Thailand Country Facts

We provide comprehensive information regarding, Culture, Work life, Taxation, Visa’s & immigration, Labour Law, recruiting in your country of choice and employment contracts.

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Thailand Visas, Work Permits and Migration

Thailand, as well as having a wonderful heritage, sun, sea, and beautiful beaches, is also a perfect location for foreign investment. Many visitors dream of returning as residents, find a job or start their own business in the welcoming Thai environment. However, there are numerous routes into Thailand and getting though the red tape needs time and research if you want to avoid fines, sanctions, or imprisonment. Thailand is strict with its rules and regulations, and they can change from month to month … the Land of Smiles and paperwork!

At least 64 counties have agreements regarding entering Thailand for short periods (30 days) for tourism and cultural purposes and are visa exempt. These travellers may be able to extend ‘once’ during their stay for another 30 days but must check with the local embassy as procedures are tightened regularly, especially during COVID times.

Other nationals can apply for a ‘Visa on Arrival’ (15 days but those wanting to work cannot do so on this visa and must apply for a Non-Immigrant Visa category ”B”, at a local embassy/consulate before leaving their home country.  All other foreigners apply for one of the nine visa types. Those wanting to work and live in Thailand require paperwork – the appropriate Work Visa, Work Permit … and a Thailand Pass as of 2021

What Types of Work Visas, and Permits for Thailand are there?

To travel from one country to another, most nationalities require paperwork to enter, live and work in Thailand.

  • Entry Visa depends on nationality, purpose, and duration of travel. This is a stamp or sticker in the passport and is applied for at an embassy or consulate before leaving the home country. Although some nations are visa-exempt up to 30 days, if foreigners know they will be staying or working for longer, they should apply for the appropriate visa before travelling
  • Work Permit to legally work in Thailand. When a prospective employee receives an Entry Visa (Non-immigrant B Visa) to enter Thailand, they can apply for a Work Permit alongside an employer who provides certain documentation for the application. This should be made in Thailand to the One-Stop Service Center (OSSC)* or the Department of Employment under the Ministry of Labor. The employer can start the process, but it cannot be issued until the employee arrives in Thailand
  • ‘An Extension of Stay’ application to stay longer (one year) in Thailand. Applications are made to the Department of Immigration for an extension of the ‘Non-immigrant B Visa’ which is initially 90 days. The extension can be applied for on receiving the Work Permit
  • A Thailand Pass as of 2021. This replaced the Certificate of Entry. All travelers to Thailand should apply for this online, apart from children under 12 years. It takes three to seven days to process. Monitors movement and health of travelers
  • Re-Entry Permit. Required for employees who only have a Single-Entry Visa, allowing them to exit and re-enter Thailand without the visa becoming void

*IMPORTANT*

Thailand introduced a One-Stop Service Center to streamline and shorten the times foreigners had to wait for Work Permits, renewals, and Pre-Work Permit Approval (PWPA). This is required by foreign employees to apply for their Non-Immigrant B Visa in their home country. However, employers and employees must qualify to use this ‘fast track’ service. Otherwise, this service comes under the Minster of Labor and is administered at the Foreign Workers Administration in the Department of Employment.

Types of Visas

(D) for Diplomats; (F) for Official Visits; (TR) for Tourist Visa; (S) for Sports Personnel; (B) for Business, Investment or Employment; (B-A) Foreigners wanting to start a Business; (IM) for Investment through Ministry; (IB) for Investment through BOI-Board of Investment; (TS) for Transit and short stays passing through; (C) for Captain or Crew; (ED) for Education e.g. students; (M) for Mass Media of communication personnel; (R) Religion; (RS) for Research and Science; (EX) for Expert and (O) Others e.g. Volunteer; (O-X) Long term stay (1 year) for over 50s.

Immigrant Visas and Non-Immigrant Visas

  1. Immigrant Visas are for foreigners living permanently in Thailand and can take three years of living and working in Thailand to qualify e.g., three consecutive one-year non-immigrant visas. Plus, have had a three-year work permit and income over THB 80,000 (€2,140; US$2,446) per month
  2. Non-Immigrant Visas issued to foreigners travelling to Thailand for purposes other than for Tourism or Transit. For example, to study, invest, work. The letter is then recorded on the stamp in the passport at the embassy or consulate as a reference for the Immigration Officer at Border Control

The main Work Visa for employment is the B (Business) – Non-immigrant Visa. This is the only visa allowing employment. However, this alone is not sufficient for work, prospective employees also require a Work Permit and Extension of Stay on arrival. After this, they may require a Re-Entry Permit if employees have only a Single-Entry Visa. This allows them to exit and re-enter Thailand without the B Visa becoming void

Points to consider regarding visas

  • Generally, these are applied for outside Thailand, at a local embassy or consulate, but in certain countries applications are accepted by post or through agencies or travel companies. Applicants must check what is acceptable through the embassies
  • For the foreigner to apply for the Non-immigrant B Visa, the employer needs to submit the form WP3, which is a Pre-Work Permit Approval (PWPA) from Thailand’s One-Stop-Service-Center (OSSC) which is sent to the employee as part of his required documentation. Employee and employer must qualify to use this ‘fast track’ service. Otherwise, the Department of Employment under the Ministry of Labor is responsible
  • Different visas confer different rights to the holders. They vary in duration and purpose as well as the fees. So, applicants need to be sure which one applies to them
  • Validity. A visa may be valid for three months or six months typically, up to three years, but this is only when the visa can be used (including up until the last day). The date is on the sticker in the passport and is issued at a Royal Thai Embassy or Consulate
  • Period of stay. Tourist Visa (60 days), Transit (30 days), Non-Immigrant Visa (90 days) from the day foreigners arrive and is decided by the Immigration Officer at Border Control and stamped in the passport
  • The B (Business) – Non-immigrant Visa is for 90 days and after that an Extension of Stay needs to be applied for
  • SMART Visa designed to attract the highly qualified, executives, start-ups, entrepreneurs, and investors in certain industries and can be used to apply for a work permit
  • ELITE VISA gives individuals a privileged entry, which is a fast-track system, with many benefits for long term stays and little paperwork. However, this does NOT allow for a work permit

