Introduction
Thailand is a thriving hub for international businesses, attracting multinational enterprises (MNEs) and foreign firms looking to expand their operations. While the country welcomes foreign investment, it also has strict labor laws designed to protect workers and ensure economic stability. Understanding these regulations is crucial for companies looking to hire in Thailand. Below are five key aspects of employing people in Thailand that every business should know.
1. Social Security Contributions
All non-exempt employers and employees in Thailand must register with the social security system. Contributions are made to ensure access to various benefits, including healthcare and unemployment support.
- Employees contribute 5% of their salary, up to a maximum of 750 Thai baht (THB) per month.
- Employers are required to match these contributions.
- Social security funds cover medical expenses, maternity benefits, child allowances, disability benefits, and more.
2. The Provident Fund (Retirement Savings)
Thailand has implemented a mandatory Provident Fund system to support retirement income and social programs.
- Initially voluntary, the Provident Fund became mandatory in 2018.
- Both employers and employees contribute a percentage of the employee’s salary:
- 3% for the first three years
- 5% in years 5-6
- 7% in years 7-9
- 10% from year 10 onwards (capped at 60,000 THB per month)
- Employers match employees’ contributions, except when employees earn below 10,000 THB per month — then only the employer contributes.
- Companies with 100 or more employees must match contributions within four years of enforcement.
3. Employee Leave & Benefits
Thai labor law provides employees with generous leave entitlements, ensuring a healthy work-life balance.
- Annual Leave: Employees who have worked for at least one year are entitled to a minimum of six paid vacation days.
- Sick Leave: Employees receive up to 30 days of paid sick leave per year (excluding work-related injuries).
- Public Holidays: Employees receive at least 13 paid public holidays annually, often resulting in 15 days off in total.
- Severance Pay:
- Employees who have worked for 4-12 months receive 30 days’ severance pay.
- Longer tenures are entitled to increasing severance benefits.
4. Wages & Working Conditions
Employers must adhere to strict labor regulations governing wages and working conditions.
- Minimum Wage: As of January 1, 2020, Thailand introduced new minimum wage levels ranging from 313 to 336 THB per day, depending on the province.
- Work Hours:
- Standard workday: 8-9 hours, depending on the sector.
- Maximum workweek: 42-48 hours.
- Probation Period: The maximum probationary period for new employees is 120 days.
5. Temporary & Agency Workers
Thailand extends strong legal protections to temporary and agency workers, ensuring fair treatment.
Temporary Workers
- Covered under the Labour Protection Act (LPA), they are entitled to minimum wage, regulated working hours, and fair treatment.
- Employees with fixed-term contracts of up to two years are not entitled to severance pay upon contract completion.
Agency Workers
- Businesses that use outsourcing services are still considered employers under Thai labor law.
- Employers must ensure that outsourced employees receive benefits equivalent to their directly employed counterparts.
Conclusion
While Thailand presents significant opportunities for foreign businesses, navigating its labor laws can be complex. Compliance is critical to avoid legal risks, as regulations change frequently, and key information is often available only in Thai.
Aster Lion, a trusted Employer of Record (EOR) in Thailand, can help your business manage payroll, taxation, immigration, and labor law compliance, ensuring seamless operations. Partner with us for a stress-free employment solution in Thailand.
For more insights, check out our article on Navigating Thai Labor Law.
