Introduction to payroll in Thailand
Compliance to local employment legislation is crucial to attract and retain top talent in the Kingdom of Thailand. In terms of payroll, that means paying workers in an accurate and timely manner. This not not only provides excellent employee experiences, but also ensures compliance with labor laws to avoid potentially hefty legal fees and penalties.
Accurate, compliant payroll requires genuine in-country expertise, and this is a key business area where Skuad can help your organization. Skuad’s local legal expertise regarding management and payroll in Thailand lets you easily pay remote employees so you can focus on growing your company.
Learn about employee compensation, benefits, and taxes in Thailand.
Let Skuad navigate Thailand’s complicated local labor laws that cover everything from salary requirements to taxation, deductions, benefits, and more:
- Taxes, whether income, regional, or corporate
- Social security, health insurance, unemployment benefits, and pension
- Different types of leaves and holiday compensation
- Other taxes and employee deductions
Payroll process in Thailand
The payroll process is largely the same throughout the world. What makes it unique for every country are specific local employment regulations. Regardless, there are three general phases:
The pre-payroll phase is both a preparatory stage and a time for enacting due diligence in terms of collecting and validating required inputs for salary calculation.
Setting up the organization
Every company will have its unique approaches to processes, people, and culture, and all of these aspects will directly or indirectly impact payroll processing. It is critical that in the pre-payroll phase, some key internal policies are standardized and prepared, including:
You’ll need to prepare the identifications and registered business numbers that together make up your business profile. These will be used later on for submission of documents such as tax forms and invoices to oversee government agencies.
Every work location should have localized internal policies — even different locations in the same country. They don’t have to be drastically different, just customized to meet the needs of that particular work location.
Leave policy significantly affects payroll in the same way as general attendance policy. You need to clearly standardize the various rates and details that go into different variations of paid leaves.
Attendance policy will naturally dictate the very basis of wage computation. Attendance policy should clearly standardize base pay, overtime rates, and other adjustments such as half-days and other on-duty requests — all within locally mandated labor guidelines. You also need to carefully integrate attendance tracking tools like biometrics and digital time tracking platforms.
Thailand’s employment legislation covers every facet of labor, so there are statutory components that go into every detail, including payroll processing. You’ll need to secure genuine in-country expertise to ensure compliance.
Salary policy is a combination of meeting mandated guidelines and company standards. Do not expect to only need to meet Thailand’s minimums. You’ll need to address industry norms and market rates, and also differentiated salary structures, depending on the roles you want in Thailand.
Lastly, note that a full compensation package goes well beyond base rates, and involves benefits that are both statutory and supplementary.
Thai employees generally receive their pay monthly on the last working day of the month. Try to incorporate local norms into your policy regarding pay schedule.
A lot of input collection and validation occurs in the pre-payroll phase, which would include employee information regarding attendance, performance, expenses, and virtually anything that would impact salary calculation.
Payroll calculation phase
This stage of payroll in Thailand is focused on a singular task: accurate computation of salaries. While straightforward, every individual employee’s wage calculation will be slightly different, not just due to different rates, but overall variations in compensation packages.
It’s best to employ software and payroll systems to automate much of this payroll phase, once everything is calibrated with the proper pre-payroll policies.
Most of the post-payroll stage is spent just handing out the calculated salaries. This is the period when you send an advice to your bank or payment processor of choice to execute the disbursement.
Different payroll software and solutions providers handle this stage differently, so discuss with your partner how you want to manage payment delivery, such as through direct deposit.
For internal company purposes, you need to account for salaries as a major business expense. This includes ensuring you record salaries properly.
Payroll reporting and compliance
For external compliance purposes, you will need to submit mandated forms and documents to the appropriate government departments where your employees are located.
You can book a demo with Skuad’s experts to see how this will apply to your workers in Thailand.
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Payroll Processing in Thailand
It is highly recommended to partner with an expert in remote worker management and payroll processing like Skuad so you can devote your in-house resources to other important business concerns.
Payroll Processing Company in Thailand
Skuad not only handles payroll, but also remote employee hiring and management. Skuad’s local legal expertise and its platform gives you a competitive edge in terms of executing payroll in Thailand seamlessly and, more importantly, in compliance with local Thai regulations.
