Employer of Record in Laos

How an Employer of Record works in Laos

An Employer of Record (EOR) in Laos gives foreign companies a simple way to hire in the country without setting up a local entity. The EOR becomes the legal employer, hiring employees on behalf of companies and handling everything from onboarding to legal compliance while the foreign employer manages the day-to-day operations.

Rivermate’s HR experts work with experienced network partners in Laos to provide EOR services to companies. We make the hiring process quick and compliant anywhere in the country.

Laos labor market: At a glance

The hiring market
Greatest hiring activity:	Vientiane
Hiring timelines:	Local hires: 48 hours to 2 weeks. Foreign hires: approximately 3 months.
In-demand sectors:	Hydropower and energy, mining, tourism, manufacturing.
Sectors with skills shortages:	Specialized and technical roles, and English-fluent talent.

The salary market
Employer tax contributions:	6% of gross salary, capped at LAK 4,500,000 contribution base.
Minimum wage:	LAK 2,500,000
Average gross monthly salary:	LAK 2,500,000–4,000,000
Income tax brackets:	0%: LAK 0–2,500,000 5%: LAK 2,500,000–5,000,000 10%: LAK 5,000,000–15,000,000 15%: LAK 15,000,000–25,000,000 20%: LAK 25,000,000–65,000,000 25%: Above LAK 65,000,000
Currency:	Lao kip (LAK)

What it costs to hire an employee in Laos

Salary

The minimum wage in Laos is LAK 2,500,000. However, informal and unskilled workers get an additional LAK 900,000 per month, bringing this to LAK 3,400,000.

While there are no official numbers for the average monthly wage in Laos, it tends to fall between LAK 2,500,000 and LAK 4,000,000.

Social Security

The employer pays 6% of gross salary in Laos, and the employee pays 5.5% of gross salary, withheld by the employer. The contribution base is capped at LAK 4.5 million a month, and there is no contribution for earnings above this.

Mandatory Benefits

Statutory paid leave applies in Laos. Annual leave is 15 days per year after one year of service, increasing to 18 days for hazardous or health-risk roles. It does not increase based on an employee’s years of service.

In the case of redundancy, employees are entitled to payment in lieu of any annual unused leave as well as severance pay and other benefits due, as set out in the Laos Labor Law.

Employees are entitled to paid sick leave up to 30 days per year, while maternity leave is 105 days, paid at 100%. The minimum maternity leave is 42 days after birth, extended to 120 days for multiple births. After the birth, mothers receive one hour a day of paid nursing or childcare time for up to 12 months. There are no specific rules around paternity leave, but all employees are entitled to three days of paid family care leave.

Overtime

Overtime is paid at 150% of the standard hourly wage on weekdays, increasing to 200% on weekends and 250% on public holidays. It increases to 300% between 16:00 and 22:00 on holidays and 350% for night shifts on holidays. It is capped at three hours per day and a total of 45 hours per month.

Night shifts require bonus payments, whether regular or overtime. These must be at least 15% of the standard hourly wage.

Bonuses and allowances

Employees in Laos receive various bonuses and allowances. These include an attendance allowance, transportation allowance, seniority allowance, meal allowance, communications allowance for remote workers, and a performance bonus.

While 13th month pay is not legally mandated, it is customary to pay this to employees, and it is customarily paid before La New Year. Private health insurance is often provided to employees due to the unreliable health system in Laos. Life insurance is also a common addition provided by employers.

Visas

All foreign workers will require a visa before they can legally work in Laos. A first-entry visa costs between $20 and $42, and the cost varies by nationality. Total renewal fees for the visa come to about LAK 1,245,000.

Standard visa issuance costs between $30 and $50, and the application for a work permit costs between $100 and $200. The employer pays for visa processing and the work permit, and the total cost typically ranges from $150 to $300.

Non-compliance can lead to penalties, including $100 per person for working without a permit and $200 per person for using foreign labor outside of an approved role.

Employer cost calculator

Find out the total costs of hiring in Laos using our calculator.

Hiring in Laos: what it looks like

Market condition	What an employer needs to know
Talent availability	Concentrated in Vientiane, no other real hiring hubs.
Key industries	Hydropower, mining, tourism, manufacturing, agriculture.
Skills shortages	English proficiency is a real constraint. Technical and specialized talent is also scarce.
Key employer challenge	Inflation and currency volatility, leading to brain drain.

In Laos, talent is heavily concentrated in Vientiane, the capital city. However, Vientiane itself is a small city, and there are few other real hiring hubs. Of the other cities where you may find talent, Luang Prabang, Savannakhet, and Pakse are the largest.

