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Minimum wage in Thailand

Thailand payroll

Social security benefits in Thailand

Other employee benefits in Thailand

Simplify your global payroll with CXC

Payroll in Thailand

Every country handles employee compensation and benefits differently. As an employer in Thailand, there are several measures you need to consider to ensure compliance with local labour laws and regulations, such as:

Tax obligations for employers in Thailand

You must withhold personal income tax and social security contributions accurately and make sure that these deductions, along with employer contributions, are remitted to the appropriate government bodies.

Social security and benefits in Thailand

Employers are required to enrol employees in Thailand’s social security system, contributing to the fund according to the rates provided by law. You should also manage additional employee benefits, such as healthcare, bonuses, and provident fund contributions.

Data security and protection for payroll data in Thailand

Companies must ensure that sensitive employee information and payroll data are secured and handled in compliance with privacy laws.

Payroll outsourcing in Thailand

To ensure smooth payroll operations and timely and accurate payments, you must understand your responsibilities and obligations as an employer under Thailand’s labour laws.

However, if you don’t have the expertise to manage payroll in Thailand, you can leverage outsourcing payroll services. Payroll outsourcing refers to delegating the payroll processes and responsibilities from a company to an external service provider, such as CXC, which can help manage payroll across different countries, including Thailand.

The advantages of outsourcing payroll services, such as those offered by CXC, include gaining access to payroll expertise without the need to develop it in-house, ensuring compliance with local regulations, and improving scalability and flexibility in workforce management. This enables you to focus on your core business while the payroll provider streamlines your payroll operations.

Outsource payroll services in Thailand

Companies that may particularly benefit from outsourcing payroll in Thailand include those without a local subsidiary or entity in the country, as managing payroll internally requires a legal entity to process payments and taxes correctly. Small to medium-sized enterprises (SMEs) that do not have the resources to maintain a full-time, in-house HR team for their operations in Thailand might find outsourcing a cost-effective and efficient solution as well.

Minimum wage in Thailand

In Bangkok, Thailand, the minimum wage has increased from 354 Thai Baht (THB) to 400 THB per day, depending on the province. This came into effect on January 1, 2024, which means employers must start paying employees according to the updated rates from this date onward.

The increase in the minimum wage in Bangkok is part of a broader regional adjustment. This higher wage rate reflects the higher cost of living and economic conditions in the capital city, where the cost of goods, services, and housing is typically higher compared to other regions.

Meanwhile, companies looking to attract highly skilled talent usually offer higher compensation that exceeds the minimum wage in Thailand. This is especially true in competitive fields such as technology, finance, and management, where specialised skills and experience are in high demand.

Aside from offering higher salaries, companies often include additional perks and benefits, such as performance bonuses, stock options, flexible work arrangements, and other incentives to attract top-tier talent.

Minimum wage law in Thailand

The Minimum Wage Act is Thailand’s primary law that governs minimum wage standards and practices. This Act clearly mandates that employers must pay employees at least the minimum wage set by the government. The Act aims to ensure fair compensation for workers and address disparities in wage levels across different regions.

While the Minimum Wage Act specifically deals with wage rates, the Labour Protection Act (B.E. 2541 (1998)) provides broader regulations for labour rights and employment conditions, including wage provisions. It includes provisions related to fair wages, working hours, overtime pay, and other employment terms that intersect with minimum wage policies.

As an employer in Thailand, you must ensure compliance with the minimum wage standards set forth in the legislation. Non-compliance can put your company at risk and damage your reputation.

Is there a minimum wage for foreigners in Thailand?

In Thailand, the minimum wage laws apply uniformly to all workers, regardless of nationality. This means that there is no separate minimum wage specifically for foreigners; instead, the minimum wage rates are the same for both Thai and foreign employees.

Foreign workers are entitled to receive the same minimum wage as Thai workers, as established by Thailand’s government. This ensures that foreign employees are not paid less than the legal minimum wage based on their work location.

Thailand payroll

Payroll tax in Thailand

The country employs a progressive income tax system, meaning that tax rates increase with higher income brackets. Both employers and employees have to contribute to social security at specified rates, which adds another layer to payroll calculations.

The general personal income tax rates range from 0% for incomes that do not exceed a certain threshold to 35% for higher income levels.

Moreover, employers in Thailand are also subject to specific contributions on behalf of their employees. This includes the social security contribution, which is mandatory for both the employer and the employee, typically set at 5% of the employee’s salary.

