Thailand is a country in southeast Asia, bordered by Myanmar, Laos, Cambodia, and the Gulf of Thailand. Thailand has periodically alternated between democracy and military rule, and has a newly industrialized economy.

The country also functions as an anchor economy for the neighboring developing economies of Laos, Myanmar, and Cambodia. Known for its temples, floating markets, biodiversity, and incredible street food, Thailand is a great place for remote workers.

Types of Contracts

Common types of employment contracts in Thailand are Permanent Employment and Fixed-Term contracts.

Permanent contract: This contract type is Open-ended, continues until terminated by either party.

• If employment is terminated before completing 120 days of service, the employer is not required to pay severance.
• Once the employee completes 120 days, severance pay entitlements under the LPA apply.

Fixed term contract: This contract type is less preferred in Thailand due to lack of flexibility, as:

• It has a duration of minimum 3 months and a maximum of 24 months.
• No probation period applies.
• If the company extends the contract, total service length is counted from the original start date, in accordance with Thai labor law.
• If the company wishes to end the contract before the agreed end date; Employer must pay the full remaining salary and fixed income as agreed in the contract.
• If the employee resigns before the agreed end date; No payment for the remaining contract period, as resignation is initiated by the employee.
• Employers must provide 1 month notice to the employees if they wish to no longer extend the contract after the agreed end date.

Job Title Restrictions

There are job title restrictions when hiring in Thailand under employer of record services. EOR providers in Thailand guide clients on permissible job titles that will pass Ministry of Labour scrutiny. Thailand maintains a list of prohibited jobs for foreigners, regardless of hiring model, EOR services must comply with these restrictions; only managerial, specialist, or expert roles are generally permitted. The job title chosen for a foreign employee must align with the work permit approval framework.

Working Hours

Working hours are set at 8 hours per day or a maximum of 48 hours per week.

The maximum amount of overtime permitted is capped at 36 hours per week. Permitted only with employee consent, except in emergencies.

Overtime Pay Rates:

• Normal workdays (Mon–Sat): at least 150% of the normal hourly wage.
• Weekly rest days / Public holidays (typically Sundays): at least 200% of the normal hourly wage.
• If working on a public holiday and also doing overtime on that day: must be paid at least 300% of the normal hourly rate.

Minimum Wage

As of 1 January 2025, the daily minimum wage across provinces in Thailand was increased, and now ranges from THB 337 to THB 400 depending on the province. The higher end of THB 400 applies to certain provinces and districts, such as Phuket, Chon Buri, Rayong, Chachoengsao, and Ko Samui.

Probation Period

Probation periods are not mandatory, common practice is between 90 and 119 days.

• Employers often keep probation below 120 days, because severance pay obligations start after 120 days of continuous service.
• If the employee is terminated before completing 120 days for just cause, no severance pay is required.
• An employee whose contract is terminated during the probation for no just cause is entitled to severance pay.
• The amount of severance pay is calculated based on the length of service and the employee's salary.

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Taxes & Local Employment Costs

Employee Taxes

Employees pay Income Tax and contribute towards Social Security.

Income Tax: Employees pay income tax only on income derived from Thailand. The income tax ranges between 0% for salaries less than 150 000 THB to 35% for salaries above 5 million THB per annum.

Social Security: Covers healthcare, unemployment, pension, maternity, disability, and child allowance benefits.

• Employees contribute 5% of monthly wages.
• Contribution is capped at THB 750 per month (5% of THB 15,000).

Employer Taxes & Contributions

Taxes: Employers may be subject to taxes, levies, or contributions that are location or industry specific.

Social Security Contributions: Employers contribute to the social security system to provide coverage for benefits such as medical benefits, disability benefits, maternity benefits, and survivor benefits.

The contribution rate is 5% of the employee's monthly wages, up to a maximum of 750 Thai Baht per month.

Annual Leave

Employees are entitled to a minimum of 6 days of paid annual leave per year after completing 1 full year of service. For employees with less than 1 year of service, the employer may grant leave on a pro rata basis at its discretion.

