Employment Regulations

Thailand labour market is governed by strict rules and regulations. It’s important that appropriate advice is sought out based on the business structure that would be established in Thailand.

Some of the rules and regulations that govern Thai labour market include:

  • Labor Protection Act B.E. 2541 (1998)
  • Labor Protection Act B.E. 2551 (2008)
  • Labor Relations Act (No. 2) B.E. 2518 (1975)
  • Social Security Act of 1990 as amended in 1999
  • Workmen’s Compensation Act of 1994
  • State Enterprise Labour Relations Act B.E. 2543 (2000)
  • The Labour Court and Labour Court Procedure B.E. 2522 (1979)
  • Thai Civil and Commercial Code
  • Provident Fund Act B.E. 2530 (1987)
  • Alien Employee Act B.E. 2521 (1978)
  • Employment and Jobseeker Protection Act B.E. 2528 (1985)

For these and many other reasons the following are only guidelines in the broadest sense, and professional legal services are recommended when employing in Thailand.

Key points on employment:

  • Minimum daily wage is 300 Baht per day
  • Maximum probationary period is 120 days
  • Maximum number of work hours per day varies between 8 hours and 9 hours, while maximum work hours per week varies between 48 hours and 42 hours per week
  • In addition to the 13 public holidays, each employee is entitled to a minimum of 6 days of annual leave
  • Employees are entitled to 30 days of sick leave

There are several key areas to be aware of within Thailand’s employment regulatory framework, especially for companies that plan to initiate a full local office and human resources department.  These challenges can be mitigated by use of a locally sourced payroll provider who is familiar with all of the local laws and rules for both local employees as well as foreign nationals.

Key Factors to Consider When Employing in Thailand:


An employment contract can be written or verbal as per the Labour Protection Act.  Thai Civil and Commercial code and the Labour Protection Act stipulate the following statutory entitlements be included in employment contracts.

  • Entitlement to rest, sick leave, annual leave and holidays
  • Entitlements to remuneration (wages, overtime pay, holiday pay, severance pay)
  • Notice period and the right to receive wages in case of termination of employment
  • Restrictions on suspension from work

Different types of employees based on nature of employment contract:

Temporary workers:

  • Have the same rights as permanent employees  such as minimum wages, working hours, fairness etc
  • Are considered employees under the Labour Protection Act
  • Employees whose period of employment is fixed to 2 years and is terminated  according to that period will not be entitled to severance payment

Agency workers:

  • Outsourced/agency workers are protected under the Thai Labour Laws.
  • As per the 2008 Labour Protection Act a business operator who utilizes outsourcing service for its employees is
    • Considered as an employer of outsourced workers
    • Ensure that the benefits to outsourced employees are similar to direct employees who have the same description

Part time workers:

  • Receives wages based on an hourly rate
  • Minimum wage per hour is 40 Baht

Permanent workers:

  • Are protected under the Thailand Labour protection Act

Employee Entitlements

Statutory Working Hours     

Non-hazardous work: Maximum number of hours per day is limited to 8 hours, while the maximum number of hours per week is limited to 48 hours.

(Note: However, under special contracts employer and employee may agree to arrange the period of working hours. However, such hours cannot exceed 9 hours per day and 48 hours per week).

Hazardous work: Maximum number of hours per day is limited to 7 hours, while the maximum number of hours per week is limited to 42 hours.

All employees are entitled to a total of 1 hour for a full working day. Such daily rest periods can be taken after five consecutive hours of work. Employer and employee may agree to a shorter rest period. However, a total of 1 hour should be allocated for a full working day. Employees should be granted one daily holiday per week and the interval between holidays must not exceed six days.

Employees will be entitled for overtime pay rates for work performed in excess of the maximum hours stipulated by the contractual agreement or the statutory law. Maximum overtime hours allowed per week is limited to 36 hours and will be paid at a rate varying between 1.5-3.0 times normal hourly wage rate.

