In an effort to enhance social sustainability and improve employee welfare, Thailand is set to implement a new law in October 2025. This initiative, a new Employee Welfare Fund, represents an additional improvement in the country’s labour landscape, but it will also incur some additional costs to businesses with 10 or more employees (but not those with existing Provident Funds).
For business owners in Thailand, understanding the implications of this new regulation is important. Whether you manage a small enterprise (over ten employees) or oversee a large corporation, the Employee Welfare Fund introduces some additional compliance requirements. This article explores the key features of the fund, its goals, and what business leaders need to know to prepare effectively.
The Purpose Behind the Employee Welfare Fund
The Employee Welfare Fund aims to provide enhanced financial security and support for employees during periods of hardship. By creating a safety net, the fund is designed to assist workers facing unexpected circumstances such as unemployment, serious illness, or workplace injuries.
The Thai government has emphasised that this initiative is not merely a policy change but part of a broader commitment to fostering social equity.
Key Features of the New Welfare Fund
The Employee Welfare Fund introduces several key elements that business owners should familiarise themselves with:
- Mandatory Contributions:
Employers and employees will be required to contribute a fixed percentage (0.25%) of each employee’s monthly salary to the fund. This contribution will double to 0.5% in 2030. Companies with more ten or more employees will need to contribute to this fund, unless they already have an established Providence Fund. - Employee Coverage:
All full-time employees will automatically be enrolled in the fund, while provisions for part-time and freelance workers are still under consideration. However, it is very likely that Expartriates will also be participating in this scheme, unless they are already part of a company Provident Fund. - Disbursement of Benefits:
The fund will offer financial assistance to employees in specified situations, including termination without cause, medical emergencies, and family bereavements. Eligibility criteria and application processes will be streamlined to prevent delays in access. At this point, however, the exact processes for disbursement, are not known. - Government Oversight:
The fund will be managed by a centralised government body to ensure transparency and efficiency. Employers will be required to submit regular reports and monthly contributions through an online portal.
Implications for Business Owners
The introduction of the Employee Welfare Fund marks a potentially significant shift in Thailand’s savings rates, particularly for those on the lower end of salary scales. For business leaders, it presents both opportunities and challenges.
Financial Planning:
One of the immediate challenges for businesses will be adjusting financial plans to accommodate the mandatory contributions. Small and medium-sized enterprises (SMEs), in particular, may need to reassess budgets to ensure compliance without compromising operational stability. Employers and employees are each required to contribute 0.25% of wages to the Employee Welfare Fund.
Administrative Adjustments :
Employers will need to integrate new processes into their payroll systems to manage contributions efficiently. This may involve investing in software upgrades or outsourcing payroll management to ensure accuracy.
Legal Compliance :
Non-compliance with the new law could result in penalties, including fines and reputational damage. Business owners are advised to consult legal experts to understand their obligations and avoid potential pitfalls
Turnover :
One of the original goals of the Provident Fund Act B.E. 2530 (1987) was to help reduce employee churn. Companies that offered Provident Funds with options to increase contributions over the employees tenure, were thought to reduce turnover. Largely that’s exactly what happened. Under the new Employee Welfare Fund there is no option that we are aware of, to increase contributions at will and therefore aid in reducing employee churn.
Preparing for the Transition
With the October 2025 deadline, it is advisable for businesses to begin preparations now. Here are some practical steps to ensure a smooth transition:
- Understand the Regulations:
Stay informed about updates and clarifications regarding the fund’s implementation. Government agencies (Labour Department) and industry associations are valuable resources for accurate information. - Evaluate Current Policies:
Review existing employee benefit schemes to identify overlaps or gaps. Aligning current benefits with the new fund can simplify the transition and enhance overall effectiveness. You also have the option to implement a Provident Fund which has the benefit of improving employee retention. If you decide on implementing a Provident Fund, then it will not be necessary to contribute to the government Employee Welfare Fund. It may also be possible to implement a combination of Provident Fund and Employee Welfare Fund, however at the time of writing this article, we are not 100% certain if this is possible. - Engage Employees:
Open communication with employees about the fund’s benefits is critical. Transparency fosters trust and helps employees appreciate the value of this new initiative. As they are having deductions made from their salaries, it’s crucial that they understand the purpose of the fund and how to make use of it, if necessary. - Seek Professional Advice:
Consult with HR specialists, legal advisors, and accountants to navigate the complexities of compliance. Their expertise can help mitigate risks and optimise processes.
A Step Towards Social Sustainability
The introduction of Thailand’s Employee Welfare Fund represents a new milestone in the nation’s journey towards improved social sustainability. By prioritising employee welfare, the government is laying the foundation for a more equitable and resilient economy.
However, it is worth noting that as of 2023, approximately 52.3% of Thailand’s workforce, equating to about 21 million individuals, are employed in the informal sector (Bangkok Post) and they will likely not benefit from this new scheme.
For more on our Sustainability series, please read:
Advantages: Sustainability for Small to Medium-Sized Manufacturing Companies in Southeast Asia
Environmental Footprint: Cost-Effective Strategies for Manufacturers