Blog

18 minutes

How to Hire via Employer of Record in Thailand

EOR/ PEO

Author:

Annie Yap

Published:

October 11, 2024

Last Update:

October 16, 2024

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Hiring employees in Thailand requires a thorough understanding of local labor laws, regulations, and compliance measures. For companies unfamiliar with Thailand’s employment landscape, utilizing an Employer of Record (EOR) Thailand solution can significantly simplify this process.

Establishing a local entity can be daunting, as it requires a local shareholder and director, which adds complexity and risks to the setup. These requirements can complicate the legal landscape, making it challenging for businesses to navigate effectively. However, by partnering with an Employer of Record, companies can expand into Thailand without the hassle of establishing a local entity. An Employer of Record (EOR) hires the employee on your behalf, manages all local compliance requirements, including payroll, tax, benefits, and labor regulations, enabling businesses to focus on their core operations without setting up a local entity..

This ultimate guide provides essential insights on how to hire through an Employer of Record in Thailand, emphasizing local compliance requirements and the benefits of leveraging employer of record services to navigate the employment landscape seamlessly.

Navigating the Manpower Landscape with an Employer of Record in Thailand

Thailand boasts a diverse talent pool across various sectors, making it an attractive destination for businesses seeking skilled employees. Some popular talent areas that companies often leverage through an Employer of Record Thailand include:

Information Technology (IT): With the growing demand for digital transformation, IT professionals specializing in software development, data analytics, cybersecurity, IT project management, and artificial intelligence (AI) are in high demand.
Engineering: Thailand produces a significant number of engineering graduates, particularly in mechanical, electrical, and civil engineering, catering to the needs of manufacturing and construction industries.
Sales and Marketing: As companies expand their operations, skilled sales and marketing professionals who understand local markets and consumer behavior are sought after to drive business growth.
Hospitality and Tourism: Given Thailand’s status as a top tourist destination, there is a continuous need for professionals in hospitality management, event planning, and customer service roles.
Finance and Accounting: Many firms require finance and accounting professionals with expertise in local regulations and compliance, making this a key area of recruitment.
Manufacturing and Production: Skilled labor in manufacturing roles, including quality control and production management, is essential to support Thailand’s robust manufacturing sector.

Utilizing an Employer of Record Thailand allows companies to tap into this diverse talent pool efficiently while ensuring compliance with local employment regulations. The Employer of Record Thailand manages the complexities of recruitment, contracts, and ongoing compliance, enabling businesses to focus on their core operations.

Recruitment in Thailand involves adhering to several legal frameworks. Employers must ensure that employment contracts are compliant with Thai labor law, which requires clear terms regarding job duties, working hours, remuneration, benefits, and termination procedures. While it is not mandatory to have written contracts for Thai employees, it is highly recommended for clarity and legal protection. An Employer of Record in Thailand helps ensure that all contracts and recruitment processes align with Thai labor laws, reducing the risks of non-compliance for foreign companies.

Key Compliance Considerations: Employer of Record in Thailand

When hiring through an Employer of Record in Thailand, understanding several key compliance considerations is essential to incorporate into employment contracts:

Work Hours and Overtime: Standard working hours in Thailand are 8 hours per day or 48 hours per week. Overtime is strictly regulated, and employees must be compensated for any hours worked beyond the standard hours. It is critical that employment contracts clearly outline the regular working hours, overtime compensation rates, and how overtime will be calculated. This clarity helps prevent disputes and ensures compliance with labor laws.
Probation Periods: Thai law allows for a probation period, but it must be explicitly stated in the employment contract. Typically, probation periods are limited to 4 months. If an employee continues beyond this period, they are entitled to severance pay. Contracts should include clear terms regarding the duration of the probation period, evaluation criteria, and conditions for continued employment. By specifying these terms, employers protect themselves from potential legal complications related to termination or non-compliance.

Including these compliance elements in employment contracts is crucial for minimizing potential legal issues and fostering a fair workplace. An Employer of Record Thailand plays a vital role in this process by ensuring that all employment agreements are compliant with local labor laws. They provide expert guidance on best practices for contract drafting, reducing the risk of misunderstandings and disputes that can arise from unclear or non-compliant contracts.

By leveraging the services of an Employer of Record, businesses can confidently navigate the complexities of local employment regulations, knowing that their contracts are compliant and tailored to protect their interests while providing employees with clear expectations regarding their rights and obligations.