Work Permits

This usually comes in the form of a booklet to be always carried, especially in the workplace. It is a legal document and acts as a license to perform work, also detailing the occupation and job description as well as the employer (Thai company).

Employees must have the correct visa e.g., B Non-Immigrant Visa for the work permit. Both the employee and employer must submit various documentation and the process takes around seven workdays. The employee is restricted to the work/job stipulated on the work permit for the specific employer.

  • Non-immigrant visa B – Employment
  • Non-immigrant visa IB – Investment (through BOI, Board of Investment)
  • Non-immigrant visa B-A – Self-employment
  • Non-immigrant visa O – Voluntary workers
  • Non-immigrant visa M – Media communications

There are some exemptions regarding diplomats, investors and those urgently needed skills for short-term employment (15 days or less).

Minimum income / salaries regarding foreigners’ work permits that employer must meet as of June 2021:

  • Western Europe, Australia, USA, Canada, and Japan – THB 50,000 pm (€1,336; US$1,528)
  • S. Korea, Singapore, Hong Kong, and Taiwan – THB 45,000 pm (€1,203; US$1,376)
  • Eastern Europe, Asian, S. America, Cen. American Countries, Mexico, S. Africa, Russia, and Turkey -THB 35,000pm (€936; US$1,070)
  • Asian nations, Vietnam, Laos, Cambodia, Myanmar – THB 25,000pm (€669; US$764)

Industries where foreigners are not permitted to work:

To protect their local workforce, there are certain jobs/industries where foreigners are not allowed to work. This includes areas of the service, industrial, agricultural, and commercial sectors. So, when applying for the work permit, check it is not for a prohibited occupation.

Companies employing foreigners

Here is another issue which prospective employers need to be aware of. There are limits to the number of foreigners companies can employ. For example, a company can hire one foreigner for every THB 3 million (€80,788; US$91,670) of capital and for every four Thai workers working full-time. A company cannot exceed 10 foreigners unless they have a Foreign Business License (FBL) or approval from the Board of Investment (BOI). There are exceptions and this doesn’t apply to non-governmental organizations (NGOs).

Important: Regarding the work permit, if there are revisions e.g., change of address, or it is lost or damaged, this must be reported as soon as possible to the Ministry of Labor and a new one should be applied for. Most importantly, if the employee no longer works for the employer the work permit must be returned. The authorities are strict if these rules are not observed which can result in fines, arrest, and imprisonment.

Smart Visa

This was instigated in 2018 and is designed to attract highly qualified people, executives, start-ups, entrepreneurs, and investors in certain industries.

  • T Visa for Foreign Talented individuals
  • I Visa for Foreign Investors
  • E Visa for Foreign Executives
  • S Visa for Entrepreneurs in tech-based startups
  • O Visa for family of above visa holders

Points to consider

  • Work permits are attached to this visa for the holder and family
  • Issued for length of the employment or service contract – up to four years
  • No need for re-entry permits
  • Report to immigration annually rather than every 90 days
  • Applicants need to qualify for relevant visa
  • Processing Smart Visa costs THB 10,000 (€267; US$305) a year

Thailand Tax Laws

Bradford Jacobs has more than 20 years’ experience in the front line of international payroll providers, and we ensure our clients comply with every aspect of taxation legislation across the globe. Our ‘knowledge’ is vital for international companies expanding into Thailand and then further afield into Asia and the Pacific Rim.

Dealing with tax, payroll, and employment regulations for your staff from overseas is always a potentially troublesome process with complications that demand expert guidance. Thailand is no exception and employers cannot risk mistakes at state level or among the 77 provinces, which apply different limits on such as minimum wages.

Overview of Taxes in Thailand

* Thailand uses the Thai baht (THB) as its unit of currency.

Personal Income Tax (PIT): Income is exempt up to THB 150,000 (€4,010, US$4,580). There are six further tax bands through 5%, 10%, 15%, 20%, 25% up to 30%, with income over THB 5,000,000 (€135,980, US$154,444) taxed at 35%. Returns are not required from single individuals with employment income under THB 120,000 (€3,200, US$3,666) or THB 220,000 (€5,876, US$6,720) for married persons. Couples can file joint or individual tax returns.

Social Insurance Taxes: Employers contribute the equivalent of 5% of their employees’ salaries and employees also contribute 5% of salary to the Provident Fund and the Workers’ Compensation Fund. Contributions are capped at THB 750 (€20, US$23).

Corporate Income Tax (CIT): The rate is 20% with companies incorporated in Thailand liable for tax on their global income. Companies incorporated abroad are taxed on Thailand-sourced income. Companies with capital under THB 5,000,000 (€135,980, US$154,444) are exempt from CIT on income up to THB 300,000 (€8,028, US$9,170). A rate of 15% applies on these companies with taxable income up to THB 3,000,000 (€80,284, US$91,733). Liability reverts to 20% for taxable income above that.