Payroll calculation in Thailand

When it comes to payroll processing in Thailand, you need to be aware of the following to ensure compliance with local labour laws and regulations

Gross salary calculation: This is the sum of the employee’s basic salary and any additional allowances, such as housing, transportation, or meals that are considered taxable income.
Tax deductions: Employees are subject to a progressive personal income tax that ranges from 0% to 35%. The employer is responsible for withholding these taxes each month based on earnings and submitting them to the Revenue Department.
Social security contributions: Both employer and employee make mandatory social security contributions, which are typically 5% of the employee’s salary, up to a cap currently set at 750 THB per month.
Overtime payments: Employees who exceed the standard work hours are eligible for overtime compensation, which the payroll must accurately calculate and add.
Voluntary deductions: These may include contributions to provident funds, loan repayments, or other agreed deductions between the employer and the employee.
Net pay: Derived by subtracting all applicable deductions (tax, social security, etc.) from the gross salary to determine the take-home pay of the employee.

Payroll cycle in Thailand

The payroll cycle in Thailand is typically on a monthly basis. It is common for employees to receive their wages on the last working day of the month, as per the terms agreed upon within their employment contracts.

13th-month salary in Thailand

It is not mandatory to provide a 13-month salary payment in Thailand.

Is it possible to implement a time attendance system and integrate it with your payroll platform in Thailand?

Yes, integrating a time and attendance tracking system with your payroll platform is feasible. This is important when it comes to calculating work hours, overtime, and payroll. To do this, you can use a time tracking system that seamlessly integrates with your existing payroll software or system. You can also rely on or partner with a global payroll provider, such as CXC, to help you with this requirement.

This way, you can mitigate errors that could lead to legal challenges or employee disputes.
The benefits of integrating a time attendance tracking system into your company’s payroll platform include:

Enhanced accuracy: Automated integration reduces manual entry errors and ensures that payroll reflects actual hours worked, including overtime and holiday pay in line with Thailand’s labour regulations.
Improved efficiency: Automation saves valuable time for your HR and accounting teams, freeing them to focus on strategic tasks rather than manual data entry.
Real-time data access: Live tracking of employee hours provides immediate insights, assisting in managing labour costs and making informed business decisions.
Simplified compliance: Integration helps maintain alignment with Thailand’s payroll tax requirements, minimising the risk of non-compliance penalties.
Employee trust and satisfaction: Transparent and accurate payroll calculations enhance employee trust in your remuneration processes, fostering a positive working environment.

Does Thailand have social security benefits for workers?

Yes, Thailand has a social security system that provides benefits for workers. All employees working for a Thai employer are required to register for social security as mandated by the country’s labour law.

Both Thai citizens and expatriates are eligible to receive the same benefits, as long as they contribute to the system. Employees contribute to the social security fund at a rate of 5% of their salary, with a maximum salary of 15,000 THB per month. This means that the maximum contribution from an employee would be 750 THB per month, even if their salary exceeds 15,000 THB Employers match the employee’s contribution with an equal amount.

Social security benefits in Thailand

Thailand’s social security system provides various protections for workers, such as:

Sickness and accident benefits
Maternity benefits
Disability benefits
Death benefits
Child support
Old age pension
Unemployment benefits

Employers usually handle the registration process, after which employees receive a unique social security number. Enrolment in the social security system guarantees workers’ coverage by this safety net and their eligibility for the associated benefits.

Thailand’s Social Security Act

The Social Security Act in Thailand, formally known as B.E. 2533 (1990), provides coverage and benefits to Thai employees. It was established to provide security and support to workers in cases of non-work-related injury, illness, disability, and death, as well as in circumstances like maternity, child support, old age, and unemployment.

The Social Security Act, since its inception, has been subject to several amendments to improve and extend the benefits and coverage. An example of such amendments is the Social Security Act (No. 4), B.E. 2558 (2015), which introduced changes like revised terms for committee members and advisors under the act.

Workmen’s compensation fund in Thailand

This compensation scheme provides compensation and support to employees who suffer from work-related injuries, disabilities, or death.

Established under the Workmen’s Compensation Act, B.E. 2537 (1994), this fund mandates employers to contribute to it, ensuring that employees who face work-related accidents or illnesses receive financial assistance and medical care.