One of the major problems in Laos is sourcing English-speaking talent, as well as specialized and technical talent. The country has a small economy that is agriculture-based, and agriculture employs about 47% of the workforce based on the latest World Bank household survey figures. However, the majority of the country’s GDP is generated by industry and services. This means the formal, skilled labor pool is quite small.

Laos is in the Golden Triangle region, which means some illicit activity exists. However, this is not generally an issue for foreign employers. It is mainly limited to border areas, and legitimate hiring is straightforward and legal.

One problem for foreign employees is that the public healthcare system is not particularly reliable. As a result, private health insurance is commonly provided by insurers, as is life insurance, but it’s not legally required.

The foreign worker quota is an important consideration for employers who want to hire foreign employees in Laos. Current figures state that a maximum of 15% of staff can be foreigners in manual labor roles and 25% in mental labor roles.

Country-specific problem that employers must know about

One of the major problems for employers trying to source local talent in Laos is brain drain. The main reason for this is that the economy has been volatile in recent years.

Brain drain means employers often encounter staff shortages for labor-intensive businesses. Due to the economic challenges, many workers migrate abroad for better-paid jobs, with neighboring Thailand proving to be a big draw for its higher wages.

Inflation rose above 40% in 2023, and while it has come down since, the picture remains volatile. Since 2022, the kip has fallen 60% against the USD. Over the past decade, it has depreciated about 170%, showing a sustained trend.

This can lead to challenges for employers. Laos depends heavily on imports, and the weaker kip means everyday items become more expensive. As such, a competitive salary can quickly lose value, and employers need to be aware of this.

Compliance risks to be aware of in Laos

Foreign worker quota

There is a foreign worker quota in place in Laos. The maximum quota of foreign workers a company can have is 15-25% depending on the type of role. Failure to stay within this quota can lead to penalties for employers. This is currently equal to $200 USD per person for using foreign labor outside the quota.

Restrictions on termination

Article 87 of the Laos Labor Law provides protection to certain groups of employees from job termination. This states that several types of employees, including pregnant employees, those with a child under one year old, employees who are in medical treatment, employees in legal proceedings, union reps, and others, cannot have their positions terminated.

This is an important consideration for any employer to be aware of because terminating the employment of someone in one of these groups could lead to serious legal difficulties.

Fixed-term contracts convert after three years

Under Article 76 in the Lao Labor Law, fixed-term contracts automatically convert to indefinite-term contracts after three years. This means you cannot continue to employ someone on short-term contracts.

In addition, when renewing an employment contract, the employer must give 15 days’ notice before expiry. The new contract must be confirmed within 60 days of the old contract expiring.

Notice period depends on type of work

The notice period you are required to give employees depends on the type of work they carry out rather than the length of their service, which may be a surprise to employers. Article 80 states that, for employees undertaking physical labor, the notice period is 30 days, while for those undertaking mental labor, it’s 45 days.

How Rivermate can help you stay compliant when hiring in Laos

Rivermate’s experts know all the local labor laws, and they will deal with every aspect of the employment relationship. You can focus on running your business and finding talent without having to worry about legal compliance issues because we take care of that for you.

Learn more about EOR services

Benefits of hiring employees through an EOR in Laos

Setting up a local entity is a considerable amount of work and can take between three months to a year. When you compare this to hiring someone in 48 hours to two weeks with an EOR, this is a significant difference. Setting up a legal entity also typically costs between $40,000 and $100,000 USD.

The foreign worker quota system is often unclear for employers because there is disagreement over the exact figures permitted, and even with careful research, you can still make mistakes. Using an EOR avoids this risk because it will always have the up-to-date rules and will ensure compliance.

There are several other confusing rules to be aware of in Laos, including the three-year fixed-term to indefinite rule and the notice period that changes depending on labor type. These rules are not obvious to employers new to the country, and they are easy to get wrong without local expertise,

Using an EOR will ensure all the correct paperwork is in place so you don’t risk relying on a contract that’s not valid. Also, even if you are considering setting up a local entity in Laos, you may prefer to test the market for a year or two beforehand, which is a major benefit of using an EOR like Rivermate.

Want to hire employees in Laos?

Finding the right candidate is only the first step when you want to hire in Laos. At Rivermate, we make the entire process go smoothly, handling everything from payroll services to taxes and ensuring full compliance, so you can focus on running your business.

Talk to a Laos Hiring Expert

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