Hiring in Thailand

Overview

Thailand’s mandatory employer costs sit under 6% of salary (social security capped at THB 750/month), but severance scales to 400 days’ pay at 20+ years tenure. The Foreign Business Act makes entity setup painful for foreign companies. EOR is the standard entry path for fewer than 8-10 hires.

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. For APAC operating detail, see eor.asia’s Thailand guide.

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.

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.

Choosing an EOR for Thailand

Provider fees, entity models, and onboarding SLAs change frequently. See the ranked shortlist: Best EOR for 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).

Frequently Asked Questions

Why do Thai employers use 119-day probation?

Severance obligations generally begin at 120 days. A 119-day probation keeps the no-severance window open. Confirm your EOR does not default to 90 or 180 days without a reason.

How expensive is a no-cause exit after five years?

At THB 80,000/month, 180 days’ wages ≈ THB 480,000 (~$13,500) plus notice or pay in lieu and leave payout. “Poor performance” is usually no-cause, not Section 119 just cause.

Does the four-to-one foreign-worker rule apply to my company or the EOR?

It applies to the sponsoring Thai entity. On EOR, the provider’s existing Thai headcount typically covers your expat ratio. On your own entity, you need the Thai staff ratio and capital tests yourself.

When does a Thai company beat EOR?

Around 8–10 employees, or sooner if you need BOI foreign-majority and tax holidays for a qualifying project. Under that, FBA friction usually keeps EOR ahead. Compare also Vietnam and Hiring in Singapore.

Sources

• Deel: Website, Pricing, Coverage
• Remote: Website, Pricing, Coverage
• Multiplier: Website, Pricing, Coverage

Related Decision Pages

• Hiring in Vietnam : Higher social %, deeper eng volume
• Hiring in Singapore : Higher cost APAC hub alternative
• Deel Review : Fast onboarding and partner entity model in Southeast Asia
• Remote Review : Owned-entity approach and compliance coverage in Asia-Pacific
• Multiplier Review : Singapore-headquartered provider with strong Southeast Asia presence
• Hiring your first international employee