Withholding Tax (WHT): Dividends paid to Thai and non-resident companies and individuals are subject to 10% WHT. Interest paid to companies not incorporated in Thailand is liable for 15% WHT.

Value Added Tax (VAT): The standard rate of 10% on the sale of goods and services has been reduced to 7% until at least September 2023. Exempt categories include foodstuffs, education, and healthcare, while exports are zero-rated. Individuals or companies that supply goods or services with an annual value of THB 1,800,000 (€48,130, US$55,030) must register with Form Vat 01 to obtain their 13-digit VAT number with the Area Revenue Office in the province they operate. Since September 2021, overseas providers of digital services and electronic platforms must file returns to the Thai Revenue Department if income exceeds THB 1,800,000.

Specific Business Tax (SBT): Applies to certain sectors not subject to VAT, such as the financial sector (3%) and life insurance (2.5%).

Thai Individual Tax – Single, Married

The tax year is the calendar year from January 1 till December 31. Hard copy individual tax returns must be filed by March 31 of the following year, or April 8 if filed online. Individuals who spend a total of 180 days in Thailand, not necessarily consecutive, in a calendar tax year are considered tax residents. Thai tax laws do not define short-term residency rules.

Residents and non-residents are taxed on employment and business income whether payments are made in or outside Thailand. Residents who earn income from abroad are taxed if it is paid into Thailand in the tax year it is received. Returns are not required from single individuals with employment income under THB 120,000 (€3,200, US$3,666) or THB 220,000 (€5,876, US$6,720) for married persons. Individuals earning most forms of business income must file a return for the first half of the year by September 30 and pay any taxes due. Married couples can opt to file joint or individual returns.

* Thailand uses the Thai baht (THB) as its unit of currency.

Personal Income Tax (PIT)

Figures in THB, euros, and US dollars

Income up to THB 150,000 (€4,010, US$4,580) is exempt.

Annual income from | To | Percentage tax
THB 150,001 (€4,010, US$4,580) – THB 300,000 (€8,017, US$9,167): 5%
THB 300,001 – THB 500,000 (€13,358, US$15,278): 10%
THB 500,001 – THB 750,000 (€20,038, US$22,920): 15%
THB 750,001 – THB 1,000,000 (€26,725, US$30,562): 20%
THB 1000,001 – THB 2,000,000 (€53,430, US$61,126): 25%
THB 2,000,001 – THB 5,000,000 (€135,980, US$154,444): 30%
Over 5,000,001: 35%

Social Insurance Taxes

Contributions to the Provident Fund and Workers’ Compensation Fund

Employers – 5% of employees’ salaries

Employees – 5% of their salaries

Thailand Entity Set Up

Launching a subsidiary overseas can be costly and time consuming – and the venture has no guarantee of success.

The southeast Asian nation developed into a social and economic success story in the early 21st Century, growing from a low-income to an upper-middle income economy in recent decades. The World Bank ranked Thailand 21st out of 190 nations in its most recent ‘ease of doing business’ report.

Thailand’s Gross Domestic Product (GDP) was expected to have reached 546 billion US dollars by the end of 2021, 26th in the world, with predicted growth of between 3.0% – 3.5% to around 550 billion US dollars by the end of 2022. Instead of taking a big risk, the sensible alternative is to use a Professional Employer Organisation (PEO) and Employer of Record (EOR) such as Bradford Jacobs to locate the finest local talent and administer your payroll in Thailand – speedily and risk free. Your company will be up-and-running in days rather than weeks or even months.

How to set up a Thailand Subsidiary

Setting up a subsidiary in Thailand? International companies planning to hire staff and run payroll have the option of opening a legal entity as a foreign-owned limited liability company.

A limited liability company as a subsidiary is incorporated under the Foreign Business Act after obtaining a Foreign Business License. The company must also comply with Section 1096 of the Civil and Commercial Code. US companies, however, do not need the license and are free of most of the restrictions under the Act due to signing the Treaty of Amity with Thailand in 1966.

General procedures and requirements include:

  • Reserve the company name prior to application and all documents being lodged with the Department of Business Development (DBD)
  • At least three initial shareholders, founders or promoters must sign application documents
  •  Open a head office in Thailand, confirmed by letter of consent from the landlord or owner, and obtain registration number (Tabien Ban)
  • Memorandum of Association of the parent company
  • Articles of Association detailing company by-laws as established in a statutory meeting, where directors and auditors are appointed
  • Bank letter certifying sufficient funds in Thai shareholders’ personal bank accounts
  • Legally, the three initial minimum shareholders must each have shares worth THB 5, giving total share capital of THB 15 (€0.40, US$0.45)
  • However, companies are expected to have registered capital to cover business expenses for the first three years, as follows:
  • Non-restricted companies with registered capital of THB 2,000,000 (€52,975, US$60,650), which can include US companies covered by the Treaty of Amity
  • Restricted companies with THB 3,000,000 (€79,470, US$90,980)
  • Once registered with the DBD and issued with a Business Registration Certificate, the company can open a corporate bank account to deposit capital
  • Obtain bank certificate confirming sufficient funds have been deposited

To operate other procedures, include:

