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Hiring in Thailand

Background checks in Thailand

Hiring options in Thailand

Language used in Thailand

Practical process in Thailand

Global expansion made easy

Employer of Record (EoR) in Thailand

Hiring talent in Thailand offers a unique opportunity to enhance your workforce with highly skilled professionals who can help drive your business forward. Known for its versatility, dedication, and rapidly improving skill set, particularly in industries such as technology, manufacturing, and services, Thai talent can bring an edge for your business.

However, hiring talent in the country requires setting up a local legal entity, which can be expensive and time-consuming.

Thankfully, there are modern workforce solutions that can help you hire talent in Thailand quickly and compliantly. Workforce solution like employer of record (EoR) allows you to hire talent anywhere in the world without the hassle of setting up a legal entity.

What is an EoR?

An Employer of Record (EOR) is an external service provider or organisation that legally employs workers in a country or region where you don’t have a local office. With an EoR, you can offload the administrative and legal tasks related to hiring international workers, including payroll, taxes, benefits, and compliance.

Choosing to partner with a reputable EOR provider, such as CXC, allows your business to seamlessly manage international workers without facing legal challenges. This means the EoR provider will ensure full compliance from onboarding to offboarding of your workers.

In this guide, we’ll provide everything you need to know to hire compliantly in Thailand, including conducting background checks, your hiring options, payroll process in the country, and how to leverage EoR for your global expansion journey.

Hiring in Thailand

When hiring in Thailand, companies should be mindful of several factors to ensure a smooth recruitment process and compliance with local laws, including:

Understanding local employment laws and regulations in Thailand: Thai labour laws offer clear guidelines on working hours, overtime compensation, and mandatory benefits. Familiarising yourself with these regulations will not only ensure legal compliance but also enhance your reputation as a fair and responsible employer. This helps you mitigate potential legal and financial risks.
Regional salary structures across Thailand: Major cities, such as Bangkok, typically offer higher salaries compared to rural areas. International companies are mostly concentrated in this area. Employers should therefore be prepared to adjust their salary offerings based on the job location to attract and retain the best talent.
Understanding language and cultural norms in Thailand: While English is the common language used, especially in a business setup, understanding the Thai language remains important for effective communication and integration in the workplace. Understanding and respecting Thai culture and social norms are equally important in building harmonious relationships with your employees.
Competitive job market in Thailand: With businesses looking for top talent across various sectors, you need to develop a compelling employer brand that stands out in a competitive job market. Emphasising career development opportunities, offering competitive compensation packages, and fostering a positive work life balance can help attract the best talent.
Enhancing recruitment strategies to attract talent in Thailand: Optimising your online presence and recruitment strategies can significantly enhance your ability to attract talent. Leveraging social media platforms, professional networking sites, and an efficient online application process can streamline recruitment and widen your access to a diverse talent pool.

Hiring foreign workers in Thailand

To hire foreign workers in Thailand, employers must adhere to labour regulations and requirements in order to remain compliant. Here are the key things you should know:

Meeting the employment quota in Thailand: As an employer, you should be aware of the number of foreign employees you can hire. For limited companies, the ratio is typically 4 Thai employees to every foreign employee. Representative offices have a ratio of 1:1, and for foreigners married to a Thai national, the ratio is more lenient at 2:1. Companies of the Board of Investment (BOI) may benefit from exemptions or adjustments to these quotas, depending on their specific circumstances and contribution to the Thai economy.
Obtaining a work permit in Thailand: Companies should ensure that the foreigner has a valid work permit from the Ministry of Labour before starting the employment. In this process, companies must prove that a Thai national cannot fill the position and submit various documents, such as the employer’s commercial registration and financial statements, as well as the employee’s non-immigrant visa and qualifications. The work permit specifies the occupation, position, employer, and validity.
Procuring a non-immigrant visa in Thailand: A prerequisite for a work permit is a non-immigrant visa, obtained from a Thai embassy or consulate abroad. The visa application requires supporting documents from the employer in Thailand, as well as evidence of the applicant’s qualifications. This visa needs to be converted to a non-immigrant visa under category “”B”” (business) or “”IB”” (investment and business) if not initially obtained as such.
Reporting employment in Thailand: Employers are required to report the employment of foreign workers to the government. This includes providing details about the nature of the job, the duration of their employment, and compliance with the specified quota for foreign workers. It’s also essential for employers to be in compliance with all laws and regulations regarding labour, taxation, and immigration.
Renewal of work permits and visas in Thailand: Work permits, and non-immigrant visas have limited validity and must be renewed. Employers and employees must keep track of expiration dates to avoid legal issues. Additionally, the Thai authorities should receive reports of any changes in employment or the employee’s status.

Independent contractors in Thailand

An independent contractor in Thailand refers to a professional or business entity that provides specific services to clients under terms defined by a contract or agreement.

