Hire Contractors in Thailand

Over the years, Thailand has experienced tremendous social and economic growth, moving from an economy heavily reliant on agriculture to an increasingly modern tech-based economy. 

The size of the country’s workforce specializing in science and technology-related fields has increased by a fifth, from 1.7 million in 2014 to over two million in 2021. 

This has proved highly advantageous for companies in these industries looking to hire contractors in Thailand.

In addition, the government of this country plans to produce as many as 800,000 skilled workers across domains such as intelligent electronics, healthcare, and automobiles by the end of 2024. 

In this article, you will get to know everything there is to learn about hiring contractors in Thailand (EOR/direct hiring), its advantages and disadvantages, payment procedures, and more.

How to Hire Contractors in Thailand

There are primarily two ways of hiring Thailand contractors. They include,

• Direct Hiring: If you are directly hiring contractors, please note that you will be responsible for several crucial aspects. They include
  • sourcing candidates via different job platforms according to your project's requirements
  • Forming clear and compliant contracts
  • Making timely payments in accurate currency
  • Learning about the tax and employment laws of Thailand, among others

It is typically quite a time-consuming and expensive process and, therefore, is best suited for short-term projects. 

• Hiring through contractor management software/AOR: If you are hiring contractors for long-term projects, then partnering with an AOR is your best bet.
  • An agency of record will take care of all administrative aspects of hiring, including compliance with necessary regulations, payment processes, and more.

Hiring Contractors through Skuad AOR

• Skuad AOR handles all critical aspects of international hiring, saving you a lot of time and resources, which otherwise would have to be spent on contractor onboarding. 
• With Skuad, you can
  • Draft locally compliant contracts
  • Ensure timely payments in the correct currency
  • Manage tax obligations
  • Guarantee compliance with Thailand's labor laws
  • Protect your company’s IP under government regulations. 
• Skuad also provides assistance if you ever wish to switch your Thailand contractors to employees. It will keep all the employment history and records intact to guarantee a seamless transition.

How to Pay Contractors in Thailand

One way to pay a Thailand contractor is through bank transfers, credit cards, or international platforms such as PayPal or Wise. 

However, the process can get extremely complicated, especially if you lack knowledge about the country's tax laws, currency exchange rates, and other similar nuances. 

A safe alternative to managing international contractor payroll through Skuad AOR. 

This will help you reduce a significant burden and stay compliant with the necessary laws and regulations.

Skuad’s payroll solutions has numerous capabilities, such as,

• Multi-currency payroll (100+ currencies)
• Streamlined payroll data consolidation
• Bullet-proof data privacy and security.

Hiring Contractors Directly vs Hiring Contractors via Skuad

Let’s examine this detailed comparison table between the two main ways of hiring contractors in Thailand.

Cost of Hiring Contractors in Thailand

There is usually no fixed cost of hiring contractors in Thailand. It can differ significantly depending on the requirements of your project, the industry you operate in, or even the skills and knowledge possessed by the selected contractor. 

An independent contractor in Thailand with many years of experience will charge you more than someone who has just started their career. 

This is primarily due to the skills and knowledge they bring to the table in a particular field. 

Additionally, the cost of hiring contractors can vary depending on the particular industry. 

For example, the average hourly rate of an independent contractor in finance is THB 1,813. On the other hand, if you wish to hire contractors in Thailand from Information Technology, you might have to bear an hourly rate of THB 580.

How to Convert a Contractor into an Employee in Thailand

Following the steps below, you can convert a Thailand contractor into an employee or switch from Form 1099 to W2.

• Learn in-depth about the labor laws of Thailand, the rules and regulations surrounding employment relationships, and other similar legislations. For example, in the event of termination, employees must serve a notice period ranging from one to three months. 
• Discuss this switch with your contractor and carefully negotiate all the terms and conditions of employment, such as salary, leave entitlements, and social security contributions.
• Draft an adequately written contract highlighting the change in roles and responsibilities, the working conditions, and other necessary details.
• Once the contract is signed, conduct a background check and complete other onboarding necessities before adding them to your payroll.

Challenges of Hiring Contractors in Thailand

Before discussing the two main ways of hiring a contractor in Thailand, let’s examine some of the associated challenges. 