An employee is entitled to compensation for unused leave at the termination of a contract.

There are no laws regulating the accrual or pro-ration of leave entitlements and paying cash in lieu of leave. Practices are based on the employer’s company policy.

• If the annual leave is not taken in the calendar year, it can be rolled over to the next year.
• Unused leave can be cashed out.
• Unpaid leave (leave without pay) can be taken if the employee goes into a negative balance.

Sick Leave

• Employees are entitled to up to 30 working days of paid sick leave per year.
• Paid at the employee’s normal wage.
• If an employee takes 3 consecutive days or more, the employer may request a medical certificate from a licensed physician.

Maternity Leave

Employer obligation: Must pay wages for the first 45 days of leave.

Social Security Fund (SSF): Provides a cash benefit for an additional up to 45 days, calculated at 50% of the employee’s wage, subject to the Social security fund cap.

Employee must be registered under the Social Security Fund and have contributed for at least 7 months within the past 15 months before childbirth to qualify for Social security fund maternity benefits.

Paternity Leave

There is no mandatory Paternity Leave in Thailand. Any leave granted is at the discretion of the employer and must be set out in the employment contract or company work rules.

Other Leave

Sterilization Leave: Employees are entitled to paid leave for sterilization procedures, This is considered a type of sick leave under the LPA. Employees are entitled upto 7 days of leaves, If the sterilization leave extends beyond 3 consecutive days, the employer may request a medical certificate from a licensed physician.

Military leave: Male employees are entitled to paid leave when required to perform- Military service registration, Military conscription (lot-drawing), Military training. Male employees get up to 60 days of paid military leave per year. Employee must provide official documentation (e.g., military summons or orders) to the employer.

Employer must pay the employee at their normal wage rate during the period of military leave (up to the 60-day limit).

Public Holidays

There are 13 public holiday days per year, which varies yearly according to government policy.

If a public holiday falls on the weekend, the next working day is a holiday.

Notice Period

The employer must give 1 payroll cycle (30 days) notice to terminate a contract with or without cause. If the employer initiates termination post 120 days of service, the employee is entitled to severance pay in the final payout along with other dues such as salary until the final day, unused leaves, overtime and any reimbursements if applicable.

Cash in lieu of notice is acceptable.

An employee can be terminated with cause without notice and compensation where the employee has committed serious misconduct or significantly violated the terms of their employment contract.

During probation, notice requirements still apply (one payroll cycle) unless the employee falls under one of the serious misconduct exceptions above.

No statutory notice requirement, but 1 payroll cycle is common practice. It must be clearly stated and agreed upon in the employment agreement.

Severance Pay

Severance pay if the termination was without cause and an employee has worked for 120 days or more. The employer is not required to pay severance pay if the employee commits serious misconduct as specified in Section 119 of the Labor Protection Act (e.g., fraud, assault, or a severe violation of company rules). In cases where the misconduct is not considered serious but still affects the company or employer such as violations of company policies or working regulations the employer is required to issue a warning letter to the employee. If the employee repeats the same type of misconduct within the same year, and has received 2 (two) or more warning letter, the employer may terminate the employee without paying severance.

The amount of severance pay is based on the duration of service as illustrated:

• 120 days-12 months = 30 days of wages
• 1-3 years = 90 days of wages
• 3-6 years = 180 days of wages
• 6-10 years = 240 days of wages
• 10+ years = 300 days of wages

All unused leave is paid if an employee has been terminated without cause.

If an employee has been terminated with cause, the employer is obliged to pay accumulated unused leave excluding that accumulated in the current year.

• Overtime payment is eligible only if the Employee has received a prior written request or authorization from the Company or its client designated to perform such overtime work.
  The rate of overtime work shall be in accordance with the rates stipulated by applicable Thai laws.
• Employees on probation are still considered employees under Thai labor law, they are entitled to all legal rights and protections from the first day of work.
• Employers are encouraged to conduct at least 2 formal performance evaluations during probation, this helps avoid disputes or claims of unfair dismissal.