Unlike regular employees, independent contractors are not bound by the same legal and tax obligations towards their clients, such as income tax withholding or social security contributions. Independent contractors must have written contract agreements with their clients, specifying the nature of the work, the compensation, and other terms of service.

Independent contractors in Thailand have the autonomy to work with multiple clients simultaneously, provided it do not breach any non-compete agreements or create conflicts of interest with their clients.

Contractors who generate an annual income exceeding THB 1.8 million (approximately USD 52,000) must register and charge Value Added Tax (VAT) to their clients in accordance with Thailand’s tax regulations.

Background checks in Thailand

Background check for employment in Thailand

To ensure a thorough assessment of potential hires, employers can look into an applicant’s employment history and conduct reference checks. Employment history verification can involve contacting the HR or payroll departments of the candidate’s past employers to confirm their employment dates, salary details, and reason for leaving the company.

Here are some important aspects you need to keep in mind when conducting background checks in Thailand:

Understanding data privacy law in Thailand: Data privacy laws dictate what type of information can be collected and how it should be used. Ensuring compliance with these laws protects your business from potential legal issues.
Clearly define the scope of the background checks: Define what aspects of the background check you need to verify. This could include criminal records, educational qualifications, previous employment history, and financial stability.
Seek Consent: Before proceeding with the background check for employment, employers must obtain written consent from the candidate.

The type of background checks you can conduct in Thailand are as follows:

Verify employment history: Contact the HR or payroll departments of the candidate’s previous employers to verify past employment dates, salary, and reason for leaving. This step helps ensure the accuracy of the information provided by the candidate on their resume or application.
Perform reference checks: Conduct reference checks by reaching out to the provided references. This can offer deeper insights into the candidate’s work ethic, character, and qualifications from those who have worked closely with the individual.
Consider additional checks if necessary: Depending on the role and industry, additional checks such as education verification, professional license verification, or credit checks may be necessary. Tailor these checks to the requirements of the job position.

Criminal background checks in Thailand

The primary avenue for conducting a criminal background check in Thailand is through the Royal Thai Police. The specific department that handles these requests is the Police Clearance Service Centre. To submit an application, workers typically need the following documents:

A completed application form, available from the Police Clearance Service Centre’s website or their office.
The applicant’s valid passport or Thai national ID card (copies and originals).
A set of the applicant’s fingerprints, which can be taken at any police station or at the Police Clearance Service Center. It is vital to ensure these are accurately taken to prevent delays.
Recent passport-sized photographs of the applicant.

What is the timeframe when conducting background checks in Thailand?

Several factors, such as the type of checks performed and the efficiency of the involved institutions, can vary and can affect timeframe for conducting an employee background check in Thailand.

Given these variables, it’s reasonable to allocate several weeks to conduct a comprehensive background check in Thailand. The verification of educational and employment history, criminal records, and other relevant checks may require coordination with various institutions and authorities, which can extend the process.

Hiring options in Thailand

Hiring employees in Thailand

An employee is defined as an individual who agrees to work for an employer under the employer’s direction in exchange for wages, regardless of the job title.

The Labour Protection Act (LPA) governs this definition and regulates the relationship between employers and employees, setting standards for working conditions, wages, working hours, and welfare. While the LPA outlines the employment regulations, it is important for both employers and employees to understand their rights and obligations under Thailand’s law to ensure compliance and harmonious work relations.

Hiring independent contractors in Thailand

Engaging an independent contractor can offer significant flexibility and specialised expertise for your business operations. An independent contractor in Thailand operates under a distinctly different framework from that of an employee.

They are self-employed individuals or entities contracted to perform specific tasks or projects. Contractors typically manage their own schedule, provide their own tools, and maintain a degree of autonomy in their work process. A contract governs the relationship, detailing the scope of work, duration, payment terms, and conditions of the provided service.

The benefits of hiring independent contractors include streamlined workforce management, reduced overhead costs, and the agility to respond to changing business needs. This can be particularly helpful when tapping into niche skills or expanding your business capacity during peak periods without increasing your permanent headcount.

However, it is crucial to clearly understand the difference between an employee and an independent contractor to avoid any misclassification, which could lead to legal repercussions. This distinction is usually based on the degree of control over the work and the individual’s integration into the organisation’s operations. The contract should clearly state the responsibilities, expectations, and independence of the contractor.

Hiring agency workers in Thailand

The Labour Protection Act (LPA) governs how businesses use agency workers in Thailand.

When your business hires an agency to find workers for specific tasks or projects, both your company and the agency are considered the workers’ employers. It doesn’t matter if you directly manage or handle these workers’ salaries; legally, you share responsibilities for them.