Managing Employment Costs Through an Employer of Record in Thailand

Understanding the cost structure when hiring employees in Thailand is crucial for effective budgeting and financial planning. Besides the basic salary, employers must account for social security contributions, provident funds, and mandatory welfare benefits. The statutory contributions that employers must cover include:

Social Security Contributions: Employers are required to contribute 5% of the employee’s salary (up to a capped limit of 750 THB per month) to Thailand’s Social Security Fund. This fund provides various benefits to employees, including health care and unemployment insurance. Additionally, it is common practice for companies to offer voluntary contributions to a Provident Fund, typically ranging from 2% to 15% of the employee’s salary. This voluntary fund is aimed at helping employees save for their future, complementing the mandatory contributions to the Social Security Fund.
Severance Pay: Employers must provide severance pay based on the length of employment. For instance, employees with over one year of service are entitled to a minimum of 30 days’ worth of severance pay.
Welfare Benefits: Additional benefits such as health insurance and accident coverage may be required under certain industry regulations.
Annual Leave and Public Holidays: Employers are also responsible for providing paid annual leave and public holidays. Employees are entitled to a minimum of 6 days of annual leave after one year of employment, in addition to 13 public holidays each year. These benefits are essential components of the overall employer cost when hiring in Thailand.

Understanding the full cost of employment is essential for better budgeting and financial management. When companies are aware of all potential expenses associated with hiring in Thailand, they can allocate resources more effectively and avoid unexpected financial burdens. An Employer of Record Thailand can provide transparent cost structures, allowing businesses to understand the complete scope of employment expenses.

By utilizing the services of an Employer of Record, companies not only ensure compliance with local labor laws but also gain insights into the financial implications of their hiring decisions. This comprehensive approach helps businesses manage their budgets more effectively and strategically plan for future growth.

Offering Competitive and Compliant Employment Packages in Thailand

Thailand’s labor laws are designed to protect employees, ensuring they receive fair treatment regarding working conditions and benefits. For companies aiming to attract and retain top talent, it’s crucial to offer competitive yet compliant employment packages.

Annual Leave: Employees are entitled to a minimum of 6 days of paid annual leave after completing one year of service. However, many companies choose to offer more generous leave policies to enhance employee satisfaction and work-life balance. Organizations should also communicate their leave policies clearly to employees to foster a positive workplace culture.
Public Holidays: Thailand recognizes 13 national public holidays that employers must honor. These holidays include significant cultural and religious observances, and respecting them is essential for maintaining goodwill with employees. Companies can consider additional days off during festive seasons to further boost employee morale.
Sick Leave: Employees are entitled to at least 30 days of paid sick leave per year. Companies that go above and beyond by offering additional sick leave days or flexible sick leave policies can promote a healthier work environment and show commitment to employee well-being.

While it is critical to meet legal requirements, structuring benefits that align with market expectations is equally important for attracting high-quality candidates. Here are some strategies to consider:

Health and Wellness Programs: Offering comprehensive health insurance that covers medical expenses, dental care, and preventive health services is increasingly important in Thailand. Additionally, incorporating wellness initiatives, such as gym memberships or mental health support, can enhance the overall employee experience.
Retirement Benefits: Many employees appreciate employer-sponsored provident funds or retirement plans that contribute to their financial security. Providing options for retirement savings can be a strong incentive for long-term employment.
Flexible Working Arrangements: As workplace dynamics evolve, offering flexible work arrangements, such as remote work or flexible hours, can make a company more attractive to potential hires. This flexibility is particularly valued by younger generations entering the workforce.
Professional Development Opportunities: Investing in employee development through training programs, workshops, or tuition reimbursement can help attract ambitious talent. Employees are more likely to remain with a company that supports their career growth.

An Employer of Record in Thailand can provide valuable insights and advice on designing benefits packages that comply with the law and resonate with local talent. By leveraging their expertise, businesses can ensure they remain competitive in the job market while fostering a compliant and fair workplace environment.

Employers can benefit from the Employer of Record provider’s understanding of local market trends, enabling them to tailor their offerings to meet employee expectations effectively. This approach not only aids in attracting top talent but also plays a crucial role in employee retention, reducing turnover rates, and enhancing overall organizational performance.

By partnering with an Employer of Record, companies can navigate the complexities of Thai labor laws and develop attractive, compliant benefits packages that support their employees’ needs while driving organizational success. Connect with an AYP’s expert to gain a clear understanding of the total costs involved in hiring in Thailand. Our specialists are here to provide you with tailored insights and simulations, enabling you to make informed decisions for your budgeting and hiring strategy.

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Managing Employee Performance and Reviews via an Employer of Record in Thailand

Performance management in Thailand follows a structured yet flexible approach. Regular performance reviews are essential for retaining talent and ensuring productivity within the organization. However, performance-related decisions, such as promotions or terminations, must comply with Thai labor regulations to avoid disputes.

Probation Reviews: At the end of the probation period, an official review is necessary to determine the employee’s continued employment. If the employee does not pass the review, the employer must provide a justified reason in line with the guidelines of the Labour Protection Act.
Termination: Employees terminated without cause are entitled to severance pay, as previously mentioned. Implementing a compliant and fair termination process helps protect the business from potential legal challenges.

