Hiring employees in Thailand: a practical guide

Employment contracts

Thai law does not require a written employment contract; an oral hire is fully binding. A written contract is nonetheless essential, because everything the law leaves to agreement, duties, place of work, bonus discretion, confidentiality, post-termination restraints, is unenforceable or ambiguous without it. Contracts may be in English, though a Thai version, or a bilingual document with Thai prevailing, avoids disputes about what an employee understood and is what the Labour Court will read most comfortably.

Offer letters are customarily short and binding once accepted, so conditions belong in the letter itself: references, medical checks where lawful, and, for foreigners, permit approval. Background checking is normal for financial and senior roles, criminal record checks require the candidate's cooperation, and personal data gathered in recruitment now sits under the Personal Data Protection Act, which expects consent, proportionality and retention limits. A tidy recruitment file matters less here than in more litigious jurisdictions, but the PDPA has given it a new edge.

Two drafting cautions. First, the Labour Protection Act sets a floor that no contract can undercut: minimum wage, holidays, overtime, severance. Clauses that waive statutory rights are simply void. Second, non-compete and non-solicit clauses are enforceable only when reasonable in scope, duration and geography, and Thai courts read them narrowly; a year and a defined field is defensible, a blanket restraint is not.

Probation

Probation is a custom, not a statutory category. Its practical purpose is severance timing: statutory severance first attaches at 120 days of service, so Thai employers conventionally set probation at up to 119 days and decide before that line. Two things still apply during probation: termination requires notice of at least one pay period (or payment in lieu) unless there is serious cause, and the employee is protected against unfair or discriminatory dismissal from day one. Probation trims cost; it does not remove process.

Registrations and the first payroll

• Social security. An employer must register with the Social Security Office within 30 days of hiring its first employee, and register each new hire. Employer and employee each contribute 5 percent of wages up to the statutory ceiling, deducted and remitted monthly by the 15th.
• Withholding tax. Payroll income tax is withheld each month under the progressive personal scale and remitted on form PND 1 by the 7th of the following month, with an annual summary early in the new year.
• Provident fund. Voluntary, but standard among professional employers, with matched contributions typically in the range of 3 to 10 percent of salary. It is the centrepiece of a competitive package for senior Thai staff.
• Workmen's compensation. An annual employer-funded contribution covering work-related injury, registered alongside social security.

Payroll norms and customs

Salaries are paid monthly, almost universally by bank transfer at month end. Working hours are capped at eight per day and 48 per week for general work, with most professional employers on five-day weeks. Employees are entitled to at least six days of annual leave after one year, thirteen public holidays, and up to 30 days of paid sick leave per year; better employers offer ten to fifteen vacation days from the start, and the market for skilled staff expects it. Issue payslips, keep payroll records ready for inspection, and pay by traceable transfer; cash payrolls invite labour and tax questions in equal measure.

A thirteenth-month payment is a widespread custom rather than a legal requirement, common in banking, trading and established corporates, and discretionary bonuses beyond that follow performance. The caution is contractual: a bonus described in fixed terms, or paid identically for years without a discretion clause, can harden into a term of employment that the Labour Court will enforce. Keep discretion explicit and exercise it visibly.

Wages, hours and overtime

Minimum wage is set province by province and revised periodically, with Bangkok and the major economic provinces at the top of the scale; professional salaries are set by the market far above it. Overtime is where employers actually stumble: work beyond eight hours a day attracts pay at one and a half times the hourly rate, work on holidays carries higher multiples, and non-managerial employees can claim arrears years later if records are thin. Keep time records for every employee below genuine management level, and put senior staff on terms that reflect their exempt status honestly rather than by job title inflation.

Alternatives to direct employment

Not every role needs an employment contract. Genuine independent contractors, outsourced functions and, for foreign groups testing the market, employer-of-record arrangements all have their place. The caution is substance: Thai law characterises the relationship by how it operates, not by its title, and a contractor who works fixed hours under supervision with company equipment is an employee for severance, social security and tax purposes whatever the contract says. Misclassification surfaces at the worst possible moment, termination, when the contractor claims the statutory severance scale as if employed throughout.

Employer-of-record structures deserve particular care where foreign staff are involved, because the work permit must be sponsored by the entity that actually directs the work; a permit held through a payroll vendor while the person answers to someone else is a compliance gap, not a solution.

Hiring foreigners: the extra layer

A foreign hire is a company compliance question before it is an HR question. A work permit generally requires two million baht of paid-up capital per foreign employee (one million where the employee has a Thai spouse) and a ratio of four Thai employees per foreigner, all registered and contributing to social security. The candidate needs a Non-B visa obtained before the permit, the permit before the first day of work, and 90-day reporting thereafter. BOI-promoted companies escape most of this through the One Stop Service, with relaxed capital and ratio requirements; our separate briefing on Non-B visas and work permits covers the mechanics.

Letting a foreign hire start work while the permit is in process is a criminal offence for the employee and the employer, and immigration cross-checks social security and payroll records more systematically than it once did. Build the four to eight week lead time into the offer letter.

Termination, briefly

Exit costs belong in the hiring decision. Severance scales with tenure from 30 days of wages after 120 days of service to 400 days after twenty years, and dismissal without documented cause invites an unfair termination claim on top. The full scale, and the discipline that keeps terminations clean, are covered in our separate briefing on Thai labour law for employers.

Getting it right from the first hire

The pattern in troubled companies is always the same: informal contracts, late social security registration, and a foreign manager working ahead of a permit. All of it is avoidable with sequencing. Asia Global Partners sets up employment documentation, payroll and the registrations for client companies as one package, and handles the work permit chain for foreign executives, so the first hire is done the way the fiftieth should be.

This briefing is general information, not legal, tax or investment advice. Thai rules change frequently and individual cases differ. Verify current requirements with the relevant authorities, including the Immigration Bureau, the Board of Investment, the Land Department, the Department of Business Development and the Revenue Department, and take advice on your own facts before acting.