Guide to Hiring in Thailand

Labour Law – Basics

What are the basic requirements for employers in Thailand?

• Provident Fund

Provident Fund contributions are not mandatory – but employers and employees can voluntarily make these contributions. Both employers and employees can contribute between 2% – 15%, but the employer has to give an equal or higher contribution than the employee.

Employers and employees who wish to contribute to the provident fund must register with The Securities and Exchange Commission (SEC).

• Requirements for Hiring Foreign Employees

Companies that want to employ foreign workers in Thailand must fulfill the following:

• • Company must be officially registered in Thailand.
  • The ratio of employees must be 4 local employees to 1 foreign employee.
  • The business must have a tax ID and value-added tax (VAT) registration.
  • The minimum salary for foreign employees must be per the Order of Royal Thai Police No.327/2557.
  • Companies with a Thai majority ownership must have a minimum paid-up capital of THB 2 million for each foreign employee.
  • Companies with a foreign majority ownership must have a minimum paid-up capital of THB 3 million for each foreign employee.

• Timesheet and Record Keeping

Employers who have 10 or more employees must maintain employee records in the Thai language. These records must be kept for at least 2 years after an employee leaves the company. The records should typically contain the following information of each employee:

• • Name, surname and gender
  • Nationality
  • Date of birth and age
  • Address
  • Start date of employment
  • Position and duties
  • Wages and other benefits
  • Date of termination (if applicable)

• Work Rules

Employers with more than 10 staff must also come up with a list of work rules in the Thai language. The work rules must be announced within 15 days of hiring 10 or more employees.

The work rules should at least cover the following:

• • working days, normal working time and rest periods.
  • holidays and rules of taking holidays.
  • rules governing overtime and holiday work.
  • the date and place of payment of wages, overtime pay, holiday pay and holiday overtime pay.
  • leave and rules of taking leave
  • discipline and disciplinary measures.
  • lodging of grievances, and
  • termination of employment, severance pay and special severance pay.

What to remember when hiring new employees?

• Employment Contracts

Labour law contracts in Thailand can be either fixed-term or non-fixed term (permanent).

Fixed-term contracts:

• • have no minimum number of years for the contract period.
  • have no maximum number of frequencies.
  • entitle employees to severance payments when the contract ends – subject to certain conditions.

Fixed-term employment contracts can only be used for certain types of work, such as:

• • special projects which are not usual for the business or trade of the employer, and where the schedule for commencement and completion of work is fixed;
  • work of a temporary nature which has a fixed schedule for its commencement and completion; or
  • seasonal work where employment is only for a particular season.

All the work types above must be completed within 2 years to align with the maximum length for fixed-term employment contracts. Employers must terminate the contract within the specified fixed period, and any extension will preclude the contract from being considered a fixed-term employment contract.

Non-fixed term contracts:

• • do not state the last day of employment
  • do not provide for severance payments if the employee voluntarily resigns – only if the employer terminates the employee.

Thailand labour law permits employment contracts that are either written or verbal for both fixed-term and permanent employment. However, businesses are encouraged to prepare written contracts for their employees.

In terms of language, it is advisable for contracts to be in dual language (Thai and English). This is especially important in the event of a legal dispute.

What are the different discrimination laws in Thailand?

• Thailand Gender Equality Act 2015 which protects individuals against discrimination due to gender expression.
• Constitution of Thailand which prohibits discrimination on 12 grounds, including gender
• Labour Protection Act which grants protection for private sector workers, guaranteeing equal treatment for male and female workers – with certain exceptions.
• Ministry of Labour’s Regulation on Thai Labour Standards, Social Responsibility of Thai Businesses which prohibits discrimination on various grounds such as nationality, race, religion, age, sex and marital status.
• Promotion and Development of Quality of Life of Persons with Disabilities Act that defines quotas for hiring workers with disabilities on public and private sector employers.
• 2011 Ministerial Regulation issued under the Rehabilitation of Disabled Persons Act, which requires employers to hire persons with disabilities (PWD) in a ratio of 1 PWD to every 100 other employees. Employers who fail to do this must pay an annual donation to the Rehabilitation of Disabled Persons Fund equal to the minimum wage a worker with disabilities would have been paid.

What are the working hours in Thailand?

Under Thai labour law, working hours are capped at 8 hours a day and 48 hours a week. For some types of work, employers and employees can negotiate the daily hours of work, but the total number of hours should not exceed 48 hours a week.

