Hire In Thailand

Challenges of Hiring in Thailand

Securing top talents in Thailand requires a focused approach to navigating through the following challenges, including the unique considerations of managing remote workers: 

1. Employment laws in Thailand

Thai labor laws favor flexibility, but its compliance requirements can be a challenge to hire in Thailand- 

• You must understand regulations regarding minimum wage, overtime pay, severance packages, and mandated benefits. Non-compliance can lead to fines and legal issues.
• While at-will employment offers some freedom, ensuring a legally sound contract that adheres to employee rights and benefits is crucial to avoid disputes later.

2. Payroll in Thailand

Thai payroll involves calculating deductions for social security, multiple progressive income tax rates (0% - 35%), and other mandatory contributions like health insurance. 

This affects hiring, as payroll compliance requires establishing a business presence. Moreover, processing payroll in-house can be time-consuming and resource-draining, especially for companies with many employees.

Alternatively, you can outsource payroll compliance requirements to dedicated EOR solutions to simplify your hiring process in Thailand. 

3. Thai labor market structure 

A significant portion of the workforce remains employed in low-skilled occupations. This can limit the pool of candidates with experience in specific industries.

Moreover, half of employment in Thailand is informal, meaning these workers lack job security, benefits, and formal contracts. 

While you can easily hire contractors in Thailand, you will need help attracting and retaining qualified individuals seeking stable employment with clear paths for growth.

4. Competitive talent landscape in Thailand

Thailand's working-age population is shrinking due to lower birth rates and an aging population. Fewer people are entering the workforce, making it a competitive landscape for skilled talent.

Thailand's competitive talent landscape signifies a high demand for skilled workers but also presents significant challenges for companies seeking to recruit them. 

Moreover, skilled workers in Southeast Asia have greater leverage and now prioritize additional factors.

• Remote or hybrid work options are highly desired.
• Benefits that extend to family members or cater to specific healthcare needs are valued.
• Repetitive interview rounds and lack of transparency can deter top talent.
• Failing to offer competitive salaries and benefits can make it challenging to attract skilled workers.

5. Cultural nuances 

Thailand’s unique culture prioritizes respect and hierarchy. This can be a challenge for foreign companies unfamiliar with these norms.

For instance, direct communication styles common in some Western cultures might be misconstrued as rude in Thailand.

Moreover, work-life balance has become a top priority among the workforce in Thailand. 

Recent reports confirm companies having a hard time hiring in Thailand as workers themselves were choosier about new opportunities. 

This shift in priorities further tightened the available talent pool.

How to Hire in Thailand

You must adopt a strategic approach towards Thai employment laws by choosing suitable options to onboard new employees and hire contractors in Thailand. 

Here are three popular ways to go about it:

1) Setting up a local entity

The first option if you are looking to hire employees in Thailand is to establish a legal entity. This approach allows you to form your own company in Thailand and offers several advantages for hiring:

• You can design compensation and benefits packages, determine work schedules, and establish company culture directly.
• You can participate in local job fairs, advertise directly on Thai job boards, and tailor your employer branding message to resonate with the Thai workforce.
• This signifies a long-term commitment to the Thai market and thus attracts potential employees seeking stability.

Recently, global companies have preferred EOR in Thailand to hire and onboard potential candidates. 

2) Hiring employees via EOR

The second option for hiring in Thailand is through an Employer of Record (EOR) service provider. 

An EOR like Skuad acts as a legal employer on your behalf, handling all the administrative tasks associated with hiring and managing your Thai workforce. 

This approach benefits your hiring strategy in the following way:

• It allows you to hire and onboard employees much quicker, bypassing the lengthy process of setting up your company.
• Outsource your HR complexities, including payroll processing, employee benefits administration, and ensuring compliance with Thai labor laws. 
• Avoid ongoing costs like accounting and legal fees for maintaining a local company.
• Scale your workforce up or down as needed without the complexities of managing a local entity.

3) Hiring contractors through AOR

You can employ an Agent of Record (AOR) service provider to hire independent contractors from Thailand. 

An AOR differs slightly from an EOR as it offers specific solutions for hiring individual contractors, and freelancers. 

The AOR manages payroll and contractor paperwork, verifies contractor status, and ensures compliance with relevant regulations.

Cost of Hiring in Thailand

You can factor in the following expenses when hiring employees in Thailand:

• Pre-hiring costs involve market research on salary benchmarks and industry trends, job board postings, and recruitment marketing costs associated with promoting your employer brand and attracting talent.
• Hiring process costs involve background checks and assessment tools.
• Onboarding costs include training and developing onboarding materials like employee handbooks or manuals.
• Furthermore, ongoing employment costs include salaries and benefits, payroll taxes and social security, work permit and visa fees, HR Software for payroll, etc. 

Here’s a summary of the cost factor between setting up a local entity and partnering with EOR/AOR. You can also use Skuad’s cost calculator for more insights.

A Brief About Employment Laws in Thailand

Thailand has a civil law system governing employment, with the following vital laws:

• Labor Protection Act: Establishes minimum wage, working hours, leave entitlements, and severance pay.
• Labor Relations Act: Deals with unionization, collective bargaining, and dispute resolution.
• Social Security Act: Mandates social security contributions for employees and employers, covering healthcare, unemployment benefits, and retirement pensions.
• Alien Employment Act: Regulates work permits and visa requirements for foreign employees.

Hire in Thailand with Skuad

Hiring in Southeast Asia, especially Thailand, has its challenges. This is where Skuad comes in. 

Skuad is a global employment and payroll platform that empowers organizations like yours to build globally distributed teams seamlessly. 

We ensure compliance with local employment laws in over 160 countries, including Thailand.

With Skuad, you can:

• Hire and onboard employees in Thailand quickly and easily without needing a local entity.
• Offer competitive benefits packages that resonate with Thai employees.
• Streamline payroll processing and ensure compliance with Thai social security contributions.

Contact Skuad today and book your demo to help you navigate the exciting hiring world in Thailand!

FAQs

Q1. How do I employ someone in Thailand?

A1. There are three main ways to employ someone in Thailand:

1. Set up a local entity to gain full control over HR compliance.
2. Hire through an EOR to reduce the administrative burden of compliance and simplify benefits management.
3. Utilize an AOR for short-term projects with independent contractors and avoid employee misclassification risks.

Q2. What is the employment structure in Thailand?

A2. Thailand's employment structure boasts a flexible labor market, with over one-third of the population concentrated in low-skilled jobs. The workforce is further divided between wage earners (44%), farm workers (31%), and self-employed or employer roles (25%). Legal migrant workers fill crucial roles in labor-intensive sectors, and overall, Thai workers have less bargaining power than many other countries.

Q3. What is the basic salary of a Thai worker?

A3. A Thai worker's basic salary is above the prescribed daily minimum wage of 363 THB (Thai Bhat). 

Q4. What are the working hours in Thailand?

A4. The standard working hours in Thailand are eight hours per day or 48 hours per week. You can also ask employees to work overtime, but they are limited to a maximum of 36 hours a week.