Wage portage in Thailand
Exploring the Thailand economic landscape in 2022 reveals a thriving hub in Southeast Asia. With a GDP reaching 455.8 billion US dollars, Thailand demonstrates a stable growth of 2.6% year-over-year. Despite a slight contraction of 23.1% in foreign direct investments during the same period, Thailand maintains its appeal for businesses seeking to establish themselves in this flourishing region.
Discover how our approach facilitates wage portage in Thailand, guiding you through each step. Our goal is to enable you to focus entirely on your business in this growing market of Southeast Asia.
What is wage portage in Thailand?
An outsourcing company is a local third-party entity that serves as an intermediary in an employer-employee relationship. Salveo is an Employer of Record (EOR) responsible for meeting legal and regulatory requirements related to immigration, employment, and payroll.
Therefore, Salveo becomes the legal employer of the worker but does not assume any supervisory role over the employee’s position. The original employer retains the substantial employment relationship, making decisions regarding compensation, job content, development, and termination of the contract.
What advantages does wage portage offer in Thailand?
The services of employer of record (EOR) offer numerous benefits, enabling you to establish a cost-effective local presence while avoiding complexities associated with setting up and managing a local legal structure. By doing so, you not only eliminate the waiting period, which can extend up to 6 months, but also allow for a comprehensive assessment of the potential Thai market for your project.
By delegating administrative and regulatory responsibilities to us, you can maintain your focus on essential business operations. Furthermore, leveraging EOR services to establish a local presence not only adds value but also enhances trust with your clients. This serves as a reassuring element and facilitates closer communication, particularly benefiting from the convenience of shared time zones.
This service offers a quick and adaptable solution, tailor-made to seamlessly address the specific needs and objectives of your company.
The key to our approach: simplifying the management of your human resources
We offer a comprehensive range of services to assist you in managing your human resources in Thailand.
Our services include:
Understanding the key points for hiring an employee in Thailand
Types of employment contracts in Thailand
In contrast to most Asian countries, Thailand doesn’t mandate employers to furnish written employment contracts to employees. Nevertheless, it’s considered a best practice for employers to create clear and robust written contracts. Doing so helps prevent misunderstandings and ensures a definitive delineation of both employer and employee rights and responsibilities.
Thailand offers two main types of employment contracts:
- Open-ended contract
- Fixed-term contract
Common Probation Period Practice in Thailand
The maximum allowable probationary period in Thailand cannot exceed 119 days. However, there is no mandatory minimum, and most employers tend to stick with the whole 119 days. This is because the longer the probation period, the more time the employer has to assess the employee’s performance and make a decision about whether or not to retain them.
Types of contract | Probation period |
Open-ended contract | 119 days |
Fixed-term contract | None |
Working hours and overtime in Thailand
In Thailand, the standard work week spans 48 hours or eight 8 per day. Employers and employees can mutually agree upon alternate working hours, provided the total doesn’t surpass 48 hours weekly. Additionally, employees are entitled to at least one day off per week, ensuring a maximum interval of 6 days between consecutive days off.
As for the overtime rates, they are regulated by the Labour Protection Act of 1998. The act mandates that employees be compensated for overtime work at a rate that is at least 1.5 times their normal hourly wage. For work on a holiday, the overtime pays increases to at least three times the hourly wage.
Annual paid leave
In Thailand, employees are entitled to at least 6 days of paid annual leave per year after they have completed one full year of consecutive work. For employees who have not completed 1 year of service, the employer may provide annual leave on a pro-rata basis.
National Holidays
The following table indicates the Thai public holidays and their dates for 2024.
Holiday | Date |
New Year’s Day | 1st January |
Makha Bucha | 24th February |
Chakri Day | 6th April |
Songkran | 13th April |
Labor Day | 1st May |
Coronation Day | 4th May |
Royal Ploughing Ceremony Day (Tentative Date) | 13th May |
Visakha Bucha, Queen Suthida’s Birthday | 22th May, 3rd June |
King Vajiralongkorn’s Birthday | 28th July |
Buddhist Lent Day | 1st August |
The Queen’s Birthday | 12th August |
Anniversary of the Death of King Bhumibol | 13th October |
Chulalongkorn Day | 23rd October |
King Bhumibol’s Birthday/Father’s Day | 5th December |
Constitution Day | 10th December |
New Year’s Eve | 31st December |
Minimum wage
The minimum wage in Thailand is set by the Ministry of Labour and ranges from 328 baht (US$9.12) to 354 baht (US$9.84) per day. The minimum wage is reviewed and adjusted annually, usually in October. The last minimum wage increase was in October 2022, when the daily minimum wage was increased by 5%.
Employment contract Termination
Employers are required to provide a written notice period of at least one month before terminating an employee without a specific cause. Alternatively, the employer can opt to compensate the employee for the notice period.
Regarding severance payments, employers are mandated to provide the following amounts based on the length of an employee’s service:
Number of service day | Compensation |
20 days < X < 1 year | 1 month of salary |
1 year < X < 3 years | 3 month of salary |
3 years < X < 6 years | 6 month of salary |
6 years < X < 10 years | 240 days’ of salary |
More than 10 years | 300 days’ of salary |
If an employee is terminated due to economic reasons and has completed 6 or more years of continuous service, they are entitled to additional compensation. This additional compensation amounts to 15 days’ wages for each year of employment, capped at a maximum equivalent to 360 days’ wages.
It’s important to note that work exceeding 180 days is considered as a full year of service for calculating these payments. This additional compensation is provided in addition to the severance pay outlined earlier.
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