Regular performance reviews not only enhance employee engagement but also align individual performance with organizational goals. To navigate this process effectively, consider the following best practices:

Goal Setting: Establishing clear, measurable, and achievable goals is fundamental. Involving employees in the goal-setting process fosters ownership and commitment. Utilize the SMART criteria (Specific, Measurable, Achievable, Relevant, Time-bound) to create goals that align with both individual aspirations and the company’s strategic objectives. This alignment encourages employees to work towards common goals while enhancing overall organizational performance.
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Constructive Feedback: Providing timely and constructive feedback is crucial for employee development. Regular check-ins should be conducted to discuss performance, address challenges, and recognize achievements. Encourage a two-way dialogue where employees feel safe sharing their thoughts and concerns. This approach not only helps in personal development but also strengthens the employer-employee relationship, promoting a positive work culture.
Performance Appraisal: Conducting comprehensive performance appraisals at regular intervals allows for a formal evaluation of employee contributions. This process should be objective and based on predefined criteria, ensuring that all employees are assessed fairly. Incorporate self-assessments and peer reviews to gain a well-rounded perspective of an employee’s performance. Documenting these appraisals is essential for transparency and can provide valuable insights for decisions related to promotions, training needs, and overall workforce planning.

By implementing these best practices, businesses in Thailand can create a compliant, effective, and fair performance management system that not only motivates employees but also aligns their growth with organizational goals.

Through an Employer of Record in Thailand, businesses can receive expert guidance on managing performance reviews in accordance with local labor laws. This partnership helps avoid disputes and ensures a compliant workplace environment.

The Employer of Record takes care of hiring, managing, and paying employees in Thailand, allowing the client to focus on managing employee performance and deliverables. This division of responsibilities ensures that businesses can concentrate on their core operations while maintaining compliance with local regulations. By entrusting these essential functions to an Employer of Record, companies can effectively navigate the complexities of employment in Thailand and foster a productive workforce.

Enhancing Employee Experience Through Employer of Record in Thailand

Employee experience is vital to business success. In Thailand, employers must foster a positive work environment while adhering to labor laws. This includes ensuring fair treatment, providing equal opportunities, and addressing employee grievances effectively.

Workplace Culture: Establishing a culture that embraces diversity and inclusion helps create a positive employee experience. Employers should promote a supportive environment that values employees’ voices and encourages open communication.
Employee Support: Providing access to local HR experts through an Employer of Record in Thailand enhances employee experience. Employees should have a clear point of contact for any concerns, questions, or support needs, fostering a sense of security and belonging.
Workplace Options: Offering diverse workplace options such as remote work, co-working spaces, and traditional offices can cater to the varying preferences of employees. This flexibility allows employees to choose the environment that best suits their work style, whether they thrive in a collaborative co-working space or prefer the comfort of their home office. Embracing different work arrangements can lead to increased productivity and job satisfaction.

By collaborating with an Employer of Record, companies can ensure compliance while focusing on building a positive employee experience. The Employer of Record handles local compliance, allowing businesses to concentrate on employee engagement and development.

How to Convert Freelancers/Contractors to Employer of Record Employees in Thailand

Converting freelancers or contractors into full-time employees through Employer of Record Thailand services ensures compliance, operational efficiency, and improved employee benefits. Here’s how you can convert freelancers or contractors into employees with an Employer of Record in Thailand:

Step 1: Assess Compliance Requirements in Thailand

Before converting freelancers to employees, it’s essential to understand Thailand’s labor laws and compliance requirements. Misclassification of workers in Thailand can lead to penalties, so proper classification is crucial. An Employer of Record in Thailand can assist with compliance and local labor law expertise, ensuring that your newly converted employees meet the legal standards.

Step 2: Review Current Agreements

Evaluate the current terms and contracts with freelancers or contractors. You will need to renegotiate their compensation, working hours, and responsibilities to align with Thailand’s labor laws for employees. The Employer of Record Thailand service will draft compliant employment contracts based on the country’s legal framework.

Step 3: Calculate Employee Costs in Thailand

Freelancers don’t typically receive benefits such as health insurance or paid leave, so converting them to employees involves calculating the added costs of these entitlements. Employer of Record Thailand services can provide insights into statutory contributions, payroll taxes, and insurance requirements in the country to help determine the financial impact.

Step 4: Set Up Employment Contracts

Once the cost analysis is complete, the Employer of Record Thailand will formalize the process by setting up compliant employment contracts. This includes outlining the benefits, responsibilities, and local compliance requirements for each employee.

Step 5: Enroll Employees in Payroll & Benefits via Employer of Record in Thailand

The converted employees will be enrolled in payroll and benefits systems by the Employer of Record in Thailand service provider. This includes statutory benefits like social security, health insurance, and other employment perks required by Thai law.