  • Applying to the Revenue Department for a Tax Identification Number (TIN) to register any foreign employees and those Thai employees who are not exempt through being registered for a national Personal Identification Number (PIN)
  • Registration must be completed within 60 days of employees receiving first pay
  • Withholding and remitting tax to the Revenue Department on form PND1
  • Register for Value Added Tax at the relevant area Revenue Office
  • Registering Thai and foreign employees with the Social Security Office (SSO) by submitting their Social Security Fund application within 30 days of starting work
  • Withholding and remitting contributions to the SSO for social welfare funds, including the Provident Fund and the Workers’ Compensation Fund
  • Taxes must be remitted by the 7th (manually) or 15th (online) following the salary month
  • Employees must receive pay slips, hard copies or online, for each pay period
  • Filing employees’ annual tax returns by March 31 of the year following the tax year, which runs from January 1 to December 31
  • Payroll records must be kept for seven years

Benefits of setting up a Subsidiary in Thailand

Specific advantages for a foreign company opening a private limited liability company in Thailand include that the entity has a separate legal identity from the parent company. The subsidiary operates under Thailand’s Civil and Commercial Code. Shareholders’ liability is limited to the value of their shares. However, the directors who manage the company can have unlimited liability if this is stipulated by the Memorandum and Articles of Association. Generally, the subsidiary is responsible for its own debts and liabilities, while the parent company has no responsibility.

Through its subsidiary, the parent company has the advantage of maximizing business opportunities throughout Thailand and further afield.

At the crossroads of Asia, Thailand is a founder member of the Association of Southeast Asian Nations (ASEAN) formed in 1967. Apart from it immediate neighbours, Thailand is in prime position for international trade with Singapore, Indonesia, China, and India among a host of other Asian nations and into the Pacific Rim.

Other benefits for a subsidiary:

  • Easier to obtain potential benefits and incentives from the Thai Board of Investment and enter contracts with other Thai companies
  • More impact with clients and suppliers, as subsidiaries imply more permanency than branches
  • Employees feel there is more stability and job security than from being with a branch

In the wider commercial sense, opening a subsidiary makes a statement of a company’s commitment to expanding into foreign markets, in this case the opportunities offered by Asian and Pacific Rim economies.

Thai Market

Thailand is one of the success stories of the 21st Century, developing from a low-income economy to an upper-middle market with a Gross Domestic Product of 546 billion US dollars by the end of 2021, and predicted growth between 3% and 3.5% through 2022.

Thailand has the eighth strongest economy in Asia and in 2021 the Institute for Management Development (IMD) ranked Thailand 28th globally in its World Competitiveness Index.

At the crossroads of Asia, Thailand is a founder member of the Association of Southeast Asian Nations (ASEAN) formed in 1967. Apart from trade with its immediate neighbors, Thailand is in prime position for international trade with Singapore, Indonesia, China, and India among other Asian nations and into the Pacific Rim.

In addition to the economic potential, Thailand offers a stunning backdrop of royal palaces, ancient ruins and relics from a magical past, ornate temples – and mouth-watering cuisine. Visitors and tourists also know Thailand for its tropical landscape, jungles, stunning wildlife, and golden beaches. The futuristic and cosmopolitan capital Bangkok resonates with a vibrant modern lifestyle as a contrast to Thailand’s timeless heritage and history.

Of course, incoming companies intending to set up a subsidiary will find adjustments need to be made – and quickly. The employment market is framed by strictly applied laws and regulations … and they cannot be ignored or side-stepped.

Starting a Business into Thailand

International companies launching a business in Thailand to hire staff and run payroll have the option of establishing a legal entity subsidiary as private limited liability company.

The foreign-owned Thai limited liability company operates under the Foreign Business Act and requires a Foreign Business License. However, this need not apply to US companies, under the terms of the Treaty of Amity signed in 1966. US citizens can hold a majority or 100% of shares in a Thai limited company or open a branch or representative office without needing a license and operate equally with local Thai companies.

To start operating as a subsidiary, procedures and requirements include:

  • Reserving the company name prior to the application and all documents being lodged with the Department of Business Development (DBD)
  • At least three initial shareholders, founders or promoters must sign application documents
  •  Opening a head office in Thailand, confirmed by letter of consent from the landlord or owner, and obtaining registration number (Tabien Ban)
  • Providing Memorandum of Association of the parent company
  • Providing Articles of Association detailing subsidiary company by-laws
  • Holding a statutory meeting, where directors and auditors are appointed
  • Legally, the three initial minimum shareholders must each have shares worth THB 5, giving total share capital of THB 15 (€0.40, US$0.45)

However, companies are expected to have registered capital to cover business expenses for the first three years, as follows:

  • Non-restricted companies with registered capital of THB 2,000,000 (€52,975, US$60,650), which can include US companies covered by the Treaty of Amity
  • Restricted companies with THB 3,000,000 (€79,470, US$90,980) of capital
  • Once registered with the DBD and issued with a Business Registration Certificate, the company can open a corporate bank account to deposit capital
  • Obtain bank certificate confirming sufficient funds have been deposited

Expanding Business into Thailand

Opening a business in any overseas territory brings issues. Moving staff across the world means lengthy processes to obtain visas and work permits. When employees are in place, who will handle payroll? How will your company deal with regulations on taxation, entitlements and benefits, termination, and severance? Drawing up an international expansion blueprint is not enough. Your business plan will have to answer all these questions.

Thailand generally welcomes foreign investment. However, there are restrictions on sectors where foreign companies cannot operate, as well as the number of foreign employees who are allowed to work in comparison with the number of Thais on the workforce. Employment legislation is a mix of statutory regulations, with some variations in Thailand’s 77 provinces, and workplace policies which act as collective agreements.

There are other issues, too. Where will you find manufacturers, offices, and distributors?

