Labor Contracts: Contracts can be in English or bilingual. They must be in written form and signed by both parties. Contracts must include the name, start date, employment duration, job description, and termination conditions.
Part – time Employees and Interns: IC Contracts: It is recommended to use an Independent Contractor (IC) agreement for part – time employees and interns, which can be signed with the Hong Kong entity.
Overview of Local Statutory Welfare Systems
Salary Payment: Once a month.
Monthly Minimum Wage: The minimum daily wage varies by region. Currently, it ranges from 337 to 400 Thai baht per day. The highest is 400 Thai baht in Phuket, the lowest is 337 Thai baht in southern provinces like Pattani, and the current minimum daily wage in Bangkok is 372 Thai baht.
Probationary Period: According to local labor laws, the minimum probationary period is 30 days. However, employees are entitled to severance pay if they work continuously for 120 days. Therefore, most companies extend the probationary period to the maximum legal limit of 119 days.
Employer Costs: Employer costs are generally estimated to be 5.3% of the employee’s salary. Social security accounts for 5%*, and the work – related injury compensation fund accounts for 0.2% – 1%. *The maximum contribution rate is 20,000 Thai baht per person per month or 240,000 Thai baht per year, and the monthly contribution per person is 40 – 200 Thai baht. If a company has more than 100 employees, it is required to hire one disabled person. Otherwise, it needs to pay a disability security fund to the Social Disability Security Bureau (the amount is equivalent to the remuneration of hiring a disabled person, usually calculated based on the minimum daily wage, with the total annual salary as the payment amount). If the number of employees reaches 200, two disabled people must be hired, with a ratio of 100:1.
Salary Payment and Statutory Holiday Responsibilities
Personal Income Tax: The personal income tax rate ranges from 0% to 35%, and income tax is calculated on a progressive tax rate.
Overtime Pay and Maximum Working Hours: The standard working hours are 8 hours a day, 5 days a week (Monday – Friday), with a 1 – hour break. The standard working week is from 09:00 to 18:00. However, employees can also work from Monday to Saturday, with a maximum of 48 hours per week. Overtime pay is mandatory. Any work outside the standard working hours is considered overtime, and employees can work a maximum of 36 hours of overtime per week. For additional working hours, employees will be compensated as follows: 150% of the hourly wage for normal weekday overtime; 200% of the hourly wage for working on holidays; 300% of the hourly wage for holiday overtime; managers and supervisors with supervisory authority in their job descriptions are exempt from overtime pay.
Statutory Holidays: Full – time and part – time employees are entitled to 6 working days of paid time off (PTO) per year. PTO accumulates at a rate of 0.5 days per month. Employees are eligible for annual leave after working for 12 months.
National Holidays: Thailand announces the list of national statutory holidays for the following year at the end of each year, which varies slightly each year. There are more than 20 holidays in total. According to labor laws, companies must select at least 13 statutory holidays as the company’s holiday schedule. This usually includes important holidays such as New Year’s Day, Songkran Festival, and Labor Day, like New Year’s Day, Makha Bucha Day, Chakri Day, Songkran Festival, Labor Day, Coronation Day of King Vajiralongkorn, Visakha Bucha Day, Buddha’s Birthday, Buddhist Lent, Queen’s Birthday, Chulalongkorn Day, King’s Birthday, Constitution Day.
Treatment or Conversion Logic of Unused Annual Leave at the End of the Year: Generally, employers require employees to use their annual leave within the current year or by March of the following year. Unused annual leave is considered waived, and annual leave will be re – accumulated in the new year. In the case of dismissal, if the employment is not terminated due to the employee’s misconduct or improper behavior as stipulated in Article 119, the employer must pay the unused annual leave for the current year on a pro – rata basis.
Other Leaves
Maternity Leave: Employees are entitled to 98 days of paid leave. For the first 45 days, employees will receive 100% of their salary, which is paid by the employer. For the next 45 days, 50% of the salary is paid by social security.
Paternity Leave: In the private sector, Thai law does not mandate paid paternity leave, but employers can offer paid or unpaid leave at their discretion.
Sick Leave: Employees are entitled to a maximum of 30 days of paid sick leave. The employer will pay 100% of the employee’s salary. In addition, employees are also entitled to leave in the following situations: 3 days of business leave per year, with 100% of the salary paid by the employer; 60 days of military service leave per year (if the employee is required to perform military service).
Calculation Logic of Salary for Incomplete Attendance (Including Absence or Unpaid Leave): Deducted salary = Employee’s monthly salary/30 * Number of absent days/Number of unpaid leave days.
Expatriate Employees
Local Minimum Wage Required for Split Payroll Work Permit: The minimum visa requirement is 35,000 Thai baht. It is recommended to pay at least 50,000 Thai baht for a higher chance of visa approval.
Withdrawal of Local Social Welfare (e.g., Provident Fund): Employees need to apply to the Social Security Office for withdrawal, providing documents such as employment termination certificates and visa cancellation certificates.
Dismissal Rules and Compensation Arrangements
Dismissal (Legal Requirements and Best Practices)
Notice Period: The shortest notice period is 0 days, and it varies depending on the type of employment. No notice is required if the employer has justifiable reasons to terminate the labor contract; 30 days’ notice is required if the employer terminates the employment without just cause.
Voluntary Resignation: Employees are allowed to resign at any time.