Agency workers have the right to claim benefits from either your business or the agency. The primary employer is considered the direct employer for their rights and benefits. This guarantees the protection and fair treatment of workers, regardless of their hiring method.

Language used in Thailand

There is no legislation governing language requirements in the workplace. However, the LPA requires the writing of work rules and policies in Thai, the official language of the country.

In the workplace, English is also a prominent language, particularly in multinational companies, business dealings with international clients, and sectors that interact frequently with foreigners.

For businesses operating in, or expanding to, Thailand, incorporating language training programs and encouraging cultural fluency can be highly beneficial strategies. Cultivating a workforce that is proficient in both Thai and English bridges communication gaps and enhances your business’s competitive edge in the local and international market.

Practical process in Thailand

When managing payroll in Thailand, you need to understand your responsibilities as an employer to avoid legal risks and costly financial errors. This include:

Employee information gathering: Collect all relevant employee information, such as tax identification numbers, banking details, necessary for processing payroll.
Gross salary calculation: Calculate the gross salary for each employee. This includes their basic salary and any additional income such as overtime, bonuses, and allowances.
Deductions: Determine the mandatory deductions, such as personal income tax and contributions to social security. Employers are required to withhold income tax from the employees’ earnings according to a progressive tax rate and submit this to the Thai Revenue Department.
Social security contributions: Both the employer and the employee must contribute a certain percentage of the employee’s salary (up to a prescribed limit) to the Thai Social Security Office. All employees who are legal residents of Thailand are required to be registered for social security.
Reporting and remittance: The employer is responsible for submitting the tax amount to the government and filing a monthly payroll report. This report should detail wages paid and withholdings made for all employees.
Year-end adjustments and tax filing: At the end of the tax year, employers must reconcile the amounts of tax withheld and provide annual tax documentation to the employees for filing their personal income tax returns.

Moreover, it’s important for employers to maintain accurate payroll records, ensure the privacy of payroll information, and remain compliant with all local labour laws.

For international companies with employees in Thailand, there are additional considerations in running international payroll, including managing currency exchange rates and understanding bilateral tax treaties that may affect tax liabilities.

Because of these complexities, some organisations opt to outsource payroll to a reliable global payroll provider, such as CXC, to ensure compliance with local labour laws and tax regulations.

How to hire talent in Thailand

Setting up a legal entity in Thailand is one approach for companies to hire locally; however, it is not the sole method to achieve compliance in hiring practices. Here are some approaches you can leverage:

1. Establishing a local entity in Thailand: Setting up a local entity in Thailand, such as a subsidiary or branch office, provides the most autonomy and control over operations and hiring. This approach allows your company to directly hire local employees, manage payroll and benefits, and adhere to the local regulatory environment under your corporate umbrella.

However, setting up a local entity also requires significant investment in terms of time and resources, compliance responsibilities, and ongoing management of legal obligations, which can be overwhelming if you’re not well-versed with all local regulations in Thailand.

2. Using an Employer of Record (EoR) in Thailand: Another approach is by using an Employer of Record (EoR). An EoR acts as the legal employer of your workers in Thailand and is responsible for all local employment legalities, HR tasks, payroll, and compliance with labour laws.

This approach enables you to quickly onboard and manage your workforce in Thailand. Moreover, it mitigates risks associated with international hiring, which can be particularly beneficial for businesses making their initial entry into the Thai market or for those managing smaller teams.

Choosing the right approach for your expansion in Thailand

What approach should you take for your recruitment or expansion efforts in Thailand? Taking the right approach that fits your unique requirements is essential to ensure business success.

To help you make informed decisions, here are key things you need to consider:

Speed and ease: If you want to speed up your market entry and ease of management are your priorities, an EoR provides a quick and straightforward solution. The EoR provider ensures compliance with local labour laws and regulations, enabling you to focus on other important aspects of the business.
Cost and resources: Evaluate the cost implications and your company’s ability to manage foreign legal entities. An EoR can reduce upfront expenses and resource allocation.

While setting up a local entity in Thailand offers control over your operations, using an Employer of Record provides a hassle-free and compliant way to manage your workforce without the added complexity of establishing and maintaining a local company.

Global expansion made easy

As you expand into new markets, we understand that understanding country-specific labour laws and regulations can be overwhelming — requiring careful attention to maintain compliance and mitigate risks.

That is where CXC comes in. With CXC, you can confidently find, hire, manage, and pay workers anywhere in the world, all while remaining fully compliant. By leveraging our Employer of Record (EoR) solution, you can bypass the complexities and expenses of setting up a legal entity, allowing you to focus on what truly matters: growing your business.

Read about EoR services

Compliantly hire workers anywhere with CXC

With our EoR solution, you can engage workers anywhere in the world, without putting your business at risk. No more worrying about local labour laws, tax legislation or payroll customs — we’ve got you covered.

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