Thai Business Facts

  • Capital – Bangkok
  • Population – 66.77 million (projected end of 2021)
  • Regions – Geographically, Thailand has six regions: Northern, Northeastern, Western, Central, Eastern and Southern. Administratively it is considered to have four regions with Eastern and Western combined into Central (Siam), plus Northern (Lanna), Northeastern (Isan), Southern (Tambralinga). In addition, there are 77 Provinces
  • Official language – Thai
  • Economy – GDP 546 billion US dollars, 26th in the world
  • Leading Sectors by GDP – Services 58.25%, industry 33.1%, agriculture 8.63%
  • Main exports include – Electronics 14%, vehicles 13%, machinery and equipment, agricultural goods (mainly rice and rubber) 8%, machinery and equipment 7.5%, foodstuffs 7.5%
  • Main imports include – Crude petroleum, integrated circuits, petroleum gas, vehicle parts
  • Main trading partners – Japan, US, China, Singapore, Malaysia
  • Government – Parliamentary system, unitary state, constitutional monarchy
  • Currency – Thai baht (THB)

Advantages and Challenges of the Thai Market

Advantages of expanding into the Thailand market include:

  • Location:  Geographical position in southeast Asia is ideal for further expansion among Asian and Pacific Rim economies
  • Trade: Largely tariff-free agreements with nearly 20 nations, including China, Australia, New Zealand, and South Korea in addition to fellow member nations of Association of Southeast Asian Nations (ASEAN). Competitive in international trade and ranked 21st globally for ‘ease of trading across borders’
  • Taxation:  Comparatively low standard rate of 20%, with lower rate of 15% for companies with capital under certain limits
  • Business:  Thailand jumped six places to 28th out of 190 nations in the World Bank’s most recent ‘ease of doing business’ report
  • Infrastructure:  Plans for a high-speed rail link between three of the seven international airports. Government investment creating one of the region’s most extensive road networks. Six deep seaports and two river ports
  • Investment:  Board of Trade offers incentives in some sectors for foreign companies

Challenges of expanding into the Thailand market include:

  • Workforce: Ageing population and declining labor force with slow movement away from working in agriculture
  • Education: Regional imbalances in learning and acquiring skills
  • Economy: Heavily dependent on trade and tourism
  • Expansion: The Foreign Business Act and the Foreign Business License impose restrictions on foreign involvement in certain sectors
  • Red Tape: Protracted procedures for obtaining work permits, which also strictly apply employment parameters for foreigners and the balance between local and foreign employees that can be hired by foreign companies
  • Language: Thai is the official language for business. Government and legal documents are in Thai and although English is used in business, it is best to secure services of a certified translator

Limited Company / Subsidiary or Branch in Thailand?

International companies planning to expand into Thailand, hire staff and run payroll have the option of establishing a subsidiary as a limited liability. Companies that want to extend their global reach without this commitment, have the choice of opening a branch.

The foreign-owned Thai limited liability company operates under the Foreign Business Act and requires a Foreign Business License. They require a minimum of three shareholders. However, this need not apply to American companies. Under the terms of the Treaty of Amity signed in 1966, US citizens can hold a majority or 100% of shares in a Thai limited company or open a branch or representative office without needing a license and operate equally with local Thai companies.

Limited companies and branches have differences in how they are registered and how they operate.

Subsidiaries and branches have differences in how they are registered and operate.

Thailand Contracts

Internationally minded companies hiring employees in Thailand must operate within a strict framework of legislation.

Most aspects of employment regulations in Thailand are based on the Employment Protection Act, the Employment Relations Act and the Civil and Commercial Code, with some aspects set by provinces.

These considerations come into play during the first stages of hiring, onboarding, and drawing up contracts with your new employees. Once Bradford Jacobs’ Professional Employer Organisation (PEO) recruitment networks have located the best talent for your company, we step in to steer you through this crucial element of recruitment.

General requirements applying to all contracts include:

  • The Employment Protection Act and the Civil and Commercial Code do not specify that a contract must be written, but it is advisable to put the key terms in writing as they form the working conditions
  • If the contract is in English, for example, there should be a Thai translation if the employee is local. The Thai-language contract will be used in any legal disputes
  • The Employment Protection Act says blue- and white-collar workers have the same protection under the law
  • Employment contracts are generally either open-ended and indefinite, or fixed term
  • Fixed-term contracts cannot include a probationary period and must specify an end date. If the end date is exceeded, it can be deemed to have become open-ended. Fixed-term contracts do not require an ‘advance notice’ of termination
  • Probation periods are permitted but usually do not exceed 119 days, as employees are entitled to severance pay once they have worked for 120 days

In addition to individual contracts, employers must also apply workplace policies.

  • Once a workforce reaches 10 employees the employer has 15 days to publicize workplace rules (in hard copy or electronically) detailing workdays, hours and breaks, vacation regulations, overtime, pay rates and schedules, disciplinary procedures, termination, and severance terms

In a workplace with more than 20 employees, the workplace agreement forms part of the employee’s contract

Employment Contracts in Thailand

Employers are recommended to put contracts in writing as they include the working conditions, but this is not legally required by the Civil and Commercial Code or the Employment Protection Act. Employers and employees are free to agree terms for their contract, but the Civil Code does not allow contracts that are disproportionately advantageous to the employer. Thai employees must be given a Thai version of the contract if it has been drawn up in English or another language. In the case of disputes, the Thai contract will be the valid version for the courts. Contracts that contravene statutory minimums will be considered invalid by the courts.

