Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.
For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.
For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.
As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.
While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.
A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.
Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in Thailand can be expensive, stressful, and time-consuming. It's not for the faint of heart.
To set up a subsidiary in Thailand, you have to:
If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for Thailand.
An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.
An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.
Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.
At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.
Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:
Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.
Paying employees in Thailand is not the same as paying workers in your own country. Employees have to be paid using Thailand's employment and payroll standards.
This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.
Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.
After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:
One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.
Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.
Outside of EORs acting as the full admin employer, many also provide remote payroll.
For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.
We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.
The maximum number of work hours is 8 per day, with a total of 48 hours weekly. Employees performing hazardous tasks work 7 hours per day and 42 hours weekly.
A 1-hour rest period during a working day is given to employees. They can break their rest period into parts, the minimum time being 20 minutes and the longest time being an hour. If the employee is engaged in such work where stoppages may damage its production or quality, the employer may request the former to work without breaks. The employee’s consent is required in this case.
An employee must consent to overtime and cannot exceed 36 weekly. Employees working overtime are entitled to overtime pay. Overtime pay is 150% their normal rate or 200% the rate for work on holidays.
The pay date is determined between the employer and the employee. Overtime pay, holiday pay, and holiday overtime pay are given to employees once a month, also on an agreed date. The employer also must pay the employee’s salary in his or her workplace, unless agreed otherwise. If employers want to deposit salary into the employee’s bank account, they must obtain the permission of the employee to do so. No employee can be forced to receive money deposited into his or her bank account instead of cash.
Not required by law.
An employee who has worked continuously for one full year is entitled to an annual holiday of 6 days per year. If the employee works for less than one year, his or her annual leave is prorated. Sometimes, employers voluntarily give more than 6 days of annual leave to employees. If employees do not use their annual leave holiday within a year, it is carried over to the next year and added to the next year’s annual leave. Yet some employers refuse to carry unused annual leave to the next year, annulling it when the year to which it belongs ends.
16 public holidays.
Employees are eligible to take up to 30 days of paid sick leave per year. If the employee is absent for more than 3 consecutive days, the employer can ask for a doctor’s note verifying the illness.
Employed expectant mothers are granted a minimum of 98 days of maternity leave. 45 days out of these 98 days are paid. Whether the remaining days are paid for or not depends on the employer’s agreement with the pregnant employee.
The rights enjoyed by fathers of newborn babies vary depending on the sector in which they work. Fathers working in the private sector receive no paternity leave. The public sector, by contrast, gives fathers 15 days of paternity leave to take care of their newborn babies.
No statutory regulation.
Work-related injury leave: If the employee needs to receive medical treatment due to work-related injury or occupational disease, his or her work-related injury leave should not exceed more than 12 months. In case of serious injury or special circumstances, the work-related injury leave may be appropriately extended upon the confirmation by the municipal labor ability certifying committee.
The extension shall not exceed 12 months. Injured employees are paid 100% of their daily wages while they receive the required medical treatment. Employers bear the full brunt of payments for employees’ injury compensation.
When employers want to discharge the employee, they are required to give them one month’s notice in advance of termination. Yet in those cases when employees are discharged for a reason connected with their behavior or performance, employers are not expected to warn them in advance. Among these reasons are the following:
When employees are discharged for misbehavior, they are not paid severance money either.
If employers suspend their business temporarily for a cause other than a force majeure, they pay to the employee 50 percent of the daily wage he or she received before the suspension of the business. The payment is given to the employee for the whole period his or her services are not required.
The employee or employer can terminate by giving notice at or before any time of payment to take effect at the following time of payment. 30 days advanced notice is common, and some ask for a longer 2 or 3-month notice period. As a rule, the duration of the notice period is stipulated in the employment contract.
If employees are not dismissed for the reasons mentioned in the section above, they are paid severance according to the following scheme:
Period of Employment
Amount of Severance Pay
More than 120 days but less than 1 year - 30 days salary
At least 1 year but less than 3 years - 90 days salary
At least 3 years but less than 6 years - 180 days salary
At least 6 years but less than 10 years - 240 days salary
10 years but less than 20 years - 300 days salary
20 years or more - 400 days salary
Employees working for less than 120 days for the same employer are not eligible to receive the severance payment. Other employees who do not qualify for severance payment are those who are hired for a fixed duration. As specified in the Labour Protection Act, these employees must have a written contract of no more than 2 years duration. To receive such a contract, employees usually do a special project, not in the normal course of the employer’s business. Or it must be temporary or seasonal employment.
When the employer announces termination and requires employees to work until the end of the following month, employees can find other employment and resign before the specified date. If this is the case, employers do not pay severance pay to the resigned employee.
Not required, however, Thai law does specify severance pay for employees who have worked for 120 days or more and are terminated without cause. As a result, to avoid paying severance, many employers in Thailand set probation periods of up to 119 days.