If your company is recruiting talent abroad there is no telling where you might find the perfect candidate. Thailand is home to many well-educated, skilled professionals who may be looking to work remotely for a foreign company. This will bring up hiring and managing a remote worker, especially if you’re not in the Asia Pacific.
Some candidates may be looking for an employee position, but if your company is a startup or only has project-based work this may not be feasible. That leaves you with the option of hiring workers as independent contractors, whether they are Thai residents or ex-pats. Hiring a contractor is far less expensive and quicker than trying to payroll a foreign employee. It can even be a bridge toward an employment relationship in the future.
Here are some of the benefits of hiring contractors:
- No long-term financial/HR commitment by the company
- Cost-effective when compared to paying employee benefits and entitlements
- Contracting is a B2B relationship, outside of typical labour laws
- A good way to give a recruit a ‘probationary’ period before hiring
- Can hire for short projects or on a repeat basis
- More flexible to scale up or down, or if different skill sets are needed as the company grows
This guide will outline the specifics of hiring contractors in Thailand so that you and your new remote worker remain in compliance.
How to hire and pay remote workers in Thailand
Following successful recruitment, the first question is how you will contract with and pay a remote contractor. This is especially important in a new relationship where trust has to be established on both sides of the contract. A few choices are depending on the contractor’s experience and the preference of both parties.
Hire and pay them as a freelancer
Many new contractors are working as freelancers, often for multiple clients. They will handle all of the invoicing and project management independently, so it is crucial to set up a well-defined contract and payment method. Depending on the type of role, you will want to confirm if the contractor is currently working with other clients and their time availability.
Pay them through their limited company
If a Thai contractor is experienced, they may have their own limited company in Thailand. This can give you some assurance of their reliability. The limited company would lease the contractor out to you, and all contracts would be made directly with them. Limited companies have to register in Thailand, so you would have an extra layer of certainty that the contractor will perform as expected and can be located more easily in the event of a dispute.
Use an umbrella company in Thailand
One advantageous method for both parties is to use an umbrella company in Thailand. The umbrella company would act as an intermediary to the contract and facilitate both payment and performance. This is ideal if you are new to Thailand and working with a contractor for the first time, as you will have the assurance that the contractor won’t get paid until you are satisfied. Likewise, the contractor will know that a Thai umbrella company will help to deal with a foreign client.
Compliance risks when hiring remote workers in Thailand
It might seem that as a foreign company hiring a Thai contractor that compliance would not be a problem. Your company does not have a presence in Thailand, and you are not subject to any labour laws. But there are two areas to pay attention to that could affect the relationship with your contractor, and potential tax liability.
Misclassification risk: Employee vs. contractor
Misclassification occurs when your contractor is deemed to be an employee under Thailand’s labour laws. This can happen if you pay them a fixed salary, control their work schedule and offer them employee benefits
If your contractor ever decided to complain to Thai authorities that they are an employee, you might have to pay fines, penalties and employer social contributions. To continue the relationship, you would have to hire them as an employee and set up a Thai payroll, so following the contractor-status criteria is important.
Permanent establishment risk in Thailand
A permanent establishment is triggered when a foreign company is creating revenue in Thailand through sustained business activity. This is unlikely to occur with a remote Thai worker in most online roles (IT, customer service, marketing, etc.).
But if your contractor is in a sales role in Thailand and frequently concludes contracts with Thai customers on your behalf, that could result in PE and corporate tax on earnings. It is less likely with a contractor than with a full-time employee but still is worth being aware of the possibility.
How Contractor Taxation helps you hire remote workers
We have a global network of umbrella companies in Thailand, who are ready to hire the contractor in your place. They will also administer all the tasks related to taxes, payments and contributions. As a company looking to hire remote workers in Thailand, an umbrella company be used to assist with the relationship. There is a fee, but it could be shared as there are benefits for you both.
Most contractors will be open to this, as it reduces the risk of non-payment with a new client, and relieves them of the administrative burden of self-employment.
Please contact us if you are interested in hiring a Thai or ex-pat worker for your company as a contractor.