Everything You Need to Know About Payroll Processing in Thailand

Managing payroll processing in Thailand is more than just paying employees’ salaries on time. Employers must accurately compute earnings, overtime, bonuses, statutory deductions, and net pay. They must also comply with the country’s labour, tax, and social security regulations, including the Labour Protection Act, Revenue Code, and Social Security Act. Failure to do so can result in fines, penalties, and unnecessary administrative challenges. 

In this article, we cover the key aspects of payroll processing in Thailand that businesses need to understand to calculate employee salaries accurately and ensure compliance with applicable labour, tax, and social security regulations.

Key Regulatory Authority

Ministry of Labour (MOL) 

This authority oversees labour policies and employment regulations, including wages, working hours, leave entitlements, overtime, and employee welfare under the Labour Protection Act. 

Department of Labour Protection and Welfare (DLPW) 

This department enforces the Labour Protection Act and monitors compliance with employment standards. It also investigates labour related complaints.

Revenue Department

The revenue department administers Personal Income Tax (PIT), employer withholding tax obligations, and tax filing requirements. This also includes monthly withholding tax returns and annual income reporting.  

Social Security Office (SSO) 

The Social Security Office administers the social security fund. This includes employer registration, employee enrolment, collection of social security contributions, and payment of social security benefits. 

Components of Payroll in Thailand

Payroll in Thailand consists of various components that together make up the employee’s gross salary. The exact structure can vary depending on the employment contract and company policies.

Understanding Payroll in Thailand

The official currency for payroll processing in Thailand is Thai Baht (THB).

Working Hours

The standard working hours in Thailand are limited to 8 hours per day and 48 hours per week for work that is not hazardous. For hazardous work, employees must not work more than 7 hours per day and 42 hours per week. In addition, employees are entitled to a rest break of at least one hour after working for no more than five consecutive hours. Besides, employees must receive at least one weekly holiday after working for no more than six consecutive days.

Overtime

Employers must obtain an employee’s consent before requiring overtime work, except where the nature of the work or an emergency permits otherwise under the Labour Protection Act. 

Payroll Compliance Requirements

Employers must register eligible employees with the Social Security Office (SSO) within 30 days of hiring and maintain payroll and tax records as required by Thai law. Likewise, they must submit monthly payroll tax withholdings and Social Security contributions within the prescribed deadlines. 

Mandatory Documentation

Employers should maintain the following employee records:

• Signed employment contract
• Thai National ID or passport (for foreign employees)
• Tax Identification Number (TIN)
• Social Security Fund (SSF) registration details
• Work permit and Non-Immigrant B visa (for foreign employees)
• Bank account details for salary payments
• Provident Fund enrolment records (where applicable)

Monthly Compliance

• Personal Income Tax (PIT): Withhold employee income tax and submit withholding tax form PND 1 to the Revenue Department within the prescribed deadline.
• Social Security Fund (SSF): Remit employer and employee SSF contributions to the Social Security Office (SSO) by the 15th of the following month.

Annual Compliance

• Issue Form 50 Tawi: Provide employees with their annual withholding tax certificate (Form 50 Tawi).
• Submit the annual withholding tax reconciliation (PND 1 Kor) to the Revenue Department within the prescribed deadline. 

Payroll Record Keeping

Employers should maintain accurate payroll records, including employee information, attendance, leave records, salary calculations, tax withholdings, statutory contributions, and payslips, as required under applicable Thai labour and tax laws. 

Statutory Payroll Contributions

Social Security Fund (SSF)

Who Must Contribute

Under the Social Security Act, eligible employees are covered under the Social Security Fund (SSF). In particular, employers are responsible for registering eligible employees, deducting the employee’s contribution through payroll, and remitting both employer and employee contributions to the Social Security Office (SSO). The Thai government also contributes to the Social Security Fund.

Contribution Ceiling

Contributions are calculated on the employee’s monthly wage, subject to a minimum contributory wage of THB 1,650 and a maximum contributory wage of THB 15,000. 

Benefits Covered

The Social Security Fund provides eligible employees with benefits including:

• Medical care
• Sickness benefits
• Maternity benefits
• Child allowance
• Disability benefits
• Death benefits
• Unemployment benefits
• Old-age pension

Contribution Due Date

Employers must remit both employer and employee Social Security Fund contributions to the Social Security Office (SSO) by the 15th of the month following the payroll month. Failure to do so may subsequently result in surcharges and penalties under the Social Security Act.

Employee Welfare Fund

Thailand’s Employee Welfare Fund would take effect from 1 October 2026. The fund will provide financial support to employees in certain circumstances when employment ends. Generally, employers with more than 10 employees are required to participate in the Employee Welfare Fund. However, the fund requirements do not apply to:

• Employers with fewer than 10 employees.
• Employers with an established provident fund.
• Employers with a separate employee support programme covering termination or death.
• Businesses exempted under the Labour Protection Act (LPA), including certain non-profit organizations.