Dismissal during Probationary Period: Employers are allowed to terminate the employment relationship during the probationary period. Reasons include poor performance, unsuitability for the position, and failure to meet work requirements; employers must provide a written and signed termination notice stating the reasons for non – passing the probation; the statutory notice period is a full salary payment cycle/a full month from the date the employee receives the dismissal notice. If notice is not given one salary cycle in advance, the employer must pay one month’s salary as severance pay; severance pay is calculated based on years of service: 30 days’ salary for at least 120 days but less than 1 year of service; 90 days’ salary for at least 1 year but less than 3 years of service; 180 days’ salary for at least 3 years but less than 6 years of service; 240 days’ salary for at least 6 years but less than 10 years of service; 300 days’ salary for at least 10 years but less than 20 years of service; 400 days’ salary for 20 years or more of service.
Negotiated Dismissal: Employers and employees are allowed to mutually agree to terminate the employment relationship for any reason. Common reasons include potential disputes or lawsuits involving the employee, and the employee has negotiated to terminate the labor contract.
Dismissal for Cause: Employers are allowed to immediately dismiss an employee due to serious misconduct without prior notice. Reasons include dishonesty in performing duties, intentional or negligent damage to the employer, serious violation of the employee handbook or the employer’s legitimate instructions, and consecutive 3 – day absence without just cause.
Conversion of Annual Leave for Departing Employees: Annual leave pay should be calculated on a pro – rata basis and paid together with the salary or severance pay. Annual leave pay = Monthly salary/30 * Number of unused annual leave days in the current year.
Analysis of Local Government Incentives and Policies for Opening Companies and Hiring Local Employees
Incentive Policies
Local Employment Protection Policies: The Thai government’s local employment protection policies mainly include the minimum wage law (stipulating the minimum wage standards in each region to ensure the basic income of local employees), the preferential employment policy (encouraging companies to give priority to hiring local citizens and restricting the number of foreign workers in certain industries), the social security system (providing social insurance and health insurance for employees to ensure their basic living and medical security), vocational training and development (the government provides vocational training programs to improve the skills and employability of local employees), and labor rights protection (strengthening the enforcement of labor laws to protect employees’ rights, such as regulations on working hours, leave, and dismissal). Occupations that are absolutely prohibited mainly include wood carving, motor vehicle driving, auction, diamond/gemstone making, beauty and hair – dressing, hand – weaving, handmade paper art, lacquerware making, Thai musical instrument making, operating filling machines, gold and silverware processing, polishing machine making, Thai doll making, making monk supplies, silk product making, Buddha statue making, paper/cloth umbrella making, brokerage or agency, Thai massage, cigarette processing, guiding, mobile sales, typesetting, silk reeling, secretarial work, and legal services.
Quota Ratio of Foreign Employees’ Work Permits: Generally, non – BOI companies require a quota ratio of 4:1 for foreign employees’ work permits.
Funding Policies: The BOI formulates foreign investment policies and tax – exemption incentives for hiring foreign employees, such as exemption from corporate income tax, machinery import tax, R & D material import tax, and raw material import tax for export – oriented production, to attract foreign investors.
Human Resources Analysis and Employment Suggestions
Employment Numbers: As of the third quarter of 2024, the number of employed people is 40 million.
Unemployment Rate: The unemployment rate in the third quarter of 2024 was 1.02%.
Average Salary Trend: In the third quarter of 2024, the average pre – tax monthly salary in Thailand was 15,715.16 Thai baht. The positions with the highest average monthly salaries were legislators, senior officials, and managers (32,566.66 Thai baht), domain experts (27,421.32 Thai baht), and technicians and associate professionals (22,272.52 Thai baht). The industries with the highest average monthly salaries were information and communication (36,356.47 Thai baht), finance and insurance (34,468.26 Thai baht), and electricity and natural gas procurement (31,150.35 Thai baht).
Employers hiring ten or more employees according to Thai labor laws should provide work rules in Thai, which should include at least the following details: working days, normal working hours and rest time; holiday and leave rules; rules regarding overtime and holiday work; payment dates and locations for salary, overtime pay, holiday pay, and holiday overtime pay; leave and vacation rules; discipline and disciplinary measures; channels and methods for employee complaints; and regulations on employment termination, severance pay, and special severance pay.
After an employee leaves the company, the company must retain relevant employee information and archives for at least 2 years.
According to the Development and Improvement of Livelihood Quality of the Disabled Act, one disabled person must be hired for every 100 employees. Otherwise, the employer is obliged to make a financial donation for each omitted disabled employee at the daily minimum wage standard (the minimum daily wage is 363 Thai baht) multiplied by 365 days per year. This is equivalent to the employer’s current minimum annual donation of 130,680 Thai baht (approximately RMB 26,136 per year), and the specific amount depends on the location of the employer’s office or factory. These legal restrictions should be considered during the recruitment and employment process.
Cultural Adaptation
Language: Thai is the national language, and the official languages are Thai and English. Each region has its own dialect, with the dialect of central Bangkok being the standard. Teochew, Hainanese, and Cantonese are commonly used among Thai – Chinese. There are also Malay and Khmer languages.
Religious Customs
Religion: The main religions are Buddhism, Islam, Catholicism, and Hinduism. Buddhism is an important part of Thailand’s religion and culture, having a significant impact on local politics, economy, social life, culture, and art, and enjoying a high status in Thailand.
Customs: Thailand is a country of etiquette, known as the “Land of Smiles.” Thai people are gentle – natured, pay attention to etiquette, and respect their elders. People usually greet monks with a 合十 gesture. Women are not allowed to shake hands with monks or hand them items. Thais consider the head the most sacred part of the body and dislike being touched on the head. When an elder is present, juniors or subordinates must walk around or bend down to pass. When visiting temples, people must dress neatly and take off their shoes.
Business Culture
Greetings: People usually greet each other by pressing their hands together in front of the chest. Hand – shaking may not be necessary after the 合十 greeting.
Avoid using the left hand to pass or receive items.
Avoid crossing legs when sitting and do not point feet at others.
Avoid pointing at others with fingers during conversations.