Main contract types include:

  • Open-ended, Indefinite Employment Contracts: The most common type of employment agreement gives the start date and details of the agreement. These must include names and addresses of both parties; location of work; any probationary period (generally not exceeding 119 days); salary and working hours, breaks and vacations; any information regarding confidentiality and intellectual property if relevant. Open-ended contracts require ‘advance notice’ of termination, usually 30 days, unless termination is with due cause.
  • Fixed-term, Definite Employment Contracts: These stipulate the start and end dates of the agreement and end on the expiry date without needing ‘advance notice’ of termination. They cannot be terminated before the end date unless there is due cause. The Thai Supreme Court ruled that if the contract includes provisions for it being terminated prematurely, it becomes an open-ended contract. The contract also automatically converts to open-ended if the employee is paid for continuing to work after the end date. Fixed-term contracts cannot include a probationary period.
  • Probation Periods: These are allowed but generally do not exceed 119 days, as employers are required to make severance payments after 120 days of employment.
  • Collective Bargaining Agreements (CBAs): Generally known under Thai law as ‘agreements relating to conditions of employment’ these apply at workplace level and must be implemented if the company has 20 or more employees. Once in force, the employer cannot enter any contract that does not comply with the agreement, unless it is beneficial to the employee. If employers want to change the collective agreement, they must negotiate with employees’ representatives under the terms of the Labor Relations Act.

Employee Benefits

Happy and satisfied employees make your business thrive and lead to even better profits. However, the specific benefits for employees in Thailand might not all be familiar to you yet. By using our PEO and Employer of Record(EOR) service we can provide compliant labour contracts for employees in Thailand including local benefits.

When expanding your company’s presence in a new country, you need to ensure compliance both in your employment contracts and benefit guarantees. These involve social security contributions, sick leave, health insurance, and unemployment, to name a few.

What are the Employee Benefits in Thailand?

Benefits and entitlements in Thailand are generally covered by the Civil and Commercial Code, the Employment Protection Act, and the Employment Relations Act. Collective Bargaining Agreements as recognized in most employment markets do not generally apply in Thailand. Their equivalent – ‘agreements relating to conditions of employment’ – operate at workplace level where there are more than 10 employees.

Foreign companies hiring employees in Thailand must operate within this complex framework of legislation, which provides safeguards and guarantees for the workforce. Minimum guarantees include:

  • Minimum wages
  • Paid vacations
  • Working hours
  • Termination, severance, and notice periods
  • Sick leave
  • Maternity allowances and benefits

The responsibilities of foreign companies reach further than simply complying with tax, social security, and payroll regulations. Failure to comply with specific regulations applying to benefits and entitlements runs the risk of fines and sanctions. It is vital that employers have a firm grasp of what is guaranteed for their employees, as this will affect the employer-employee relationship.

What Compensation Laws exist in Thailand?

The obligations of employers and rights of employees are covered in general by the Civil and Commercial Code, the Employment Protection Act, and the Employment Relations Act. Additionally, other Acts or Royal Decrees can apply specific regulations.

These include the Gender Equality Act, Foreigners Working Management Decree, Personal Data Protection Act, Alien Working Act, Employment and Job-seeker Protection Act, the Occupational Safety, Health and Environment Act, Provident Fund Act, Social Security Act, State Enterprise Labor Relations Act, and the Workmen’s Compensation Act.

Legislation protects employees regarding minimum wages, paid vacations; working hours; termination, severance, and notice periods; sick leave; maternity and paternity allowances and benefits.

In Thailand it is vital for employers to be up to speed with responsibilities to their staff over benefits, compensation, and minimum requirements. Do not take the risk of paying penalties for ignoring these responsibilities!

Compensation, entitlements, and benefits include the following:

