A client who uses payroll outsourcing service of MSNA Group consulted with us on how much to increase the salaries of his employees in Thailand.

Question:  Our new Thai company is considering giving salary increase to our employees. We would like your advice on the practice of salary increase in Thailand. What is the average percentage increase in salary in our industry? Maybe there is a different increase for different levels of staff, for example technicians, executives and managers?

Answer: Regarding the practice of salary increase in Thailand, there are companies that give 3 – 10% increase depending on whether they make profits in the previous year. However, from the experience of many clients who use MSNA Group for payroll outsourcing service, we have learned that salary increase by percentages does not work for every employee. Like bonuses, the employers may want to give a less salary increase to the employees that they can replace easily and/or do not perform that well and a bigger salary increase to the employees that they really need and/or perform well (or to the employees that are in high demand and can find another employer so easily).

Contact MSNA Group for payroll outsourcing service and advice on human resource issues.

One of MSNA’s payroll outsourcing clients asked us about the bonus scheme to be given to employees in Thailand.

Question: Our Thai company is currently still operating at a loss. We are studying into a variable bonus scheme to be given to the employees in Thailand and would like to seek your opinion on this matter.  Do you know of any company in our industry or any M&E construction company which pays variable bonuses? If so, what is the average bonus quantum in terms of months? I guess the bonus should be peg to the company profits.

Answer: Regarding bonus scheme, it depends on many factors. For example, companies with western culture usually have a different bonus scheme from the companies with the Thai culture. In many cases, if the monthly salaries are already high, then the number of months for bonus is often lower than if the salaries are low. When you want your company to be an attractive employer, you can pay an attractive salary plus 13th month bonus or you can pay normal salaries plus many months of bonus. Also it depends on the quality of employees. The ones that are very good and can demand higher compensation will stay if the overall remuneration is better than other companies. The ones that are not in high demand will stay even though you do not pay them bonuses. We would suggest having different agreements on the numbers of months for bonus with different employees depending on the levels of performance and the difficulties of finding replacements.

However, if you peg the bonus on company’s profits, it is a non-tax deductible expense. That means all the bonus you pay that is dependent upon the company’s profits will get added back to the bottom line and treated as if it was never an expense of the company for the purpose of calculation of corporate income tax.

Consult MSNA for your questions regarding your doing business in Thailand.