Plenty of companies end up with a small Thai team before they ever build the infrastructure to support one. A contractor here, a local hire there, all paid through whatever arrangement got the work started. It's a natural way to grow, but the setup that got you to five people in Thailand isn't the one that protects you at fifteen.
The Compliance Gaps That Appear Without Local Infrastructure
Running Thai payroll properly requires more than a bank transfer each month. Employers must register new hires with the Social Security Office within 30 days, withhold and file personal income tax monthly, issue annual tax statements by the end of January, and pay wages in Thai baht (TBH) through a compliant local channel.
Without a registered entity or an Employer of Record (EOR) in place, some of these obligations simply can't be met correctly, and gaps in social security registration or tax withholding don't stay small. They accumulate with every pay cycle until an audit brings them to the surface.
What Thai Nationals Are Legally Entitled To
Thailand's Labour Protection Act sets clear statutory minimums, and getting them wrong is where exposure tends to concentrate. The baseline starts with social security: employees contribute 5% of wages to the Social Security Fund, matched by the employer and calculated on a wage base capped at 15,000 THB a month, which funds healthcare, disability, pension, and survivor benefits.
Leave entitlements are as follows:
annual leave accrues at 6 days after a full year of continuous service;
though 10–15 days is common market practice
sick leave runs to 30 paid days a year
Severance is the largest single exposure. It is tenure-based and mandatory for employer-initiated termination, from 30 days' wages for employees with 120 days to a year of service, scaling up to 400 days' wages for 20 or more years.
Miscalculating any of these isn't a paperwork issue: underpaid severance or missed social security contributions can trigger back-pay claims through Thailand's Department of Labour Protection and Welfare, retroactive contributions with penalties, and, under the Labour Protection Act, personal liability exposure for the individuals who signed off on payroll.
Why Informal or Contractor Arrangements Create Growing Exposure
A Thai national working set hours, taking direction, and functioning as part of your team looks like an employee to Thai authorities regardless of what the contract calls them. If that relationship is ever reclassified, the obligations above don't start from the reclassification date, they apply retroactively to the day the person started, including severance, leave, and social security contributions the company never accrued for.
Every additional person hired informally to fill what is functionally a permanent local role adds another instance of the same exposure, and it compounds quietly until something forces a review.
How EOR Consolidates Your Thai Headcount Into a Clean Structure
An EOR gives you a straightforward way to bring an existing Thai team onto proper footing without asking anyone to relocate or re-sign into a new relationship from scratch.
Atlas HXM operates its own entity in Thailand as part of a network across 160+ countries, which means converting contractors to compliant employees can happen without switching providers, where legally permissible.
Once onboard — typically within as little as two weeks — employees are paid monthly in THB, registered correctly for social security, and covered by severance and leave calculations built into the process from day one, not bolted on after a problem appears. It's one platform to onboard, manage, and pay the whole team going forward as your Thailand headcount grows.
If your company has been running Thai payroll informally, the fastest way to know where you stand is a straightforward compliance review, before an employee, an auditor, or the Department of Labour Protection and Welfare finds the gap first.