Step 6: Ongoing Employee Management by Employer of Record Thailand

After the conversion, the Employer of Record in Thailand service provider manages all administrative responsibilities, such as payroll, benefits, and local tax compliance, ensuring that your business stays fully compliant while your employees receive the support they need.

How to Transfer Employer of Record Thailand Employees from an existing Employer of Record provider to the another provider

Switching from an international Employer of Record (EOR) provider that lacks a local entity and on-the-ground support to one with a direct local presence can lead to cost savings, improved compliance, and a significantly better employee experience. Here’s how to smoothly make the transition:

Step 1: Review Existing Employer of Record Contracts

Start by reviewing the terms with your current international Employer of Record provider, especially any exit clauses or notice periods. Ensure that there are no hidden costs in terminating the existing agreement. A local Employer of Record Thailand can help you understand local legal obligations for seamless employee transfers.

Step 2: Choose a Local Employer of Record Thailand with Direct Presence

A local Employer of Record Thailand will have a direct in-country presence, offering a deeper understanding of Thai labor laws and employment regulations. By choosing a provider with direct local entities, you benefit from improved cost efficiencies and more effective compliance.

Step 3: Communicate with Employees about the Transfer

Transparency is key. Inform your employees about the transition and reassure them that their employment terms and benefits will remain intact. Highlight the advantages of working with a local Employer of Record Thailand, such as tailored benefits, faster responses to HR inquiries, and enhanced local support.

Step 4: Facilitate the Transfer with Employer of Record Thailand

The new Employer of Record Thailand will coordinate with the current Employer of Record provider to ensure a smooth transition without disrupting payroll or employee benefits. All employment contracts will be transferred to meet local regulations, and employees will not experience interruptions in their service.

Step 5: Achieve Cost Savings with a Local Employer of Record Thailand

Shifting from an international Employer of Record provider to a local provider Employer of Record Thailand can provide significant cost savings:

Lower Administrative Fees: International Employer of Record providers often charge higher fees for operating across borders. A local Employer of Record Thailand reduces these overhead costs by leveraging in-country operations.
Reduced Currency Conversion Costs: With a local Employer of Record Thailand, currency conversion costs are minimized, as payments and fees are handled directly in Thai baht.
Optimized Benefits: Local providers can customize benefits packages according to Thai regulations, avoiding unnecessary costs while ensuring compliance.

Step 6: Enhance Employee Experience with Local Employer of Record Thailand provider

A local Employer of Record Thailand provider improves the overall employee experience by providing faster, more relevant support. With a dedicated HR and payroll team in Thailand, employees receive local assistance whenever needed, ensuring their satisfaction and peace of mind. This local touch enhances employee engagement and retention, as they feel more connected to the business and supported in their needs.

Get started with an Employer of Record in Thailand

Hiring via an Employer of Record in Thailand provides businesses with a strategic advantage in navigating local employment regulations. From recruitment to employee management, compliance with Thai labor laws is critical for minimizing risks and ensuring smooth operations. For businesses looking to hire in Thailand, embracing an Employer of Record solution is not just about compliance; it’s about creating a positive, engaged, and productive workforce that drives business success.

Partnering with an Employer of Record Thailand simplifies the complexities of hiring, allowing businesses to focus on their core functions while ensuring compliance with local laws. By leveraging local expertise, companies can enhance their employee experience and attract top talent in Thailand’s competitive job market.

AYP Employer of Record in Thailand empowers your business to:

Seamlessly pay employees and contractors across multiple countries, with options to remit salaries in local currencies, ensuring smooth payroll management worldwide.
Provide comprehensive employee benefits, including stock options, retirement plans, health insurance, paid holidays, and more—attractive packages designed to support employee satisfaction and retention.
Handle payroll taxes, contributions, and levies effortlessly. With just a few clicks, AYP ensures full compliance by accurately calculating and remitting payments to the relevant authorities, saving you time and reducing risk.
Protect your intellectual property (IP) and invention rights through robust, locally compliant employment contracts that safeguard your company’s assets, giving you peace of mind.
Stay ahead of evolving employment regulations with real-time updates on local labor laws. AYP ensures compliance at every stage, so you can focus on growing your business without the worry of legal complications.
AYP gives you peace of mind with our direct presence and local support in Thailand. Our HR and payroll specialists in Thailand are available to assist with employee queries and provide expert advice to clients on navigating local regulations with confidence.

With AYP, scaling your global team and onboarding talent in Thailand becomes hassle-free. As your trusted partner, we simplify the complexities of international hiring, helping you build your team quickly and compliantly. Ready to expand in Thailand? Get started with AYP Employer of Record today and experience the ease of hiring with local expertise.