Minimum age for employment is 15 years and the minimum age for employment that involves hazardous work is 18 years. Pregnant employees are prohibited from working overtime, on holidays, or between 10pm – 6am.

Time Off Work          

An employee is entitled to a minimum of 6 days of annual leave after working consecutively for one full year. For an employee who has not completed one year of service, the employer may provide an annual leave on a pro-rate basis.

Medical Leave           

An employee is entitled to take sick leave with 30 days of paid sick leave per year. An employer may request a medical certificate if an employee is absent for three consecutive days. Days on which the employee cannot work because of injury or illness caused by work shall not be deemed sick leave.

Annual Leave Accrual Entitlement 

Employees are entitled to 13 national holidays per year. In addition employees are entitled to a minimum of 6 days of vacation after one year of consecutive work.

Maternity Leave in Thailand

Female employees are entitled to 90 days of maternity leave and 45 days of paid leave.

There are no specific regulations with regard to Paternity leave.

Employment Termination

Severance / Redundancy Pay           

An employee can be terminated without a specific cause and subject to all payments including severance pay, unused annual leave, overtime pay, and other payments due under the employment agreement within 3 days from the termination of employment.

Severance pay rates vary based on the length of employment.

  • 30 days pay: 120 days – less than 1 year
  • 90 days pay: 1 year – less than 3 years
  • 180 days pay: 3 years – less than 6 years
  • 240 days pay: 6 years – less than 10 years
  • 300 days: 10 years and over

Severance pay is not made if:

  • The employment contract is for a fixed duration such as projects
  • The work is periodic in nature and has a fixed term or ending upon completion, seasonal work etc.

Conditions under which there would be non-severance payment:

  • Dishonesty or deliberate act of crimes against the employer
  • Intentionally causing damage to the employer
  • Negligence resulting in serious damage to the employer
  • Violation of work regulations subsequent to a warning letter from an employer
  • Dissertation of work for 3 consecutive working days without reasonable cause
  • Being imprisoned

Conditions under which a special severance would be paid:

  • If the employer relocates the its place of business, employees must be notified at least 30 days in advance or pay an amount equal to 30 days’ of wages. Employees have the liberty to terminate employment contract and is entitled to receive no less than 50% of the prescribed rates of severance pay.
  • If the employer terminates employment due to streamlining of work units, production process, distribution process, due to the introduction or change of machinery and technology, at least 60 days of notice or 60 days’ of wages should be paid to the employee. In the interim a labour inspector should also be notified.
  • If the terminated employee has worked consecutively for over 6 years, the employee would be entitled to an additional severance pay of 15 days of work for each year starting from the seventh year. However, such additional special severance payment should be limited to 360 days of wages.

Termination of Employment

Either party to an employment contract can give at least 1 days of notice and terminate employment, if the employment contract does not specify such terms. If an employee is dismissed for a statutory reason, such reasons should be kept on record. An employee may not be dismissed for due to the following reasons:

  • Pregnancy
  • Trade union membership
  • Participation in trade union activities

Unfair dismissal:

Under the Labour Court’s Act, a Labour Court can re-instate an employee at the same wage rate that applied prior to the dismissal. However, if the Labour Court determines that the employer and employee cannot work together due to specific conditions, then it may order the employer to pay compensation.

Ceasing operations temporarily:

When employers encounter this issue the affected employees can be paid at a reduced rate of 25% of their normal pay rates.

Workmen’s compensation

Includes 4 categories

  • Compensation amount
  • Medical expenses
  • Work rehabilitation expenses
  • Funeral expenses

Compensation amount should be paid monthly at the rate of 60% of the monthly wages. Medical expenses must be paid out and should not exceed 45,000 Baht for formal cases and 65,000 Baht for serious injuries. Work rehabilitation expenses should not exceed 20,000 Baht.  In case of death, funeral expenses should be paid at a maximum amount equal to 100 times of the minimum daily wage prescribed by the law.

