Thailand Payroll and Benefits Guide
What global businesses need to know about payroll in Thailand
Thailand is very much an up-and-coming economy, now ranked inside the top ten in Asia by GDP. Relatively low costs and a hard-working employee base has made it a go-to destination for manufacturing: 58% of GDP is built on exports from machinery and electronics, to chemicals, plastics and cars.
A relatively stable economy by the standards of the region, unemployment is very low at around 1%, and the diversity of its economy meant that the hit to tourism caused by COVID-19 didn’t have too much of an effect. All told, it’s easy to see why it’s a popular choice for international expansion for businesses from all over the world.
However, as you’ll read in this guide to running payroll in Thailand, foreign businesses are treated very differently by the Thai authorities, meaning you’ll have to work extra-hard to ensure compliance with payroll and employment laws.
Getting Started
Foreign businesses should be aware that they are subject to extra restrictions, over and above those applicable to Thai companies. You should check your organization’s eligibility very carefully before starting your Thai expansion project in earnest.
For example, any business that is more than 49% foreign-owned is required to apply for a Foreign Business License (FBL). Furthermore, foreign-controlled businesses are not allowed to operate in certain protected industries, including (but not limited to) retail, real estate, newspapers and agriculture.
Minimum startup capital requirements are also affected. This is normally only THB 50,000 (approximately £1,180; $1,550; €1,330), but rises to THB 3 million (approx. £70,600; $92,800; €80,000) if an FBL is required. Foreign-owned companies are also required to have THB 2 million (approx. £47,100; $61,800; €53,300) in registered capital for each foreign employee they wish to hire (this reduces to THB 1 million (approx. £23,500; $30,900; €26,700) for each employee married to a Thai national).
There are three types of business entities that foreign enterprises can set up in Thailand: partnerships (ordinary or limited); offices (regional, branch or representative); and limited companies (public or private). The typical company registration process includes:
- Reserving a company name with the Department of Business Development (DBD)
- Composing a Memorandum of Understanding, and submitting it for approval
- Receiving a Certificate of Incorporation on approval, after which a Tax Identification Number will be issued
- Registering employees with the Social Security Office
There is no requirement to open an in-country bank account to process payroll.
Employment Considerations in Thailand
There is no legal requirement for written employment contracts to be issued in Thailand. However, they are recommended, and agreements between employers and employees are considered contracts anyway. Collective bargaining and labor unions are not prohibited in Thailand, but they are relatively rare.
In line with most Western countries, Thai employees generally work eight hours per day, Monday to Friday, with a one-hour break for lunch (the one-hour break is a legal requirement after five consecutive hours of work). However, many companies also work half-days on Saturdays. The statutory legal limits for working time are eight hours per day and 48 per week, reducing to seven per day and 42 per week for work considered hazardous.
Overtime counts as any hours worked over and above 48 hours per week, and is paid at a minimum of 150% of salary on normal working days, 200% for normal working hours on holidays, and 300% for overtime on holidays.
Across your entire workforce in Thailand, you must have no more than 20% foreign employees. There are also minimum salary levels in place for foreign workers, depending on where they’re from. These range between THB 25,000 per month (approx. £590; $775; €665) for employees from Africa and some south-east Asian countries, and THB 50,000 per month (approx. £1,180; $1,550; €1,330) for those from North America, Australia, Japan or western Europe.
Notice periods are a minimum of 30 days, but can be longer than this through agreement in the employment contract; payment in lieu of notice is permitted. There is no statutory probation period requirement, although most Thai companies will include one in employment contracts of anything up to around four months.
Compensation and Severance
The national minimum wage in Thailand has consistently risen in recent years, and varies slightly between different regions. The latest change took effect on July 1 2025, with the top rate of THB 400 per hour (approx. £9.40; $12.40; €10.70) now extended to the capital, Bangkok, as well as to hotels and entertainment businesses across the country. The lowest regional rate remains at THB 337 per hour (approx. £7.90; $10.40; €9.00).
Thai employees are normally paid monthly, either in cash or by bank transfer. Unusually for an Asian country, there is no requirement to pay a 13th-month bonus in Thailand.
Severance pay for dismissal without cause depends on the time served, starting at 30 days’ pay for those with more than four months of service, and moving up through five further bands to 400 days’ pay for those with at least 20 years’ service.
Tax and Social Security in Thailand
Thailand has a relatively simple income tax system that applies to residents and non-residents alike, and employers withhold employees’ tax contributions from their salaries. As of the start of 2025, the first THB 150,000 per year (approx. £3,500; $4,600; €4,000) is exempt, with seven bands of progressively higher income tax rates applied for earnings above this, rising in 5% increments. The highest band of 35% is applied to all earnings over THB 5 million (approx. £118,000; $155,000; €133,000).
Social security rates are relatively low in Thailand. Employees and employers each contribute 5% of salary, which covers pension contributions, health insurance and unemployment insurance. There is a maximum cap on contributions, for each party, of THB 750 per month (approx. £18; $23; €20). This means that contributions stop rising once an employee’s monthly earnings surpass THB 15,000 (approx. £350; $465; €400).
Employers are also required to contribute between 0.2% and 1% of salary into the Workmen’s Compensation Fund. The level of contribution varies, depending on the type of work, level of risk involved, and the previous safety record of the employer).
It’s also important to note that foreign employees will need their own private medical cover.
The corporate tax rate is 20% and the VAT rate is 7% (temporarily reduced from 10%), with some exemptions for certain industries. Companies making more than THB 1.8 million a year (approx. £42,400; $55,700; €48,000) will need to register for VAT through the Revenue Department.
Holiday and Leave
The statutory minimum holiday entitlement in Thailand is six working days per year after the first year of service, although it’s common for employers to offer between ten and 15 days. Employees are also entitled to be paid for public holidays each year: there are around 20 each year (variable depending on region), and holidays that fall on weekends normally have the day off transferred to the following Monday.
Paid sick leave can run for up to 30 working days per year, and is paid by the employer. Absences of longer than three working days have to be certified medically.
The Thai parliament has approved an expansion of parental leave entitlements which took effect in December 2025. Paid maternity leave has been expanded from 98 days to 120, with at least 60 days covered in full by social security. Whether the other 60 days’ pay will be covered by social security, employers or a combination of the two has yet to be determined. An additional 15 days at 50% of salary is given in the event of newborn health complications or disabilities.
Paternity leave (which also applies to female spouses of women giving birth) has now been extended to the private sector for the first time. The entitlement is 15 days, paid by social security in full, and can be taken at any time from 90 days before birth to 90 days after.
Other leave entitlements are military leave (paid for up to 60 days a year), training and exam leave, and time off for national service.
Payroll in Thailand: a summary
The rules around running a foreign-owned business in Thailand are different to those of domestic companies, and it’s a similar situation when employing foreign workers. This emphasizes the importance of understanding all your legal requirements from a payroll and employment perspective, and staying on the right side of compliance as and when regulations change.
The best way to achieve this is to work with a global payroll partner that can deliver Thailand-specific expertise, with the help of local payroll practitioners. That way, you can make the most of all the exciting opportunities business in Thailand has to offer, without being held back by payroll issues or an administrative minefield.
This article is for informational purposes only and not intended to convey or constitute legal or any other advice. It is not a substitute for advice from a qualified professional.