The Act specifies the conditions under which compensation is payable, including the types of injuries covered and the calculation of compensation amounts. Benefits from the fund include medical expenses, compensation for temporary or permanent disability, and in the case of an employee’s death, benefits to their dependents.

Workmen’s compensation insurance in Thailand

Benefits under this insurance scheme generally include compensation for lost income, medical expenses, and rehabilitation costs. Depending on the severity of the injury or disability, the insurance scheme calculates the compensation for lost income at a rate of 60% of the employee’s monthly wages and provides it for durations ranging from 3 days to 15 years. Medical expenses, on the other hand, are covered up to amounts between 45,000 THB and 300,000 THB, based on the severity of the injury.

Provident fund in Thailand

A provident fund is a voluntary savings program jointly invested in by both the employer and the employee, to support the employee upon retirement. It functions as a long-term savings scheme that also covers other events such as resignation, illness, or death, providing financial security for employees under various circumstances.

Employees can opt to contribute between 2% and 15% of their wages, based on the terms set by the service provider. Typically, employers will match or exceed the amount contributed by the employee.

Provident fund law in Thailand

The Provident Fund Act B.E. 2530 provides guidelines on the formation, management, and utilisation of provident funds in Thailand.

Employers, together with their employees, can establish a provident fund to serve as a savings and social security mechanism for employees upon retirement, resignation, disability, death, or other purposes specified in the fund’s regulations.

According to the Act, the fund’s management should comply with the rules and regulations outlined in the prospectus and the fund’s established policies. The management must be conducted with diligence, prudence, and in the best interest of the fund’s members.

Other employee benefits in Thailand

While not required by law, many employers in Thailand commonly offer non-statutory employee benefits to improve employee well-being and boost their competitiveness in the labor market. These benefits often include:

Health insurance in Thailand

While the Social Security Fund provides basic health coverage, employers often offer additional health insurance with greater coverage than that provided by the government plan. Additional coverage typically includes private hospital access and more comprehensive medical treatments.

Performance bonuses in Thailand

Many employers offer bonuses, such as a 13th-month salary or performance-based incentives, to reward employees and encourage high performance.

Housing allowance in Thailand

This can be a significant benefit for expatriate employees or those relocating for work, as it helps to offset the cost of accommodation.

Transportation allowance in Thailand

Some businesses offer a transportation allowance to cover the cost of commuting or provide a company car for employees to use.

Education allowance in Thailand

For employees with children, education allowances help to cover tuition fees and are considered valuable for expatriates in particular.

Relocation assistance in Thailand

For employees moving to Thailand from abroad, employers sometimes cover moving expenses to ease the transition.

Flexible working hours in Thailand

Many companies now offer flexible working arrangements, allowing employees to balance work with personal commitments more effectively.

Child allowance in Thailand

Employees receive a child allowance as part of their personal income tax deductions. A child under 25 years old studying at an educational institution, a minor, or an adjusted incompetent or quasi-incompetent person receives a child allowance of 15,000 THB each. This allowance is limited to three children. There’s an additional education allowance for each child studying in an educational institution in Thailand, amounting to 2,000 THB per child.

Employee retirement benefits in Thailand

Employees who have contributed to the mandatory Social Security Fund (SSF) for at least 180 months (15 years) are eligible for a retirement pension. The pension amount is determined by the contribution length and the average monthly salary.

On the other hand, many employers offer provident funds as part of their retirement benefits package. These are private, company-specific retirement savings plans. Employees have the option to withdraw their provident fund savings upon retirement, resignation, or under specific conditions such as disability or death.

Under the Labour Protection Act’s new retirement regime for private sector employees, employers are now required to pay severance when an employee reaches the retirement age of 60, or earlier if the company’s work rules specify it. Employers must adhere to the severance pay rates standardised across all private sector employees in Thailand.

Here are the specific points you need to keep in mind when drafting employee retirement benefits policy:

Establish a clear retirement age policy (60 years as default by law).
Plan financially for severance payments as prescribed by law.
Fulfill obligations of contributing to the social insurance pension scheme.
Provide notice and documentation clarity to avoid disputes upon retirement.
Stay informed about updates and changes to the laws governing retirement and severance.

Simplify your global payroll with CXC

At CXC, we understand the challenges involved in managing global payroll. That’s why we’re committed to making international payroll as smooth and seamless as possible. Whether you need to manage your entire workforce across several countries or just a handful of international remote workers, we provide payroll services tailored to meet your specific business needs and requirements.

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