Probation Period     

Thailand Employment law stipulates a maximum of 120 days.

Pension Requirements        

Thai pension system is a 3 pillar system and includes:

  • Pillar 1 – Old civil service scheme and social security fund. Includes old age benefits under the Social Security Fund (private sector)
  • Pillar 2 – Government pension fund and National Security Fund (Thai government’s public pension scheme)
  • Pillar 3 – Voluntary private pension schemes. In 2012 Thai government introduced a National Savings Fund, a new voluntary retirement savings program. Includes Provident funds and Retirement mutual funds.

(Note: Pillar 1 and 3 would be more relevant to expats).

Social security contributions

The Social Security Act of 1990, amended in 1999 specifies that all employers must with hold social security contributions from the monthly wage of each employee.  The current rate is 5% of the first 15,000 Baht from the salary. Employer must match the employee contributions and should be remitted to the Social Security Office within the 15th day of each day of the following month.

Social Insurance

A new business organization must register itself to make social security contributions.

Registration of a juristic person:

  • A copy of the certificate of incorporation
  • A copy of the VAT form, or a copy of Specific Business Tax form, or a copy of the license to operate a factory/business
  • Map of the business location
  • Power of Attorney (authorizes others to act on behalf of one along with a duty stamp affixed pursuant to the revenue code)

How to register the insured: A notice to register should be issued within 30 days from the effective date of employment to the Zone office of Social Security.

Social Security Office (SSO) old age insurance scheme is:

  • Socialized
  • Defined benefit
  • Pay as you go

Features of SSO pension provision:

  • Contribution – 3% employees, 3% employers, 1% government
  • Maximum assessable salary per month 15,000 Baht
  • Once you turn 55 pension benefits can be claimed
  • To obtain a full rate pension, contributions must be made for at least 15 years
  • Contributions are tax deductible. Pension payouts are tax exempt.

Funds relevant to the private sector:

  • Social security fund
  • Retirement mutual fund
  • Provident fund

Social Security fund:

Provides benefits in the event of:

  • Sickness, maternity, disability and death (Government, employer and employee contributes 1.5% of the employee’s salary)
  • Child allowance, old age (Government contributes 1%, while the employer and employee contributes 3% of the employee’s salary)
  • Unemployment (Government contributes 0.25%, while the employer and employee contributes 0.5% of the employee’s salary)

(Note: Base wage used for the calculations range from 1,650 – 15,000 Baht)

Benefits paid out:

  • Old age lump sum
  • Old age pension paid monthly for a life time

Tax benefits: Social security benefit payouts are tax exempt

Retirement mutual fund

Retirement mutual funds are suitable for those who do not have other retirement welfare savings plans such as government pension funds or provident funds. It’s an investment vehicle that intends to promote retirement savings through tax incentives.

Tax benefits:

  • Investment up to 15% of annual assessable income or a maximum of 500,000 Baht when combined with provident funds or government mutual funds is tax deductible.
  • Benefit payouts including capital gains are tax free
  • Investors will not be granted tax benefits if the funds are redeemed before 55 years of age or if have not consistently held investment units for at least 5 years.

Provident fund

A provident fund is established under the mutual agreement between the employer and the employee.  Voluntary contributions can range from 2%-15% given that the employer contributions are equal to or greater than the employee contribution.

Factors to be considered by the employer prior to establishing a Provident Fund:

  • Size of the organization
  • Organizational growth rate
  • Contribution rate
  • Governance of the fund and management of the fund from employer’s end
  • Number of employees and structure of employment (permanent or temporary employees)
  • Saving ability of the employees
  • Type of fund (a single fund or a pooled fund)
  • Expenses (management fee, custodian fee, fund administration fee, and auditor fee)
  • Management mechanism
  • Asset management company (Fund manager must be a third party and not the employer himself. Must be licensed professionals of the SEC)