Business challenges – Ensuring HR Compliance

Today’s challenge for small business owners and mid-sized companies is making sure that every employee contributes to the ongoing success of the company. In many instances, this includes either the business owner or another senior member of staff taking on at least two roles, such as a secondary function as HR manager or accountant. While this ancillary position may only need to be filled for a few days out of each month, the fact remains that a person taking on an extra workload often does so without the proper training.

Having to rely on ad hoc accounting or human resource management even for the shortest period of time puts a company, its owners and directors, in a difficult position. It is a dilemma that can easily be addressed by turning to a professional employer organization. Outsourcing HR support alleviates the need for a company to have a single employee working exclusively on HR-related issues and frees up internal resources which can be deployed elsewhere.

There is a myriad of benefits that can be gained by packaging off HR support to a professional partner, the most obvious being keeping abreast of the latest employment laws in different countries and other sensitive areas that concern personnel management. The importance of ensuring HR compliance and maintaining employee records is quite often relegated to a lower rung of significance than say winning new contracts or making quarterly profits. But to disregard these essential corporate tasks can sometimes lead to criminal charges being brought against a business owner, a company director, or both.

Seeking a trusted business partner to outsource HR support is now a straightforward procedure and one that can be concluded in a short period of time. A global professional services firm like Mazars brings with it stringent HR compliance, strategic HR management, expertise in local employment laws, and adherence to personal data protection as defined under Thailand’s PDPA regulations, which became effective on 1 June 2022. The failure to comply with PDPA regulations may result in punishment of up to THB 5 million in administrative fines and up to THB 1 million in criminal fines.

HR compliance and maintaining employee records comprises several layers of complexity that includes, but are not limited to, the preparation of salary certificates, and providing employee information to financial institutions for financial transactions such as when an employee applies for a credit card or home loan. This also extends to when an employee requires a salary certificate, whether to apply for an international travel visa or a bank loan.

While there is no specific requirement when it comes to maintaining employment records, a trusted outsourcing partner would keep original documents on behalf of the client of all documents received/issued during the employment of a worker. When it comes to rules and regulations from employee welfare to disciplinary action and termination, Thailand has employee friendly severance laws. Therefore, it can be complicated to know whether or not you can deduct an employee salary if they regularly arrive late for work.

Another issue of relevance to keep in mind covers the administration of health insurance claims as it is the responsibility of the employer to forward an employee’s health insurance claim to the insurance company. By selecting the best outsourcing vendor for your company, you can be confident that the tracking of payment claims for your employees is done professionally and directly with the insurance company. Once an employee has submitted the required documents, they are checked for accuracy and then forwarded to the insurance company or broker. The frequency of submitting health insurance claims can be set weekly or every two weeks depending on the size of the workforce.

It is also worth noting that in Thailand, as well as in many countries, company directors carry certain liabilities for which they can be held personally criminally liable. For example, a company which has sufficient funds but fails to pay its employees can be brought before a court of law by the affected workers.

Outsourcing of the above mentioned corporate functions can be a savior for companies that are seeking to maximize their business potential while keeping their footprint as small as possible. It is therefore incumbent on decision-makers to understand that they should always seek to combine their outsourced HR support services with a legal division, one that preferably has expertise in local employment law.

If you would like to understand more about the benefits of HR outsourcing and your legal obligations in Thailand, connect with Mazars Thailand’s HR admin and HR advisory services by calling +66 (0) 2670 – 1100.

In our next Business Challenges next column, we focus our gaze on how companies adhere to employee skill development as promoted by Thailand’s Skill Development Act, BE 2545.