Hiring in Thailand: EOR Guide & Compliance Overview

Overview

If you are hiring your first 1-10 employees in Thailand, using an EOR is usually the lowest-risk option because onboarding often starts in 2-6 weeks, while entity setup can take several months.

Thailand’s employment law is deceptively employer-friendly on paper — low social security costs, no mandatory 13th-month salary, and a statutory minimum wage that varies by province. The catch is severance. Thailand has one of the most aggressive statutory severance schedules in Asia-Pacific: 300 days’ wages for employees with 10–20 years of tenure, jumping to 400 days for anyone past 20 years. You cannot contract around this. Every termination without cause triggers the full statutory payout, and Thai labor courts lean heavily toward employees in disputes.

To operationalize this in Thailand, cross-check country-specific EOR options, live job demand, and pricing risk signals before final budget approval.

Employer social security contributions are 5% of wages, capped at THB 750 per month — one of the lowest employer burdens in the region. That ceiling means a senior engineer earning THB 150,000/month costs the same in social security as a junior admin earning THB 15,000. Combined with the Workmen’s Compensation Fund (0.2–1.0% depending on industry risk), total mandatory employer costs outside of salary sit under 6%. Compare that to Singapore’s 17% CPF or South Korea’s ~10% across four insurance programs, and Thailand looks cheap. It is — until you fire someone.

Setting up a Thai limited company requires a minimum of three shareholders, at least one of whom must be Thai or the company must comply with the Foreign Business Act (FBA). Foreign-majority ownership is restricted in most service sectors unless you obtain a Foreign Business License, which takes 4–6 months and requires a minimum registered capital of THB 3 million. For companies hiring fewer than 5 people in Thailand, EOR eliminates the FBA complexity entirely: the EOR’s Thai entity employs your workers, handles social security registration, and manages the work permit process for foreign nationals. The four-to-one rule — requiring four Thai employees for every one foreign work permit holder — applies to the EOR’s entity, not yours, which is a genuine advantage if you’re hiring a single expat manager alongside a local team.

Key Employment Facts

Employer Cost

Total mandatory employer cost above salary: approximately 5.5–6.5%, among the lowest in Asia-Pacific. The provident fund is voluntary but expected for professional-grade hires — candidates from multinationals will ask about it.

Hiring Through an EOR

EOR is the standard entry point for Thailand. The Foreign Business Act restrictions make direct entity setup impractical for most foreign companies hiring a small team, and the work permit process for foreign nationals requires a Thai sponsoring entity with the right employee ratios.

Onboarding a Thai national through an EOR typically takes 3–5 business days. The EOR registers the employee with the Social Security Office, sets up payroll with proper tax withholding (progressive rates from 0–35%), and issues a compliant employment contract under the Labour Protection Act. For foreign nationals, add 4–8 weeks for work permit processing — the work permit is tied to the sponsoring entity and the four-to-one ratio, so the EOR’s existing Thai headcount directly determines whether your foreign hire can be sponsored.

Watch for two things. First, probation periods: most Thai employers set probation at 119 days, specifically to avoid the 120-day threshold where severance obligations begin. If your EOR defaults to 90 or 180 days, ask why. Second, the employment contract must be in Thai to be enforceable in Thai labor courts — an English-only contract is not legally sufficient. Any reputable EOR will provide bilingual contracts, but confirm the Thai-language version is the governing document.

When to Set Up Your Own Entity

BOI promotion is worth investigating if you’re in a qualifying sector (technology, R&D, advanced manufacturing). BOI-promoted companies can hold foreign-majority ownership without an FBL, get corporate tax holidays of 3–8 years, and can bring in foreign workers above the standard four-to-one ratio. The application process takes 2–4 months but the long-term benefits are substantial for companies committing to Thailand.

Termination Rules

Thailand’s Labour Protection Act (LPA) creates two very different cost outcomes depending on whether you have grounds for cause-based dismissal.

Termination without cause: Full statutory severance is mandatory — no reduction, no negotiation. The schedule: 30 days (120 days–1 year), 90 days (1–3 years), 180 days (3–6 years), 240 days (6–10 years), 300 days (10–20 years), 400 days (20+ years). “Poor performance” does not qualify as just cause — it falls under termination without cause. Budget the full statutory amount as your exit cost for any performance-related separation.

Termination with just cause (Section 119 exceptions): No severance required for: dishonest performance of duties or intentional commission of a criminal offense against the employer, intentional damage to employer property, negligence causing serious damage, violation of work rules after a written warning (except serious rules violations), abandonment of duties for 3+ consecutive working days without reasonable cause, or criminal imprisonment. These are high bars — especially the “dishonest performance” standard, which Thai courts interpret narrowly. Document meticulously before attempting a just-cause exit.

Advance notice: At least one full pay cycle (in practice 30 days for monthly-paid employees), or payment in lieu. Alternatively, the employer can pay wages in lieu of notice and terminate immediately.

Probation exception: The 119-day probation structure exists specifically to avoid the 120-day threshold where severance obligations begin. Termination during a properly set probation period carries no statutory severance. Make sure the EOR uses 119 days, not 90 or 180 — this is a meaningful cost difference.

