How to hire employees in Thailand through an Employer of Record (EOR) [2023 Guide]
Apr 27, 2023
Hiring in Thailand? If you’re a foreign company looking to tap into the country’s skilled workforce, you can start by hiring Thai contractors and sending international payments. But if your company wants to expand and hire full-time employees in Thailand, you need to create a legal entity or hire through an EOR (especially if you’re not based out of Southeast Asia).
The catch: Registering a legal entity can take months. Once established, you’ll need to understand complex Thai employment laws that can vary by province. Any mistake can end in fines and legal action from The Revenue Department of the Ministry of Finance.
Alternatively, you can remove some of the hassle by using an “Employer of Record” (EOR), which handles Thai payroll, tax, and compliance considerations.
Here’s a step-by-step guide for hiring through an EOR in Thailand.
Step by step: How to hire through an Employer of Record in Thailand
Step #1: Decide between a Thai EOR and a legal entity
Should you hire Thai employees through an EOR, or set up your own entity? This depends on your company’s resources, size, and plans to scale.
- Legal entity in Thailand. Setting up a legal entity from scratch usually requires registering with local authorities, opening a local bank account, and consulting with local experts to ensure compliance with tax and Thai labor laws.
- Thai EOR. An EOR service is a third-party service that operates as an employer on a company’s behalf—meaning you don’t need to set up your own entity. Not only do EORs allow you to hire full-time Thai employees, but they also handle all the legal requirements for complying with Thai laws for payroll, contracts, and benefits. Employer of Record services also include calculating and withholding taxes, onboarding and managing employees, and running payroll.
Pros and cons of EORs vs. setting up a legal entity in Thailand
Cost & Implementation
✘ Becomes costlier as your headcount increases.
✔ More cost-effective once you’ve hired enough employees in Thailand.
✔ Quickly set up new hires, often within 1-14 days, depending on the provider.
✔ Supports large-scale expansion in a new market.
✘ Can’t tailor certain policies, and other HR/legal processes, to the needs of your business.
✔ Can tailor certain policies, and other HR/legal processes, to the needs of your business.
Payroll & Benefits
✔ Taxes are filed for you.
✘ Must manually keep track of statutory deductions and employee entitlements for every hire.
Step #2: How to choose the best EOR for your business
Before you choose a platform, you should consider the services you will need, and how much you plan to grow your global hiring presence.
- Is the EOR active in Thailand? The first, and perhaps most obvious consideration when choosing an EOR for global expansion.
- Does the EOR own its own entities in Thailand? If the EOR does not own the entities, it means they are partnering with a local or third-party provider.
- How does the EOR protect your sensitive and confidential information? It is vital that your EOR has the appropriate data protections in place, as well as secure technology that eliminates potential disclosures of private information.
- Does the EOR offer automated solutions? You may want to look for an EOR that automates the busy work like onboarding and benefits enrollment and other common HR and IT tasks.
- What is the EOR’s support model? It’s essential that your EOR has support staff that are both easy to contact and experts in the regulations of the countries in which you are hiring.
Get the full checklist in our guide: What is an EOR?
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Step #3: How to hire and onboard your Thai employees
Once you’ve picked an EOR that works in Thailand, you can begin the onboarding process by collecting the following information from your new employees:
- Full name (matching the account where you’ll deposit their pay).
- Identification documents (either a Thai National ID or passport, and a work permit or visa if applicable).
- Date of birth and date of hire.
- Contact information, including their phone number, mailing address, and email in Thailand.
- Taxpayer identification number (TIN) and other tax-related information for income tax.
- Bank account information.
- Emergency contact information.
- Health information.
- Amount to be paid in Thai baht (THB).
Next, you need to send out an employment agreement that outlines key working conditions. An EOR can automatically localize and distribute employment agreements. Every Thai hire will have a legally compliant contract offering statutory requirements for probationary periods, working hours, minimum wage, benefits, and termination policies like severance pay and notice periods.