  • National Minimum Wage: Thailand’s 77 provinces set their own minimum wage levels as there is no national minimum. The lowest daily rate is THB 313 (€8.30, US$9.50) in Narathiway, Pattani and Yala, up to THB 336 (€8.90, US$10.20) in Chonburi and the tourist hot spot of Phuket. The minimum hourly wage in the capital, Bangkok, is THB 331 (€8.77, US$10.0). Minimum wages are also set for foreigners when they apply and renew their visa to comply with regulations of the Thai Immigration Bureau. Rates vary between nationalities and the bureau requires PND1 forms from the previous three months, confirming salaries.
  • Sick Leave and Benefit: Employees are entitled to 30 days sick leave annually, paid by their employer, who can request a medical certificate if leave exceeds three days. If sickness exceeds 30 days and is not due to occupational illness or workplace accident, employees claim benefit from the authorities at 50% of the (capped) monthly wage to a maximum 90 days for each treatment or 180 days annually. In the case of chronic disease, this benefit can be for one year. The Workers’ Compensation Fund pays up to 60% of the monthly wage (capped) in the case of workplace injuries or occupational disease. Employers can recoup employees’ medical expenses from the fund.
  • Working Hours and Breaks: The Labor Protection Act’s ‘Hours of Work’ regulations and the Ministry of Labor stipulate working hour limits, which must be covered contractually or by a workplace agreement. Daily working hours are generally eight over a five-day period, not exceeding 48 in a week. If employment has health and safety issues, hours worked cannot exceed seven a day or 42 per week. Amendments to the Act allow other limits depending on the type of role. Employees receive one hour’s break for working five consecutive hours unless there is an employer-employee agreement for less. Breaks are not paid as working time. Employees are entitled to an extra 20-minute break before starting overtime, plus 20 minutes if overtime is for two hours. Employees have a minimum one day’s rest day per week and the gap between days off must not exceed six days. This may not apply in such industries as tourism, but employees can accumulate rest days, which must be used within four weeks.
  • Overtime: The Employment Protection Act states that overtime on a normal workday is paid at not less than 150% of the normal hourly rate. Employees working on a holiday must be paid twice the normal hourly rate, and three times the normal rate for working overtime on a holiday. The same rates apply to piece work as per quantity produced. Overtime and hours worked on holidays cannot exceed 36 in a week.
  • Paid Vacations: Employees earn six days’ paid vacation after one year’s service, with the allowance adjusted pro rata for working less than one year. It is up to employers whether to allow extra days of vacation in subsequent years. Employers and workers can agree for unused holiday entitlement to be accrued and used the following year.
  • Maternity / Paternity Leave and Benefit: The Labor Protection Act provides maternity leave up to a maximum 98 days, which generally begins with the birth of the child. Pre-natal leave requires a doctor’s certificate. The employee receives full pay from their employer for the first 45 days. Employees insured under the Thai Social Security Fund may qualify for other benefits, depending on circumstances. These options apply only to the first two births – when the child is born a lump sum payment of THB 13,000 (€346, US$395) is made or 50% of wages for the 98 days capped at THB 15,000 (€400, US$456). There is no provision in Thailand for paternity leave.
  • Termination and Severance: Either party can terminate a contract. Employers give ‘advance notice’ in writing of their intention, generally before wages are due, to then take effect before the next wages due date. Employers terminating with immediate effect must pay the employee in lieu of the advance notice period unless dismissal is due to serious misconduct. Employees’ statutory severance pay is calculated on their length of service with the company, as follows: 120 days up to one year – 30 days’ basic salary minimum; one year up to three years – 90 days’ basic pay minimum; three years up to six years – minimum 180 days’ basic pay; six years up to 10 years – at least 240 days’ basic pay; 10 years up to 20 years – 300 days’ basic salary; more than 20 years’ service – at least 400 days’ basic pay. The Social Security Office must be notified of terminations. Severance is not paid if dismissal is for serious misconduct. If a foreign employee is dismissed the employer must inform the Department of Employment of the Ministry of Labor and the Immigration Bureau.
  • Notice Periods: Notice periods generally match the employee’s payment period, i.e., one month’s notice when an employee is paid monthly. The maximum notice period is three months, regardless of the pay period. The employer must comply with the employee’s contract if it stipulates a longer notice period.

Thai Top Talent

Finding and recruiting top talent in any overseas territory puts many potential obstacles in the way of companies making the move to build their international profile.

This applies to the Kingdom of Thailand – an increasingly attractive target for global expansion. Thailand’s location in south-east Asia has its main landmass flanked by Myanmar and Laos to the north and east with Cambodia to the southeast. Thailand’s peninsula stretches south to Malaysia, between the Andaman Sea to the west and Gulf of Thailand to the east.

At the crossroads of Asia, Thailand is a founder member of the Association of Southeast Asian Nations (ASEAN) formed in 1967. Apart from its immediate neighbours, Thailand is in prime position for international trade with Singapore, Indonesia, China, and India among a host of other Asian nations and into the Pacific Rim.

The Recruitment Process in Thailand

Thailand has become one of the prime targets for international investment. However, it is essential for foreign companies taking their first steps into Thailand’s economy to have a clear plan when it comes to recruitment.

The southeast Asian nation developed into a social and economic success story in the early 21st Century, growing from a low-income to an upper-middle income economy in little more than a generation. The service sector, driven by recovering domestic and international tourism, and industry are the leading areas for the economy and recruitment. Predicted growth sectors into 2022 include e-business, logistics, IT, and digital technology.

However, foreigners who are job-seeking in Thailand find the route complicated by government-applied restrictions under the Foreigners Working Management Decree. Listed restrictions include:

  • List 1:  Strictly prohibited occupations mainly concern traditional crafts, but also include brokerage or agency work; tour guide operations; clerical, secretarial and some legal work
  • List 2: Unless allowed by international agreements – includes auditing and accounting services; civil engineering projects; architectural work
  • List 3: Prohibited occupations apply to skilled or semi-skilled foreigners unless they are working for an employer. Apart from agriculture, this largely covers traditional crafts
  • List 4: Exceptions according to treaties with other nations

There are also restrictions on the number of foreigners who can be employed in relation to the number of Thais on the workforce.

Recruitment is the first stage of making your company operational and competitive in Thailand. These restrictions complicate moving staff into the country – in addition to the complexities of obtaining work permits and visas. To avoid these issues, it is vital to know where to locate the finest talent in Thailand to be the perfect fit for your company’s global expansion plans. Don’t wait … contact Bradford Jacobs for the solutions.

Legal Checks on Employees in Thailand

Scope: Thai law does not specifically authorize or prohibit pre-hire checks. Under the Personal Data Protection Act (PDPA, 2019), which came into force in June 2021, employers are legally required to obtain a candidate’s written permission to collect any personal information. The law applies also to a third-party agency if the employer uses one to collect the information; employer and agency must have a data processing agreement in place that complies with the PDPA. An applicant’s refusal to agree to a specific background check cannot be given as a reason not to enter into an employment contract.

Criminal Records: These can be carried out with the applicant’s permission but are often dispensed with unless the role involves working with children or in finance. Such checks can be protracted if they involve several provincial jurisdictions.

Medical History or Examinations: As medical history comes under ‘personal information’ it can be requested only if relevant to the role, or for employee insurance reasons.