Budget: statutory severance + accrued annual leave payout + notice period pay (or pay in lieu). For a 5-year employee at THB 80,000/month: statutory severance = THB 480,000 (180 days’ wages = 6 months’ salary, or ~$13,500).

Statutory Benefits

Social Security Fund (SSO): 5% of wages, capped at THB 750/month (wage ceiling: THB 15,000/month). This covers sickness benefits (50% of daily wages for up to 90 days/year), injury/disability, maternity (15,000 baht lump sum + 50% wages for 90 days), unemployment benefits, pension, and death. The cap means high earners cost the same as entry-level workers — a genuine cost advantage for senior hires.

Workmen’s Compensation Fund (WCF): 0.2–1.0% of payroll depending on industry risk class. Entirely employer-funded. Covers medical expenses and compensation for workplace injuries beyond SSF coverage.

Annual leave: Minimum 6 working days per year after 1 year of service. In practice, most professional employers offer 10–15 days. Unused leave must be paid out if not taken.

Public holidays: 13–16 days per year set by government decree; the number varies annually. Labor Day (May 1) and major Buddhist holidays are fixed; others shift.

Maternity leave: 98 days (14 weeks) — 45 days before birth, 53 days after. Employer pays full salary for the first 45 days; SSF covers the remaining 45 days at 50% of wages. Actual net to employee during the second 45 days: SSF 50% + any employer top-up. Many competitive employers top up to 100% for the full period.

Provident fund: Voluntary but expected for professional roles. Not mandatory by law; the Provident Fund Act provides the legal framework for voluntary employer-employee schemes. Typical employer contribution: 3–5% matching. Thai professionals at multinationals will ask about it — its absence signals an out-of-market offer.

13th month: Not mandated by law but deeply expected. Most companies pay 1 month’s salary as a year-end bonus. Senior and high-performing employees typically receive 2–3 months.

Work Visas and Immigration

Thailand requires every foreign national to hold both a Non-Immigrant B Visa (business/employment) and a Work Permit (ใบอนุญาตทำงาน) before starting work. These are separate documents issued by different agencies — the Ministry of Foreign Affairs issues visas, the Department of Employment (DOE) under the Ministry of Labour issues work permits.

The EOR entity sponsors both. Process: (1) the employee enters on a Non-Immigrant B Visa from a Thai embassy in their home country; (2) within 30 days of arrival, the EOR applies for the Work Permit at the DOE. Work permit processing: 3–5 business days once the application is complete.

Four-to-one ratio: The employer entity must employ at least 4 Thai nationals for every 1 foreign work permit holder. This ratio applies to the EOR’s entity — not your company. The EOR’s existing Thai headcount covers your foreign hire. If you set up your own entity with 3 Thai employees, you can only hold 1 foreign work permit.

Minimum capital requirement: The employing entity must have a minimum registered capital of THB 2 million for each foreign employee sponsored. This applies to the EOR entity — verify the EOR’s capitalization capacity if you plan to sponsor multiple foreign hires.

Work permits are tied to the employer, job title, and office location — any change requires a permit amendment or new application. Renewal is annual and requires continued employment evidence.

Frequently Asked Questions

What happens if I need to terminate an employee with 15 years of tenure?

You owe 300 days’ wages as statutory severance — no negotiation, no reduction. This is on top of any accrued but unused annual leave and the notice period payment. Thai labor courts do not accept “poor performance” as grounds for cause-based termination (Section 119 exemption). Cause requires serious misconduct: fraud, intentional damage to the employer, criminal conviction, or gross insubordination. For performance-related exits, plan a mutual separation agreement with a severance package at or above the statutory floor.

Does the four-to-one rule apply to my company or to the EOR’s entity?

The EOR’s entity. The four-to-one ratio (four Thai employees per one foreign work permit holder) is calculated at the entity level, not the client level. This is a key advantage of using EOR for foreign hires — the EOR’s existing Thai headcount satisfies the ratio requirement. If you set up your own entity with three Thai employees and want a fourth foreign hire, you can’t get the work permit until you hire a fourth Thai national. The EOR already has the ratio covered.

Is the provident fund really optional, or will I lose candidates without it?

Legally optional. Practically mandatory for professional roles. Thailand’s Social Security Fund pension benefit is minimal — roughly THB 7,500/month at retirement — and educated Thai professionals expect a provident fund with 3–5% employer matching as part of any competitive package. Multinational companies operating in Thailand universally offer it. If your EOR doesn’t include provident fund administration, they’re cutting corners on your ability to compete for talent.

To connect this guidance with live hiring demand, see hiring your first international employee and remote jobs by country.

Further Reading

• Best EOR for Thailand — Provider rankings and pricing for Thailand
• Deel EOR Review — Fast onboarding and partner entity model in Southeast Asia
• Remote EOR Review — Owned-entity approach and compliance coverage in Asia-Pacific
• Multiplier EOR Review — Singapore-headquartered provider with strong Southeast Asia presence
• Hiring your first international employee

Anchal Katyal · Founder, eorHQ

Anchal has spent over a decade in product strategy and market expansion across Asia and the Middle East. She evaluates EOR providers on compliance depth, entity ownership, payroll accuracy, and in-country support quality.

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