How to Hire Remote Employees In 

Laos

The Basics

Currency
Lao kip
Employer Taxes
6%
Payroll Frequency
Monthly
Official Language
Lao (Official), French, English

Employment in 

Laos

Hire Independent Contractors

Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.

For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.

For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.

As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.

While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.

Benefits of Hiring Independent Contractors
Time savings: Hiring through a subsidiary or EOR can take months of onerous paperwork and legal wrangling. This is only multiplied if you want to hire in multiple countries.
Reduced overhead: You can save tens of thousands of dollars in onboarding costs by hiring through a company like Panther. You also have fewer responsibilities to provide benefits, further reducing overhead.
Greater flexibility: Contractors can be brought on as-needed. If they are not a good fit, you can choose not to renew them without incurring significant additional termination costs.
Reduced legal risk: Contractors generally don't have the host of legal protections that typically cover full-time employees.
Disadvantages of Hiring Independent Contractors
Risk of Misclassification: While it's important to understand local contractor law, for most firms, misclassification risk is minimal.
Lack of Control: For a worker to be classified as a contractor, they should be allowed to work independently on their assigned tasks. Hiring full-time employees offers a wider range of management options.
Lack of Loyalty: Contractors come and go as-needed. Many companies hire contractors for short-term work, which makes it difficult to cultivate loyalty.

Set up a subsidiary in 

Laos

A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.

Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in Laos can be expensive, stressful, and time-consuming. It's not for the faint of heart.

To set up a subsidiary in Laos, you have to:

  1. Register your business name and file articles of incorporation
  2. File for local bank accounts
  3. Learn and keep track of the local employment laws
  4. Set up local payroll
  5. Hire local accounting, legal, and HR people

If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for Laos.

Use an Employer-of-Record (EOR)

An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.

An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.

Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.

At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.

Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:

  • Ability to attract talented and motivated employees from all over the world.
  • Full legal compliance: There is no risk of violating local employment laws.
  • Transparency: Employees are still your employees. All the work, processes, operations and day-to-day business belong to you, the company, just like with any other employee. Panther just takes on all of the responsibilities, obligations and admin work related to your team's employment.
  • No risk of misclassification

Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.

Paying Remote Employees

Paying employees in Laos is not the same as paying workers in your own country. Employees have to be paid using Laos’s employment and payroll standards.

This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.

Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.

After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:

Pay through a local entity

One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.

Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.

Work with an EOR

Outside of EORs acting as the full admin employer, many also provide remote payroll.

For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.

We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.

Laos

 Specific Information

Working Hours

The Labor Law limits working hours to 48 hours per week.

Work that is performed beyond this limit will be considered as overtime.

Likewise, the law provides that an employee cannot work more than six days per week and eight hours per day.

Overtime

According to the Labor Law, overtime cannot exceed three hours per day or 45 hours per month.

In addition, an employee cannot work overtime for more than four consecutive days, except in emergencies.

Overtime wages differ according to the type of overtime, with the Labor Law providing different rates for different days and periods in which the overtime is performed (e.g. overtime on regular days, overtime at night, overtime on public holidays).

With respect to an indefinite-term contract, each party may terminate the contract at any time provided notification is provided to the other party at least 30 days in advance for contracts involving physical labor employees, and at least 45 days in advance for contracts involving employees who use intellectual/special skills.

Payroll Tax

Employer

Employer

  • Social Security Contributions

Minimum Wage

The minimum wage is LAK 1,100,000.

Payroll

Pay Cycle

No statutory payroll cycle.

13th Salary

Not compulsory but bonuses are common.

Leave

Paid Time Off (PTO)

An employee is entitled to 15 days' paid annual leave per year, if they have both:

  • An indefinite contract or a fixed-term contract of more than one year.
  • Been employed for one full year.

Public Holidays

There are 7 public holidays.

Sick Days

The duration of sick leave entitlement provided to workers is dependent on how long they have been employed by their employer:

  • The law provides that, upon presentation of a medical certificate, employees are entitled to sick leave fully paid up to a maximum of 30 days each year.
  • However, workers working on a daily or hourly basis under a specific employment contract are entitled to sick leave only if they have worked for more than 90 days for the same employer.

Maternity Leave

Female employees are entitled by law to receive full wages in case of maternity leave, which can range from 90 to 105 days, or 120 days in the case of multiple births.

In the event of miscarriage, female employees are also entitled to maternity leave, with the number of days to be determined by the attending physician.

Paternity Leave

Male employees are entitled to take at least three days' paid leave if their wife gives birth or miscarries (Article 58, Labour Law).

Parental Leave

Employees are entitled to up to 3 days of leave if the employee’s father, mother, spouse, or child is injured and hospitalized, and there is nobody to take care of them.

Other Leave

Jury Duty Leave and Voting Leave (Leave due to Public Interest) - Not specified by law.

Military Leave -Not Specified by law.

Marriage Leave

Not Specified by law.

Bereavement Leave

Employees are entitled to up to 3 days of paid leave if the employee’s father, mother, spouse, or child passes away.

Termination

Termination Process

The employment will be terminated when one of the following conditions is met:

  • the expiration of the contract, or completion of tasks set out in the contract
  • the death of the employee or the employer
  • the termination of the company;
  • the employee has been sentenced to imprisonment; or
  • the employer and employee have provided mutual consent

There is no defined notification period for a fixed-term contract, and such terms are generally agreed upon in the employment contract.

With respect to an indefinite-term contract, each party may terminate the contract at any time provided notification is provided to the other party at least 30 days in advance for contracts involving physical labor employees, and at least 45 days in advance for contracts involving employees who use intellectual/special skills.

Alternatively, the employer can choose to make payment in lieu of notice to the employee who will be terminated. 

The Labor Law provides for severance payments to be made for the following types of termination of employment:

  • In the case of general unilateral termination of the contract, the severance value is 10% of the employee’s last wage multiplied by the number of months worked.
  • In the case of unjustified unilateral termination of a contract, the severance value is 15% of the employee’s last wages, multiplied by the number of months worked, with no capped amount for severance payment.
  • In the case of the death of an employee, the employer must pay 50% of the compensation that would have been received by the employee for general unilateral termination of the contract.

Notice Period

The notice period in Laos is:

There is no defined notification period for a fixed-term contract, and such terms are generally agreed upon in the employment contract.

Severance Pay

The Labor Law provides for severance payments to be made for the following types of termination of employment:

  • The Labor Law provides for severance payments to be made for the following types of termination of employment:
  • In the case of unjustified unilateral termination of a contract, the severance value is 15% of the employee’s last wages, multiplied by the number of months worked, with no capped amount for severance payment.
  • In the case of the death of an employee, the employer must pay 50% of the compensation that would have been received by the employee for general unilateral termination of the contract.

Probation Period

Probation period may not exceed 30 days.