Regarding hazardous work, employees should not work more than 7 hours a day and 42 hours a week.

If an employee works more than the fixed hours due to a specific agreement or if a regulation permits it, that employee is entitled to overtime compensation. Overtime is typically paid at the following rates:

• • Overtime on a typical workday – 150% of the employee’s daily/monthly wage.
  • Overtime of up to 8 hours of work during a holiday or day off – 200% of the employee’s daily wage/100% of the employee’s monthly wage.
  • Additional hours worked during a holiday or day off – 300% of the employee’s daily/monthly wage. The employe is entitled to 300% if they have completed 8 hours of work.

  Overtime hours are capped at 36 hours per week.

What is the legal probation period in Thailand?

There is no minimum statutory probation period in Thailand, but the maximum should not exceed 119 days (3 months).

Once an employee has worked for 120 days, they must be given one month’s notice and will be entitled to severance pay.

What are the minimum wage requirements in Thailand?

The minimum wage in Thailand varies between different regions. The current rates are as follows:

What to note for existing employees?

• 13th Month Pay

There is no statutory obligation for employers to provide 13^th month salaries, but many employers across Thailand do provide the 13^th month pay/year-end bonuses.

• Monthly Payday

Employers are advised to clearly state the monthly pay day in the employment contract. According to Section 70 of Thailand’s Labour Protection Act, wages must be paid on time each month. Employees can raise disputes in the Labour Court if an employer fails to meet this requirement.

• Personal Income Tax

Thailand follows a progressive income tax system that is applicable to both residents and non-residents alike.

Thailand’s tax year runs from January through December.

Termination of Employment – Separation Pay & Long Service Payment

Below is a summary of how severance payment in Thailand is made, depending on the type of contract the employee is on.

In the event an employer must permanently terminate or temporarily suspend operations of the entire business:

As for the amount of payment received, that would depend on the years of service as well as which of these 4 situations it comes under:

• Section 118 of the LPA – Without a cause/reason
• Section 120 of the LPA – Employer relocates the place of business to another place
• Section 121 of the LPA – Change of machinery or technology which causes a reduction of the number of employees/ redundancy
• Section 122 – Employer terminates the employment of an Employee under Section 121 + the employee has over 7 years of service

What is the retirement age in Thailand?

The retirement age in Thailand currently stands at 60. If a company sets a retirement age higher than 60, the employee may still retire at 60. Even if an employment contract does not expressly state the retirement age, the retirement age is still 60.

Employment dispute channels

Thailand has its own Labour Court that was founded in 1979 to hear cases related to employment, such as labour protection, unfair labour practices or discrimination, and industrial relations.

The first course of action should be mediation – where the parties attempt to settle their disputes out of court. If that option is unsuccessful, then the case can be heard in the Labour Court.

Is employment insurance compulsory in Thailand?

Employees who contribute to the Social Security Fund can receive the following:

• Life – Death Benefits: If an insured person dies without a work-related injury or sickness and has paid contributions for at least one month during the six months before death, compensation benefits are provided. These benefits include a funeral allowance of THB 50,000 and a survivors’ allowance to the designated beneficiary.

• Disability Benefits (Invalidity Benefits): Insured individuals are entitled to compensation for non-occupational disabilities if they have paid contributions for at least 3 months within 15 months before becoming disabled. The benefits cover various medical expenses, rehabilitation, and necessary costs.

• Medical Treatment Benefits: Insured individuals are entitled to non-occupational injury or sickness compensation benefits if they have paid contributions for at least 3 months within 15 months before receiving medical services. The benefits cover medical examination, treatment, lodging, medicine, ambulance costs, and other necessary expenses.

• Maternity Benefits: Insured individuals are entitled to compensation benefits for childbirth for themselves, their spouse, or cohabitating women (recognized as wives according to regulations). They must have paid contributions for at least 5 months within 15 months before receiving medical services.

• Child Allowance: Insured parents who have paid contributions for at least 12 months within 36 months before the month of entitlement receive a monthly child allowance of 600 baht per child for a maximum of three children.

• Old Age Benefits: Insured individuals aged 55 or older, having paid contributions for at least 180 months, are entitled to an old-age pension based on the percentage of monthly wages and periods of contribution.

• Unemployment Benefits: Insured employees who have paid contributions for at least 6 months within 15 months before unemployment may be eligible for compensation benefits if they meet certain conditions, such as actively seeking work, not being entitled to an old-age pension, and not being unemployed due to misconduct or criminal offenses.