Employment Law in Thailand

Contracts

In Thailand, employment contracts can be fixed-term or indefinite, depending on the nature of the job and the agreement between the employer and employee. Indefinite employment contracts must include benefits such as social security contributions, severance pay, and paid annual leave. Fixed-term employees are entitled to the same benefits as indefinite employees after 120 days of work.

Thailand also has apprenticeship contracts, governed by the Labor Protection Act (B.E. 2541). Employers in sectors like manufacturing and construction must hire apprentices under government-approved programs.

Termination and notice periods

In Thailand, labor laws require employers to provide written notice of termination or pay in lieu of notice, with a minimum of one full pay cycle for employees who have completed at least 120 consecutive days of continuous employment. 

Employees with at least 12 consecutive months of continuous employment are entitled to severance pay equivalent to 90 days’ wages for each completed year of service, with a maximum of 300 days’ wages. There is no statutory gratuity payment in Thailand; however, additional compensation may be provided based on employment contracts or collective agreements. As your employer of record (EOR) in Thailand, we can assist you in managing employee terminations by providing legal guidance and a personalized process to ensure compliance with national labor standards and minimize legal risks.

Probation periods

In Thailand, probation periods are not explicitly defined in local law; however, they are commonly established through employment contracts, typically lasting up to 119 days to avoid severance obligations, with similar durations applicable across sectors, as specified in employment agreements.

Working hours and overtime

In Thailand, the standard workweek is typically Monday through Saturday, with eight hours per day, totaling 48 hours per week. Employees are prohibited from working for more than eight hours a day without appropriate compensation.

Any work beyond eight hours a day is considered overtime, and employees are entitled to additional compensation of at least 50% over their regular hourly rate. For work performed on rest days or public holidays, the overtime pay rate is higher, as specified by the Labor Protection Act.

Taxes

In Thailand, withholding tax is known as Personal Income Tax (PIT) and is deducted by employers before paying salaries to employees. Employers must deduct PIT from employee salaries based on applicable income tax brackets and submit it to the Revenue Department.

Employers in Thailand must adhere to various taxation and regulatory compliance requirements to operate legally and avoid penalties. 

• Corporate tax: Domestic companies are taxed at 20% on their profits. Multinational enterprises with annual global revenues exceeding €750 million EUR are subject to a minimum effective tax rate of 15% under the OECD's Global Minimum Tax framework.
• Value added tax (VAT): VAT applies to businesses with an annual turnover exceeding 1.8 million THB. Employers must register, file monthly returns, and pay VAT at a standard rate of 7% on applicable goods/services.
• Withholding tax (WHT): Employers must deduct WHT from employee salaries, vendor payments, and contractor fees. WHT must be deposited by the 7th of the following month, and relevant returns must be filed.
• Income tax returns (ITR): ITRs are filed annually based on company profits. Companies must also file annual financial statements with the Department of Business Development (DBD) and comply with electronic filing requirements.

Employer payroll contributions

Thailand’s social security system requires employer contributions that are dependent on the total number of employees, and these contributions cover pensions, medical care, disability insurance, and gratuity payments. In addition, workers’ compensation is financed by contributions from state governments, employers, and employees.