Thailand: Here We Take A Brief Look At How HR And Payroll Works In Thailand.

With a mixture of emerging and booming economies, political uncertainty and extreme contrasts in business customs, the countries around the world can never be categorised as one homogenous whole. 

Thailand does not present many challenges when it comes to human resources, but there are a number of regulations that must be abided by. Here we take a brief look at how HR and Payroll works in Thailand.

Social Security System

• The Social Security Act provides for a fund to cover payments in case of sickness, disability, death, maternity leave, child support and retirement. Unemployment benefits also are available under the social security fund.
• The employer and the employee are each required to contribute 5% of monthly compensation towards the social security, in a maximum amount of €20 (THB$750).
• In order to claim old age pension, a person must be at least 55 years of age, and should have made at least 180 months of contribution.
• The disability pension can only be claimed if employees have a medical certificate claiming that they are not capable of working.

Hiring/Retrenchment Issues

• Under the Civil Commercial Code Law, there is no obligation for the employment contract to be in a written form.
• Termination:
  • For fixed term employment contracts, a notice of termination is not required. However, for a periodical contract, a minimum of three months' notice of termination is necessary.

An employer may terminate an employment contract without notice if the employee seriously violates labour discipline or company regulations or engages in graft that cause damage to the employer.

Except for termination for cause, an employee is entitled to a severance payment, which varies based on years of experience:

Foreign Personnel

• The law governing the employment of foreigners in Thailand is the Alien Employment Act BE 2521 (1978)
  • Although there is no prohibition for employing foreign workers in Thailand unless in specific job categories which are reserved to locals, there are some quotas and rules that generally apply when hiring foreigners:
• According to the Labour Law, there must be four local national employees for every one foreigner employed, and the employer must have paid-up registered capital of at least €50,000 (THB$2m) per foreigner
• Foreign employees must comply with visa requirements and obtain a work permit prior to starting work in Thailand. Also, they need a local sponsor (generally the employing company)

Work Permits

• According to Thai laws, work permits for foreigners can only be issued once the foreigner enters Thailand on a non-immigrant B visa or non-immigrant O visa
  • A non-immigrant type B visa is a single entry (90 day) visa, or a multiple entry (12 month) visa. Type O visa is a similar visa, that is issued to the applicant's family
• The company intending to hire a foreigner must provide the applicant with a letter stating its hiring intent, which can then be used to obtain the permit
• Non-immigrant visas are generally granted for an initial stay of 90 days, but it may be extended up to one year and is renewable every year. The foreigner holding this type of visa is entitled to apply for a work permit. Holders of a transit or tourist visa cannot apply for a work permit

Payroll Cycles

• Salaries/wages in Thailand are generally paid on a monthly basis regardless of the occupation
• The minimum wage varies within each province, ranging from THB$222 in Phayao to THB$300 in Bangkok (as of April 2012), and applies across industries. The minimum wages is THB$300 all over the country. 
• The rates for overtime wages vary from 1.5 - 3 times the normal hourly wage rate. The maximum number of overtime hours in a week is limited to 36 hours
• All employees who have worked continuously for one year are entitled to a minimum of six working days paid vacation every year in addition to the public holidays observed

HR Legislation

• Thailand's general labour legislations are:  
  • Civil Commercial Code: deals with the legal affairs and rights of people of Thailand
  • Labour Protection Act: includes the rights and duties of employers and employees
  • Labour Relationship Act: sets out a comprehensive framework of rules for employees and employers to negotiate labour disputes.
• Other significant HR legislations followed in Thailand include:
  • Workmen's Compensation Act
  • Social Security Act

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.