Educational Qualifications and References: Can be checked by employers with permission.

Credit History: Under the Credit Information Business Act, assessing an applicant for employment is not a justified reason for acquiring credit information. Employers are allowed to ask the applicant’s permission for such information.

Drugs Records/Tests: With permission, and only where strictly relevant to the position.

Required:  Checks that the applicant complies with all visa and work permit regulations

Basic Facts on Hiring in Thailand

The rights of employees and obligations of employers in Thailand are governed by a combination of the Employment Protection Act, the Employment Relations Act and the Civil and Commercial Code.

International companies hiring staff for expansion into Thailand must comply with a framework of employment and taxation regulations. Some are subject to mandatory laws and others vary according to rules applied by provincial jurisdictions – a major consideration as Thailand has 77 provinces.

  • The Employment Protection Act and the Civil and Commercial Code do not specify that a contract must be written, but it is advisable to put the key terms in writing as they form the working conditions
  • If the contract is in English, for example, there should be a Thai translation if the employee is local. The Thai-language contract will be used in any legal disputes
  • The Employment Protection Act says blue- and white-collar workers have the same protection under the law
  • Employment contracts are generally either open-ended and indefinite, or fixed term
  • Fixed-term contracts cannot include a probationary period and must specify an end date. If the end date is exceeded, it can be deemed to have become open-ended. Fixed-term contracts do not require an ‘advance notice’ of termination
  • Probation periods are permitted but usually do not exceed 119 days, as employees are entitled to severance pay once they have worked for 120 days

After hiring and onboarding, employers must be aware of other considerations. Minimum standards apply to such as sick leave, minimum wages set at provincial level, working hours, maternity allowances, paid vacations, termination, and severance, notice periods and social insurance payments. Other rules regulate workplace discrimination.

Thailand Work Culture

The Kingdom of Thailand has many attractions for visitors – and international businesses. Foreign companies planning international expansion identify Thailand’s potential from being in prime position at the crossroads of Asia.

Thailand is a founder member of the Association of Southeast Asian Nations (ASEAN) formed in 1967. Apart from its immediate neighbours, Thailand is perfectly placed for trade with Singapore, Indonesia, China and India among a host of other Asian nations and further afield into the Pacific Rim.

The southeast Asian nation developed into a social and economic success story in the early 21st Century, growing from a low-income to an upper-middle income economy in little more than a generation, according to the World Bank, which ranked Thailand 21st out of 190 nations in its most recent ‘ease of doing business’ report.

For those looking to work there, Thailand has an extraordinarily rich heritage and history. Lavish royal palaces, ancient ruins and relics from a magical past, ornate temples and mouth-watering cuisine are just some of the attractions. Visitors and tourists also know Thailand for its tropical landscape, jungles, stunning wildlife and golden beaches. The futuristic and cosmopolitan capital Bangkok resonates with a vibrant lifestyle alongside its canals. Ready for the challenge? Now is the time to get down to business. So here are a few tips on taking the best steps and clearing those cultural barriers … and Thailand has some unique etiquette nuances which could catch out western visitors.

  • Language:  Thai is the official business language, but English is commonly used especially in Bangkok. If unsure, take an interpreter
  • Punctuality:  Being punctual is assumed … do not disappoint
  • Attitudes: ‘Face’ is important, as in most Asian business environments. Avoid pointing out errors and making criticisms in the presence of others. Raised voices are not appreciated
  • Negotiations: These can be a mix of ‘bartering’ and haggling alongside compromise and making concessions. Building relationships is key, so timescales should be ready to accommodate the process. When moving towards closure, ensure you are dealing with senior members of the opposite team
  • Greetings: ‘Wai’ (pronounced ‘why’) is the traditional greeting and usually initiated by the most junior member of the meeting, with senior members and visitors responding. Palms are pressed together, and the greeting is delivered with a slight bow, raising hands so the fingertips gently touch your nose. Handshakes are also acceptable
  • Business Cards:  Exchanging cards is expected; take a few seconds to read and appreciate the design. If you have dual-language cards, present with the Thai side up, with both hands
  • Dress Code:  Conservative is best, as dress is a way of showing respect to your counterparts and the occasion itself
  • Gift Giving:  Reciprocal gift giving is common, but do not open the gift in front of the person who gave it
  • Out of Hours: Thais enjoy hosting business dinners and lunches and generally will be happy to pick up the bill

Working Hours in Thailand

The Labor Protection Act’s ‘Hours of Work’ regulations and the Ministry of Labor stipulate working hour limits, which must be covered contractually or by a workplace agreement. Daily working hours are generally eight over a five-day period, not exceeding 48 each week. If employment has health and safety implications, hours worked cannot exceed seven a day or 42 weeklies. Amendments to the Act can allow other limits depending on the type of role.

Employees receive one hour’s break for working five consecutive hours unless there is an employer-employee agreement for less. Breaks are not paid as working time. Employees are entitled to an extra 20-minute break before starting overtime, plus 20 minutes if overtime is for two hours. Employees have a minimum one day’s rest day per week and the gap between days off must not exceed six days. This may not apply in such industries as tourism, but employees can accumulate rest days, which must be used within four weeks.

Overtime in Thailand

Under the Employment Protection Act, overtime on a normal workday is paid at not less than 150% of the normal hourly rate. Employees asked to work on a holiday must be paid twice the normal hourly rate, and three times the normal rate for working overtime on a holiday. The same rates apply to piece work as per quantity produced. Overtime and hours worked on holidays cannot exceed 36 in a week.

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