Example: Let’s say you hire two hourly Thai employees who live in different provinces that have separate overtime pay requirements.
When you use an EOR in Thailand, it will generate separate employment agreements to account for the Bangkok resident being eligible for 1.5x base pay after 48 hours in a workweek or nine hours per workday, and the Samut Prakan resident getting the overtime rate after eight hours in a workday.
You can onboard new hires anywhere, end to end, with Rippling. Request a demo today.
Step #4: Run payroll
For the A-to-Z on global payroll, read our comprehensive guide to running international payroll for employees in Thailand.
- Social Security Fund
- Provident Fund/Welfare Fund (Employers can choose to register for a provident fund offered by Thai financial institutions or participate in the government’s employee welfare fund, managed by the Department of Labor Protection and Welfare.)
- Workmen’s Compensation Fund (WCF)
Once you’ve collected a new hire’s information and both parties have signed employment agreements, an EOR will pay your Thai employees in THB, while withholding legally required taxes from salaries. This includes contributions to:
Frequently asked questions about hiring through an EOR in Thailand
How much does an EOR cost?
EORs typically use one of two pricing structures:
- Fixed monthly fee per employee
- Percentage of payroll plus applicable taxes
Both methods can also come with various administrative fees, onboarding charges, and other costs for supplemental features.
Keep in mind that you don’t need to use an EOR for your entire workforce. If you want to segment its use, you’ll only be charged for the employees you employ through the EOR.
What is the difference between an EOR and PEO?
A Professional Employer Organization (PEO) co-employs a company’s workforce and provides administrative services like paying employees, handling compliance, and filing payroll taxes. The company and PEO are jointly responsible for the workforce. A PEO does not, however, allow you to hire in other countries where you haven’t set up a local entity.
An EOR, on the other hand, is the sole employer of the portion of your workforce you use it for, assuming all the associated liabilities. An EOR allows companies to work with employees in other countries without setting up a legal entity.
Does an EOR protect your sensitive and confidential information?
While outsourcing your payroll management to an EOR can spare you time and compliance risk, sharing your data with companies who use third-party vendors leaves you exposed to data breaches from manual uploads.
You should seek out EORs that prioritize data protection, including:
- Compliance with industry-standard privacy regulations in Thailand, including the updated Personal Data Protection Act (PDPA).
- Secure infrastructure with around-the-clock maintenance.
- Carefully vetted personnel.
You can also establish a Data Processing Agreement (DPA) with a payroll service that mandates sound privacy practices and provides legal protection.
Does an EOR help with Thai tax filings?
An EOR can automatically calculate and file your taxes in Thailand. On your company’s behalf, it can submit Monthly Withholding Tax (WHT) monthly, which has a deadline of the 7th (for manual submissions) or 15th (for online submissions) of the following month.
What are the mandatory benefits for Thai employees?
The Civil and Commercial Code, the Employment Protection Act, and the Employment Relations Act provide the following mandatory employee benefits:
- Minimum wages
- Annual leave/Paid time off (including national holidays like New Year’s Eve, New Year’s Day, and the Queen’s birthday)
- Working hours
- Termination, severance, and notice periods
- Sick leave
- Public holidays
- Maternity allowances and benefits (including paternity leave)
- Pension plans and insurance
- Medical treatment benefits
- Death benefits
- Workers’ compensation
- Private health insurance
- Group life insurance
- Long-term disability
Healthcare in Thailand is free for Thai citizens under the Universal Health Coverage system, which is also available for foreigners with resident status in Thailand. However, your foreign employees must be treated in public facilities in their residential areas, which may mean their options are limited. That’s why many employers offer private health benefits.
For more information on mandatory benefits in Thailand, read our complete guide.
What are the employer costs for full-time employees in Thailand?
Employers are responsible for deducting the following from their full-time employees’ paychecks. Along with social security contributions like EI premiums and pension deductions, provincial taxes may also apply. Find the employer contribution details below:
Social Security Fund
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Rippling and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.