costs run per employee per month, so the economics tighten as headcount grows. This is the standard route for market entry, small teams and regional roles, and it is the only route that supports work permit sponsorship for foreign nationals without your own company.
Engaging individuals on a services contract is fast and legitimate where the work is genuinely independent: project-scoped, delivered on the contractor's own terms, for someone who serves multiple clients, but will not work if the relationship has the substance of employment. Thai authorities assess substance rather than the label on the document, and fixed hours, exclusivity, integration into your team, your equipment and your direction over how the work is done all point one way. Reclassification runs back to the original start date and brings unpaid social security contributions, unremitted withholding tax and full entitlements under Thailand labour law, including severance calculated across the whole engagement. For foreign nationals there is a further constraint, since a contractor arrangement provides no basis for a work permit.
Agencies supply workers into your operations under their own employment, which resembles an EOR but is not the same arrangement. The distinction matters legally: Section 11/1 of the Labour Protection Act treats the business operator using an outsourcing service as an employer of those workers for benefits purposes. Agencies suit temporary, high-volume or operational roles, but they are a weaker fit for professional hires you intend to keep.
One route that gets raised and does not belong on this list: a representative office or branch. Both require registration in Thailand and carry their own capital requirements, and a representative office cannot generate revenue. They are lighter forms of legal presence rather than alternatives to having one.
The alternative is worth understanding properly, because it explains why the EOR route is so common in this market specifically.
Setting up a Thai company as a foreign investor means meeting the capital requirement of THB 2 million in registered capital for each work permit issued, unless an exemption applies through BOI promotion or a treaty arrangement. In many cases the company must also employ four Thai nationals for every foreign work permit it holds. Around that sit incorporation with the Department of Business Development, tax and social security registrations, a corporate bank account, audited annual accounts and a payroll function, plus a Foreign Business Licence if the intended activities fall under the restricted lists.
For a first team of two Thai commercial hires and one foreign country manager, that means meeting the capital threshold, carrying four Thai employees to support the single foreign permit, and a setup period of several months before anyone can legally start. Those requirements are entirely manageable for a committed operation, but they are harder to justify while the market is still being tested.
The EOR is responsible for:
You remain responsible for:
The last of these is specific to Thailand and worth setting out in full.
Engaging people in Thailand as contractors is a common starting point, and it works for a narrower set of situations than it first appears to.
Thai authorities assess the substance of the relationship rather than the label on the document. Fixed hours, exclusivity, integration into your team, your equipment, your email address and your direction over how the work is done all point towards employment.
Where a contractor is reclassified, the consequences run back to the original start date: unpaid social security contributions, unremitted withholding tax, and the full set of entitlements under Thailand labour law including severance calculated across the whole engagement. For foreign nationals there is a further constraint, since a contractor arrangement provides no basis for a work permit.
Contractor engagements remain entirely legitimate for genuinely independent, project-scoped work where the individual serves multiple clients and controls how the work is delivered. The distinction is about the nature of the role rather than the wording of the agreement.
An EOR is a route into a market rather than a permanent operating model. The point at which it stops fitting usually arrives for several reasons:
Most companies treat these as sequential rather than as a single choice: enter through an EOR, validate the market, then move to setting up a Thai company once the numbers support it. The migration is smoother when it is anticipated from the beginning.
AYP owns its own direct entity in Thailand. When Social Security registration, Employee Welfare Fund enrolment or a severance calculation needs to be right, you're dealing with the entity that's actually licensed and accountable, not a remote team through multiple partners.
What that means for your Thailand hire:
Looking to hire in Thailand through an EOR? Speak to our experts now → [contact us]
Yes. An Employer of Record employs staff through its own registered Thai entity while you direct their work. No incorporation is required on your side.
Typically two to four weeks from agreement to first day, extending further where a work permit is required. Setting up a Thai company takes several months by comparison.
Social Security at 5% of wages up to a THB 17,500 ceiling, so a maximum of THB 875 per month. Workmen's Compensation Fund contributions annually. From 1 October 2026, Employee Welfare Fund contributions of 0.25% for employers with 10 or more employees, unless exempt through a qualifying provident fund.
A mandatory savings scheme paying a lump sum to employees on resignation, termination, retirement or death. It takes effect on 1 October 2026 following a one-year postponement, with the first remittance due 15 November 2026. If you already employ in Thailand, it is worth confirming with your provider who is handling registration.
Yes, subject to the provider entity meeting the applicable capital and employee ratio requirements and the role qualifying for a permit.
Yes, and it is the usual path. The transfer requires employee consent, and continuity of service generally carries across for severance purposes. Benefits parity between transferred and directly hired staff is best planned before the migration.
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