Employer of Record in Thailand: What It Is and When to Use It

For international companies looking to build a presence in Thailand, one of the first practical questions is how to hire staff before a local entity is in place. An Employer of Record arrangement is one of the most effective answers to that question, and one that is increasingly used by companies entering the Thai market for the first time.

What Is an Employer of Record

An Employer of Record (EOR) is a third-party organisation that legally employs staff on behalf of another company. The EOR appears on official employment documents as the legal employer and takes on all associated obligations: drafting compliant employment contracts, running payroll, withholding personal income tax, registering employees with the Social Security Fund, and ensuring compliance with the Thai Labour Protection Act. The client company retains full control over day-to-day management, role definition, and work direction. The EOR handles the legal and administrative layer.

This model allows a foreign company to have staff legally employed and operational in Thailand within days, without having to register a local entity first.

What the EOR Handles in Practice

In Thailand, the EOR manages a specific set of statutory obligations on behalf of the client company. Employment contracts must be written, clearly state the salary in Thai Baht, and comply with Thai labour standards. Both employer and employee contribute 5% of the monthly salary to the Social Security Fund.

As of January 2026, the salary base is capped at THB 17,500 per month, resulting in a maximum monthly contribution of THB 875 from each party. Employees are entitled to a minimum of 6 days of paid annual leave after completing their first year, up to 30 days of paid sick leave per year, 13 public holidays annually, and 98 days of maternity leave. The EOR ensures all of these entitlements are correctly applied and paid.

For foreign employees, the EOR can also manage work permit and visa coordination, which is a significant consideration for international companies placing expatriate staff in Thailand.

When an EOR Makes Sense

An EOR is best suited to three specific situations.

1. Market exploration: when a company wants to deploy business development or sales staff in Thailand to assess the market before committing to full incorporation.

2. Customer and supplier support: when the company needs a local presence to manage relationships but will continue to invoice from outside Thailand.

3. Transitional bridge: when the company has decided to incorporate but needs staff operational while the entity registration process is underway, which typically takes two to four weeks for a standard Thai limited company.

If a company needs to invoice locally, accept payments in Thailand, or build a long-term commercial presence, incorporation becomes necessary. An EOR does not give the client company the right to trade under a Thai legal entity.

A Note on Permanent Establishment Risk

One consideration that is often overlooked is the Permanent Establishment (PE) risk associated with EOR arrangements. Under the Thai Revenue Code, a foreign company may be considered to have a taxable presence in Thailand if its employees or agents conduct business activities in Thailand and have authority to conclude contracts on its behalf. Using an EOR reduces this risk but does not eliminate it entirely. Thai tax authorities apply a substance-over-form principle: if the foreign company retains effective economic control over the employees and their activities, a PE may still be established. Companies using EOR arrangements should seek professional advice on structuring the arrangement correctly to minimise this exposure.

EOR as a Starting Point, Not a Permanent Solution

For most international companies, an EOR is the most practical way to begin operations in Thailand quickly and compliantly. It eliminates the upfront cost and time required to register a local entity, reduces compliance risk, and gives the company time to validate its Thailand strategy before making a longer-term commitment. Many companies use an EOR for an initial period of 6 to 18 months before transitioning to a fully incorporated entity as their operations grow.

KLAY Consulting supports international companies with EOR arrangements in Thailand, from employment contract setup and payroll management to work permit coordination and the eventual transition to a local entity. If you are planning your first hire in Thailand, get in touch for an initial conversation.