Why going for a PEO in Thailand?
If you want to work in Thailand without getting a headache learning about the difficult employment laws in place, going with a PEO in Thailand is generally a good choice.
These past few years, Thailand has been among the most popular destinations in the world for people and businesses to expand/relocate to.
Major reasons include the dynamic economy of the country, the developing needs of its population, and the great lifestyle one can expect from living there.
While companies and entrepreneurs can easily find their place in an environment not yet saturated by service & product offerings, individuals (like freelancers, digital nomads) seek a more sat-back lifestyle where one can make decent livings and enjoy the scenery Thailand has to offer.
Thailand's Economy Overview.
Thailand is Southeast Asia's second-largest economy after Indonesia, and it serves as an economic anchor for its developing neighbors. Public investment is expected to remain a key driver in the coming years, rising in conjunction with the government's infrastructure plans to encourage private investment and the tourism sector's continuous improvement.
Thailand has made extraordinary social and economic improvements over the last four decades, shifting from a low-income to an upper-middle-income country in less than a generation. As a result of its continued strong growth and substantial poverty reduction, Thailand has become a widely acknowledged development success story. This growth resulted in the creation of millions of jobs, allowing millions of people to escape poverty. Gains have been substantial across various aspects of welfare: more children are getting more years of education, practically everyone now has health insurance, and other forms of social security have improved.
Thailand's Political Overview.
Thailand is a constitutional monarchy. The King is the Head of State, and the Monarchy is a hereditary institution. Traditionally, he wields little direct power but has enormous popular respect and moral authority, which has been used to resolve political crises and ensure national stability on occasion. The government currently holds official power. The Prime Minister is the Head of Government and has all executive powers, including the legislation of the law and running the country's day-to-day operations.
Thailand held a general election in March 2019 for the first time since the 2014 coup d'état, using a complex new system that empowered small parties and the military. In July 2019, junta chief Prayuth Chan-o-cha declared an end to military rule while retaining power as Prime Minister.
Employment Regulation in Thailand.
The main sources of employment law in Thailand are the Labour Protection Act B.E. 2541 (LPA) and the Thai Civil and Commercial Code (CCC), which covers common issues in Industrial relations, leave entitlement, wage payment and etc. Under Thailand's labor law all types of employments are protected whether they be permanent, part-time, or under a special contract. To work in Thailand, all foreign nationals are required to hold a visa & work permit. Going for a PEO in Thailand means you don't need to struggle to learn all these rules.
Holidays & Leaves
According to the Labor Protection Act, employees working in Thailand are entitled to at least 13 paid public holidays per year. Every company can select a minimum of 13 days within the 25 public holidays per year.
Employees who have worked continuously for at least one year are entitled to a minimum of 6 days per year annual leave. However, this is a statutory requirement and in practice, most employers offer professionals around 10-15 days of paid annual leave per year. It is possible to carry over annual leave in Thailand. Other types of leave including Marriage Leave, Compassionate Leave, and Hospitalization Leave are granted at the discretion of the Thai employer.
Female pregnant employees in Thailand are entitled to a maximum period of 90 days of maternity leave. The employer covers the first 45 days at the pregnant employee's regular wage rate and the Thai Social Security Fund covering the remaining 45 days.
Under Thai labor law, an employee is entitled to 30 days paid sick leave per year. If an employee is absent from work due to sickness/illness for more than 3 days, the employer has the right to request a medical certificate.
Working hours
Employer and employee can agree on regular working hours. By law, working hours must not exceed 8 hours per day, from Monday to Saturday, or a total of 48 hours per week. To be noted office employees would be working from Monday to Friday 40h/week.
Regular overtime must be paid at a rate of 1.5 times the employee's base salary. On weekends this rises to 3 times base salary.
Healthcare
Thailand provides universal healthcare through three different schemes: the civil service welfare system for government employees and their families, Social Security for private employees (expats included 750B paid by the employer and 750B pay by the employee).
Regular overtime must be paid at a rate of 1.5 times the employee's base salary. On weekends this rises to 3 times base salary.
Minimum salary to be declared in Thailand
| Minimum Salary / month | Nationality |
|---|---|
| 50,000 THB | European countries (except Russia), Australia, Canada, Japan and the United States |
| 45,000 THB | South Korea, Singapore, Taiwan, and Hong Kong |
| 35,000 THB | Asia (except Japan, South Korea, Singapore, Taiwan, Hong Kong, Cambodia, Myanmar, Laos, and Vietnam) and South America, Eastern Europe, Central America, Mexico, Turkey, Russi, and South Africa |
| 25,000 THB | African countries (except South Africa), Cambodia, Myanmar, Laos, and Vietnam |
Income tax
Income earnt in Thailand (including bonuses and other benefits) are subject to the following rates of tax:
| Annual Salary (THB) | Percentage of Income Tax |
|---|---|
| Up to 150,000 | 0% |
| More than 150,000 but less than 300,000 | 5% |
| More than 300,000 but less than 500,000 | 10% |
| More than 500,000 but less than 750,000 | 15% |
| More than 750,000 but less than 1 million | 20% |
| More than 1 million but less than 2 million | 25% |
| More than 2 million but less than 5 million | 30% |
| More than 5 million | 35% |
Employers are responsible for registering new employees with the local social security office as well as any changes to employment and monthly submission of wage information.
All employees are required to contribute to a social security fund in an amount equal to 5% of their salary, up to a maximum contribution of THB 750 per month.
Termination/Severance
By law, there is no minimum probationary period in Thailand. Employers generally set probationary periods to 119 days since employment can be terminated within this time window without severance pay.
If an employee has worked continuously for an employer for 120 days or more, he or she is entitled to severance payment, depending on the length of service. The following severance pay rates apply:
| Length of service | Termination bobus |
|---|---|
| 120 days but less than one year | 30 days salary |
| One year but less than three years | 90 days salary |
| Three years but less than six years | 180 days salary |
| Six years but less than ten years | 240 days salary |
| Ten or more years | 300 days salary |
Employees working under fixed-term contracts who have their contracts terminated upon expiry are not entitled to a severance payment. Employers also have the option of giving employees payment instead of requiring the employee to work during the notice period.
Living in Thailand.
Thailand has something for everyone, including hi-tech urban metropolises, royal coastal resorts with miles of beaches, picture-perfect islands, bountiful farms and fields brimming with exotic fruits and fauna, and lush mountains and vast national parks that must be seen to be believed.
Thai food is not only tasty, but it is also easy to find and affordable, so you can eat well regardless of how much you like to spend on a meal. Great street food can be found across every city, town, and village, so you won't have to travel far to get something delicious to eat.
Thailand is a truly beautiful and diverse country that offers an enticingly unique blend of traditional and ultra-modern lifestyles. This is a country that looks to the future while maintaining a strong connection to its history. Expats can enjoy the finest of what the modern world has to offer while living in affordable luxury, or they can enjoy the pleasures of rural life in the provinces if that is their preference.
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