1. Understanding the Thailand Civil and Commercial Code

The labor laws of Thailand are complex, and compliance can sometimes be challenging for employers, especially those who are unaware of the local regulations.

Independent contractors, commonly called freelancers, are primarily governed by the Thailand Civil and Commercial Code. 

Under this legislation, a Thailand contractor is defined as a person who performs a definite work for another person (the employer), who, in turn, pays him a remuneration for the result of the work. 

The Civil and Commercial Code contains various provisions related to this contractor-employer relationship. They include,

• The contractor is responsible for providing the tools or instruments necessary for the work.
• If the materials are supplied by the employer, the contractors are required to handle them carefully and without waste. Additionally, once the work is completed, they must return the surplus material to the employer.
• Suppose any defect or delay of the work occurs due to the nature of the materials supplied by the employer or from instructions provided by him. In that case, the contractor shall not be held responsible.

These are just a few examples of the basic rules set forth by Thailand's labor laws. 

To guarantee utmost compliance and a proper distinction between an employee and an independent contractor in Thailand, you need to be aware of all the regulations and legislation in place. 

However, it can get tricky without contractor management software or a solid team of legal professionals.

2. Tax Requirements for Thailand Contractors

Unlike employees, contractors in Thailand must file and pay their taxes. The current personal income tax rate ranges from 5%-35%. 

This increases your responsibility as an employer since you need to make sure that all the paperwork is completed according to the tax laws and that contractors are placed in the correct tax bracket. 

To complicate matters further, Thailand contractors must register for VAT if their annual turnover exceeds 1.8 million BAHT. This must be done periodically and in compliance with all tax laws to avoid the risk of legal penalties. 

Most businesses rely on contractor management software or an EOR to handle such responsibilities accurately and efficiently. 

However, the downside is that it can often be very costly to implement and requires a substantial upfront investment in energy and other resources.

3. Communication Challenges

According to a recent report, Thailand is ranked 8th or ‘very low’ among ASEAN countries and 101st worldwide in terms of English proficiency. 

A large part of the population is still not adept at speaking fluent English, which impacts their ability to study abroad or participate in the global community. 

This can be a major issue for businesses that wish to hire contractors in Thailand. It can lead to severe communication problems. 

Using an AOR, like Skuad, that’s proficient with local language and culture can help your hire better.

Hire Contractors in Thailand with Skuad

Boasting expertise in 160+ countries, Skuad has some fantastic capabilities that have earned it the ultimate international hiring solution title. With our unified platform, you can manage different tasks, from drafting compliant agreements to making accurate and timely payments, staying up-to-date with the latest labor and tax laws changes, and more. 

Skuad’s built-in IP protection system and bullet-proof data privacy and security safeguard your company’s IP under all of Thailand's necessary regulations. 

‍Connect with us today and get access to an unlimited pool of top-quality talent only with Skuad!

FAQs

Q1: How do I hire an independent contractor in Thailand?

Ans: There are two ways of hiring contractors in Thailand. Depending on your business needs and available resources, you can either follow the traditional approach of directly hiring contractors or seek the services of contractor management software or an AOR. 

Q2: What is the difference between an independent contractor and an employee in Thailand?

Ans: Employment relationships in Thailand are primarily governed by the Labor Protection Act B.E. 2541. It lays down several guidelines related to the necessities of an employment contract, the working conditions, and statutory entitlements. On the other hand, independent contractors in Thailand are subject to the Thailand Civil and Commercial Code. 

Q3: How does Skuad help hire, pay, and manage independent contractors in Thailand?

Ans: Skuad AOR enables you to hire, pay, and manage independent contractors in Thailand through one single platform. This includes drafting contracts in compliance with the country's labor regulations, making payment transactions accurately, handling reimbursements, expense management, and more. 

Q4: How do I pay an independent contractor in Thailand?

Ans: You can pay Thailand contractors directly through bank transfers or international payment solutions such as PayPal or Wise. However, if you want a more simplified approach, you can partner with Skuad AOR, which features multi-currency payroll and automated invoicing, among other capabilities.

Q5: What is an employer-of-record in Thailand?

Ans: An employer of record or EOR is a legal entity that handles all administrative and financial tasks associated with international hiring on your behalf. This includes managing tax documentation, employee benefits, and payroll.