Payroll Management in Thailand
Skuad also offers payroll management in Thailand. Payroll management involves the maintenance of payroll-related documentation and records. Every aspect of Thai labor law is comprehensive and typically requires supporting documentation primarily for labor protections.
Payroll Compliance in Thailand
Thailand’s labor laws, patterned after International Labor Organization (ILO) standards, involve a lot of measures meant to protect workers from unhealthy employment practices. As a founding member state, Thailand generally espouses the standards set by ILO while also implementing additional measures customized for the local market.
In Thailand, labor laws primarily come from the following Acts and Laws:
- Hire of Services
- Labor Protection Act 1998 (amended 2019)
- Labor Relations Act 1975
- Act on Establishment of Labor Courts and Labor Court Procedures 1979
- Social Security Act 1990
- Compensation Act 1994
Payroll Components in Thailand
It’s best to maintain a general understanding of the components of payroll in Thailand to stay compliant with the legal frameworks that dictate how they should be handled. Payroll in Thailand generally consists of base pay and benefits or bonuses as well as deductions (e.g. taxation and social contributions).
As of January 2021, Thailand’s minimum wages are standardized based on the place of work, ranging from 313 Thai Baht or THB per day ($9.02) to THB336 per day ($9.69). These minimums are reviewed and amended from time to time.
Again, do not expect to only meet these minimums. For example, the average salary in Thailand as of 2022 is much higher, at around THB4,845 ($140) per day.
In Thailand, the work day is eight hours and the workweek is 48 hours, with some exceptions for work that is deemed dangerous to personal health and safety, where the hours are reduced.
Work rendered in excess of 48 hours per week is considered overtime and needs to be agreed upon by the employee. Overtime work rates in Thailand range from 1.5 times to 3 times (work rendered on a holiday) the base.
Social security contributions in Thailand amount to 5% of an employee’s salary capped at a maximum of THB 750 ($22).
Employees are allowed unlimited sick leave, however, paid leaves are limited to 30 working days.
New mothers may take up to 90 days of maternity leave, 45 of which are paid. In the public sector, new fathers are given 15 days of paternity leave. You might want to follow suit and offer the same as a supplementary benefit.
Thailand celebrates a minimum of 13 public holidays every year:
- Jan. 1: New Year’s Day
- Magha Puja Day
- Chakri Day
- Songkran Festival (Thai New Year)
- May 1: Labor Day
- Coronation Day
- Visakha Puja Day
- Asalha Puja Day
- Aug. 12: Her Majesty the Queen’s Birthday
- Oct. 23: Chulalongkorn Day
- Dec. 5: His Majesty the King’s Birthday
- Dec. 10: Constitution Day
- Dec. 31: New Year’s Eve
Income tax rates in Thailand are implemented at a progressive rate based on salary:
- THB1 to 150,000: 0%
- THB150,001 to 300,000: 5%
- THB300,001 to 500,000: 10%
- THB500,001 to 750,000: 15%
- THB750,001 to 1,000,000:20%
- THB1,000,001 to 2,000,000: 25%
- THB2,000,001 to 5,000,000: 30%
- THB5,000,001 +: 35%
Some other important guidelines involve matters such as probation and termination. Probation periods cannot last longer than 119 days. Employees are not entitled to severance if they are terminated accordingly for grievous reasons. Termination without cause, however, entitles employees to severance pay ranging from 30 days of wages for tenure lasting 120 days to a year, to 400 days of wages for tenure lasting 20 years or more.
Need more information? Request a demo and Skuad can discuss all the details you need.
Outsourcing Thailand Payroll Processing
Managing payroll in Thailand goes beyond ensuring you match the current exchange rate, which is $1 for every THB34.74.
Thailand’s labor laws are comprehensive and so complex that you will need local legal expertise just to maintain compliance with them. For many organizations across the world, the best way to accomplish this is to partner with a global HR and payroll processing partner like Skuad that has the in-country expertise and platform to guarantee compliance.
Outsourcing payroll processing to Skuad not only alleviates compliance concerns but also automates most of the payroll process, hassle-free. This allows you to focus on scaling your organization instead of getting bogged down in local compliance concerns.
Looking to expand your international business? Talk to Skuad now.