Thailand payroll and outsourcing
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Guide to Thailand Payroll Processes and the benefits of Payroll Outsourcing

Payroll and outsourcing

With a GDP of around $540 Billion USD, Thailand is the second largest economy in Southeast Asia. The emerging economy is helping the unemployment rate plummet; however, businesses who want to come to Thailand and set up their international payroll will find using a payroll outsourcing company to be the best bet.. The country was ranked in the top 50 of World Bank's Ease of Doing Business Survey, though certain industries may find understanding the Thai Payroll system quite daunting and finding a good recruitment or HR outsourcing company to be rather challenging.

Business Basics

Registering a business requires establishing a legal entity in the country first, which can take up to 3 to 6 months and business that need to start their operations immediately can always use a Professional Employer Organization (PEO) like Smart Search Recruitment as a temporary or permanent way to hire employees in Thailand.. Organizations must put together a Memorandum of Association and have it approved by the Partnerships and Companies Registration Office, the Department of Business Development, and the Ministry of Commerce. If more than 49% of all shares are held by foreign interest, the company will need to follow rules set out in Thailand's Foreign Business Act.

Businesses will also need to open an in-country bank account to process monthly payroll transactions in Thailand. Most companies choose to form a limited company, which is subject to Civil and Commercial Code. Once their MOA is approved, company leadership will need to fill out a Declaration of Business form and provide Articles of Association and a list of shareholders. It should be noted that large businesses with several branches are seen as one unit by Thai law. This means the head office will be liable for any litigation against the local Thai branch.

Employment Law & Employee Rights

The Thai work week is usually Monday through Friday with a maximum working hours of 48/hours per week and overtime pay will apply to those employees working in excess of 48 hours in a week. Rest periods are normally an hour within a single working day and overtime compensation varies based on the day and number of hours worked. Any hours beyond the standard eight on a normal workday are paid at 150% of the employee’s base hourly rate. A shift of up to eight hours worked on a holiday or day off is compensated at 200% of the base rate, and work beyond eight hours on a holiday or day off is paid at 300% of the base hourly rate.

Written employment contracts in Thailand are not required, but they are heavily encouraged and can be written in both Thai and English. Even if no written documentation is provided, employer and employee are considered to have a contract between them. Collective bargaining is not usually practiced in Thailand, though it's not prohibited. While it is unusual to see labor unions, there are many industries in the manufacturing and airline sector that are organized in Labor Unions but not very common amongst other industries.

Thailand Payroll and outsourcing

Payroll Assessment

Compensation & Severance

The currency in Thailand is the Thai baht, and minimum wage is currently 331 baht per day for employees in Bangkok Thailand, and other regions have different minimum pay rates. The Thai people usually get paid once a month, and this can be done either in cash or through bank transfer using an outsourcing payroll company ensures this happens in compliance with Thai labor regulations.

Employees will expect approximately 30 days of notice for termination and those employers who wish to terminated immediately will have to pay an additional month of pay to compensate for the lack of notice.. Unless an employee committed criminal activity or gross incompetence to their organization, they can expect severance. Severance compensation depends on the time served, with employees who worked between six and 12 months receiving 30 days of severance, those who worked between one and three years receiving 90 days of compensation, and increase every three years with a maximum of 400 days of pay after 20 years of continual employment.

Tax Requirements & Withholding

Tax law in Thailand is fairly straightforward. Income is taxed on a progressive scale, from 0% for those making less than 150,000 baht a year up to 35% for workers making more than 4 million baht annually. Taxes are generally withheld from salaries before payment and reported to the Revenue Department. Social security rates are 5% for both employee and employer with a cap of 750 THB/Month and paid to the Social Security Department middle of every month for the preceding month.. The corporate tax rate is 30%, though this may be lowered for certain industries. In addition, payroll regulations stipulate employers will need to contribute to a workmen compensation fund that is also mandatory and paid on an annual basis.

Companies making more than 1.8 million baht a year will need to register for VAT through the Revenue Department and only some companies registered as “Representative offices” can sometimes do away with the VAT registration and payments. Your Legal Partner or Payroll company can often help you understand this better.

Thailand's Public Holiday2020 วันหยุดนักขัตฤกษ์

Time Off & Paid Leave

Thai workers are entitled to six days off after working with a company for a year. Typically Thai people will take their days off throughout the year, as opposed to going on a lengthy holiday. In addition, there are 13 national holidays in the country. New mothers are entitled to 98 days of Maternity leave with ½ of them being paid. Up to 30 days of sick leave are allowed each year. In addition, employees may take personal leave to attend to important matters, such as an ill parent. Employers are responsible for paying employees during time off.

Thailand's Public Holiday2020 วันหยุดนักขัตฤกษ์

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