Thailand Legislation
Thailand has one of the strongest economies in Southeast Asia and continues to be a community that is receptive to foreign investment. With a business-friendly environment, thriving tourism industry, and skilled workforce, many companies choose Thailand as the place to expand their Asia operations. The government continues to take a supportive approach to foreign investment by offering various incentives, making it a food long-term bet for enterprises. To help businesses in their expansion into the nation, Links has created a legislation page to cover the main employment laws and practices of Thailand.
Please note that all the information listed below is to be used as a general guideline. For more detailed accounts of laws and regulations, please visit official governmental websites.
Company Setup
Companies can be registered as:
• Sole Proprietorships
• Thai Partnership
• Thai Limited Company
The registration procedure and requirements are different for the types of companies. Learn more: https://www.boi.go.th/index.php?page=setting_up_a_business
https://www.dbd.go.th/dbdweb_en/more_news.php?cid=245
Newly established companies must file Tax ID cards, VAT certificates and other necessary documents to the Department of Business Development (DBD) and the Central Filing Office of the Revenue Department after registration.
Various documents are required to set up a business bank account, including:
- Certificate of Incorporation
- List of Shareholders and Directors
- Articles of Association
For more information: https://www.bangkokbank.com/en/Business-Banking/Manage-My-Business/Operating-Accounts/THB-Account-for-Companies-Registered-Overseas
Benefits of Registering a Company in Thailand
Strategic Location
Located at the centre of one of the fastest-growing regions, Thailand is set to become an increasingly important player on the world stage as Southeast Asia continues its development. With the economic centre shifting east, Thailand looks set to prosper from the burgeoning middle class of its large neighbours and will act as a gateway for the region.
Incredible Tourism Industry
Being a top 10 global destination for international tourists, Thailand’s thriving tourism industry plays a crucial part in the country’s economy. Its ability to attract visitors from around the world creates ample business opportunities for companies in the country.
Supportive Government
Thailand openly encourages and actively seeks to attract foreign direct investment. The country’s ease of doing business and government support incentives for overseas companies from organisations like The Board of Industries fashions an attractive business climate.
Considerations when Starting a Company in Thailand
Workmen’s Compensation Fund and Social Security Fund entitles workers to receive compensation benefits in nonwork-related cases such as illness, disablement, death, child welfare, childbirth, and unemployment as well as old age benefits under the Social Insurance Act.
Labour Law in Thailand
Employees’ Compensation
Employees must be paid at least once a month on a designated pay date.
Work Permits
A Work Permit is required for foreign nationals working in Thailand for more than 30 days. Work permits can be issued for 1-4 years depending on the company and situation.
An Urgent Work Permit (UWP) for short-term work conducted for up to 15 days, which can be extended for another additional 15 days.
Minimum Wages
Minimum wage varies through regions, ranging from 313 to 336 Baht.
Maximum Working Hours
Maximum working hours per day is 8 hours per day and 48 hours per week.
Paid Annual Leave
There are 6 days of statutory paid annual leave in Thailand
Termination
Termination notice must be provided (at least 30 days but not exceed 3 months)
Severance Payment & Long Service Payment
Employees are entitled to mandatory severance pay depending on their length of service.
- >120 days but <1 year: 30 days of severance pay
- >1 Year days but <3 year: 90 days of severance pay
- >3 Year days but <6 year: 180 days of severance pay
- >6 Year days but <10 year: 240 days of severance pay
- >10 Year days but <20 year: 300 days of severance pay
- >20 Year days: 400 days of severance pay
Personal Business Leave
There are 3 days of statutory paid (excluded from Annual Leave)
Employees
Benefits In Kind
Dependant on company policy.
Share Options
Some companies may provide Shares to employees as additional benefits.
New Employees
For each new joiner, the employer is required to do the Social Security Enrolment for the employee, which will be effective on the first day of their joining.
Discrimination Laws
The Labour Protection Act ensures equality and non-discrimination at the workplace, prohibiting discrimination because of a person’s:
- Previous Profession
- Pregnancy
- Race
- Nationality
- Sex
- Sexual Orientation
- Family Origin
Statutory Benefits
98 Days of maternity leave at full pay for 45 days, then remaining days are paid by the social security.
Not mandatory for private sector employees.
30 days statutory paid sick leave per year. The employer can ask for certification as proof for sick leave of 3 days+.
No statutory law, dependant on company policy.
No statutory compassionate leave, based on agreement between employer and employee in contract.
Tax
Income Tax Calculation
Income tax rate is dependent on the gross income of an employee. Tax rate can range from 0-35%:
| Income (Baht) | Tax Rate (%) |
| 0 – 150,000 | 0 |
| 150,001 – 300,000 | 5 |
| 300,001 – 500,000 | 10 |
| 500,001 – 750,000 | 15 |
| 750,000 – 1,000,000 | 20 |
| 1,000,001 – 2,000,000 | 25 |
| 2,000,001 – 5,000,000 | 30 |
| Over 5,000,001 | 35 |
Tax Payment to Authority
The Revenue Department.
Submission Methods
Online & Offline (Physical submission)
Elevate Your Role with Links Payroll Outsourcing Services
Want to focus on strategic functions that aid business growth? Learn how Links Payroll Outsourcing can help reduce HR costs with our stress-free payroll services.
Payment
Bank Accounts and Paying Salaries
Employers pay local employees via wire transfer to their personal bank accounts.
Bonus Payments
There is no statutory requirement for an end-of-year or 13th month bonus.
Insurance
Social Security Contributions
Both employers and employees are required to contribute to the Social Security Fund. 5% of the employee’s gross monthly salary must be contributed by the employer and employee and a supplement 2.75% is paid by the government.
Local Information
Thailand Public Holidays 2022
Employees are entitled to public holidays as follows:
| National Holiday | 2022 Date |
| Substitute for New Year’s Day | January 3 |
| Makha Bucha Day | February 16 |
| Chakri Memorial Day | April 6 |
| Songkran Festival Day | April 13 – 15 |
| Substitute for National Labour Day | May 2 |
| Coronation Day | May 4 |
| Royal Ploughing Ceremony Day | May 13 |
| Substitute for Visakha Bucha Day | May 16 |
| HM Queen Birthday Anniversary | June 3 |
| Asarnha Bucha Day | July 13 |
| Buddhist Lent Day | July 14 |
| HM King Birthday Anniversary | July 28 |
| The Queen Mother’s Birthday Anniversary | August 12 |
| King Bhumibol Adulyadej The Great Memorial Day | October 13 |
| Substitution for King Chulalongkorn Memorial Day | October 24 |
| King Bhumibol Adulyadej’s Birthday Anniversary, National Day and Father’s Day | December 5 |
| Substitute for Constitution Day | December 12 |
There might be some additional holidays to be added based on the Government’s decision. Law requires 13 days a year to be announced to your employees.
Companies must announce the PH lists to their employee before the beginning of the next year
Local Office Working Hours and Time Zone
Standard Time Zone: UTC/GMT +7 Hours
Interested to explore the idea of payroll outsourcing, EOR, or Visa application services?
Links International is a leading payroll outsourcing provider across Asia Pacific and supports payroll in over 17 countries. Please do not hesitate to contact us.