Contribution Ceiling

Note: The contribution rate will increase to 0.5% of the employee’s wage from 1 October 2031.

Personal Income Tax (PIT)

Tax Residency Rules

An individual is considered a tax resident in Thailand if they stay in the country for 180 days or more in a given calendar year. In contrast, non-residents are taxed only on income earned from employment or business activities carried out in Thailand. 

Progressive Income Tax Rates

Employers are responsible for withholding Personal Income Tax (PIT) from employees’ salaries and remitting it to the Revenue Department.

Tax Allowancs and Deductions

Thailand allows eligible employees to claim certain tax allowances and deductions, which reduce their taxable income before Personal Income Tax (PIT) is calculated. Similarly, employees may also be eligible for other deductions, such as approved charitable donations or mortgage interest, when filing their annual Personal Income Tax return.

• Personal allowance
• Spouse allowance (subject to eligibility)
• Child allowance
• Parental care allowance
• Provident Fund contributions
• Social Security Fund (SSF) contributions
• Qualified life and health insurance premiums
• Retirement savings contributions (subject to prescribed limits)

Paid Leave Entitlements & End-of-Service Payments

Employers must correctly apply statutory paid leave entitlements to ensure employees receive the wages they are legally entitled to while on leave. 

Severance Pay

The Labour Protection Act provides for statutory severance pay ranging from 30 to 400 days’ wages based on an employee’s length of continuous service. Additionally, employees with 20 or more years of service are entitled to 400 days’ wages. 

Eligibility

Employees who have completed at least 120 days of continuous service are eligible for statutory severance pay, unless an exception under the Labour Protection Act applies. However, employees dismissed for reasons specified under Section 119 are not entitled to statutory severance. Applicable notice pay should also be included in the final settlement.

Calculation

Severance pay calculation in Thailand is based on the employee’s last wage rate and length of continuous service, with the amount increasing according to the statutory service bands prescribed under the Labour Protection Act. 

Step-by-Step Payroll Processing in Thailand

1. Collect and Verify Employee Information 
Collect and verify employee records, including tax identification number (TIN), Social Security Fund (SSF) registration, salary details, bank account information, and attendance and leave records. Also, update any salary revisions or employment changes.

2. Gather Monthly Payroll Inputs
Compile all payroll inputs, including overtime, shift allowances, commissions, bonuses, incentives, reimbursements, and leave without pay, before finalizing payroll calculations.

3. Calculate Gross Salary
Calculate gross salary by combining fixed earnings with variable earnings, taxable allowances, and other applicable payments.

4. Calculate Statutory Deductions and Contributions
Calculate personal income tax (PIT) withholding, employee and employer Social Security Fund (SSF) contributions, Provident Fund deductions (where applicable), and any other authorized deductions.

5. Calculate Net Salary
Determine the employee’s net salary by deducting all statutory and authorized deductions from the gross salary.

6. Review and Approve Payroll
Review payroll calculations, verify tax withholdings and statutory contributions, confirm payroll accuracy, and obtain the necessary approvals before payment.

7. Process Salary Payments and Complete Compliance
Transfer salaries through the designated payment method, issue payslips, and remit tax and social security contributions within the prescribed deadlines.

How HR and Payroll Software Simplifies Payroll Processing

Payroll processing software helps automate payroll calculations, personal income tax calculations, and social security calculations. Thus, reducing manual errors and saves time, while increasing payroll accuracy. 

In addition, a reliable payroll software in Thailand integrates features such as leave and attendance and simplifies payroll processing. While employee self-service portal further enables employees to securely access their payslips, tax documents, and leave balances. This cuts down routine HR queries and enhances the overall experience.

Payroll software such as Empxtrack supports Thailand payroll with:

• Automated payroll processing for salaries, earnings, deductions, and overtime 
• Thailand statutory compliance support for applicable tax and Social Security calculations 
• Attendance and leave integration to reduce manual payroll inputs 
• Digital payslips with earnings, deductions, and net pay details 
• Employee self-service portal access to payslips and payroll information 
• Payroll reports and analytics for better payroll visibility 
• Secure Cloud-based access to payroll data

Empxtrack also offers a free payroll offering for up to 10 employees that allows businesses to get started at no cost and upgrade as their workforce grows.

Conclusion

Accurate payroll processing helps businesses meet Thai labour, tax, and social security requirements while ensuring employees are paid accurately and on time.

Moreover, managing payroll accurately is a time-consuming task as organizations handle overtime, leave adjustments, statutory contribution rates, and tax requirements. However, with an integrated HRIS, payroll, attendance, and leave management system for payroll processing in Thailand, businesses can automate salary calculations, eliminate duplicate data entry, maintain accurate employee records, and support statutory compliance. 

Frequently Asked Questions