Employer of Record in Laos

An Employer of Record (EOR) in Laos is a company that legally hires and pays employees on your behalf. If you want to hire someone in Laos but don't have a legal entity in the country, an EOR is your solution. It handles all the HR tasks like payroll, taxes, benefits, and compliance with local labor laws. This allows you to build a team in Laos without the cost and time of setting up your own company there. For companies looking to hire in Laos, an EOR provider like Rivermate simplifies the entire process.

How an Employer of Record (EOR) Works in Laos

Using an EOR in Laos streamlines the process of hiring employees. Here is a simple breakdown of how it works:

1. You Find the Talent: You identify the candidate you want to hire in Laos.
2. The EOR Hires Them: The EOR, which already has a legal entity in Laos, hires the employee on your behalf. They handle the employment contract, making sure it complies with Lao labor laws.
3. Onboarding is Managed: The EOR manages the onboarding process, including any necessary registrations with local authorities.
4. Payroll and Benefits are Handled: The EOR takes care of all payroll, tax withholdings, and social security contributions. They also manage employee benefits, ensuring everything meets local requirements.
5. You Manage Daily Work: While the EOR handles the legal and HR aspects, you manage your employee's day-to-day tasks and responsibilities.
6. Ongoing Compliance: The EOR stays up-to-date with any changes in Laos's labor laws to ensure you remain compliant.

Why use an Employer of Record in Laos

Using an EOR is a practical way to expand your team into Laos. It allows you to access new talent and markets quickly without getting tangled in complex local regulations.

• Avoid Setting Up a Legal Entity: The biggest advantage is that you don't need to establish your own company in Laos. This saves you significant time and money.
• Ensure Legal Compliance: EORs are experts in local labor laws. They make sure your hiring practices, contracts, and benefits are fully compliant, reducing your risk of legal issues.
• Simplify HR and Payroll: An EOR handles all the administrative burdens of payroll, taxes, and benefits. This frees you up to focus on growing your business.
• Faster Market Entry: You can hire employees and start operating in Laos much faster than if you were to set up your own entity.
• Access to Local Expertise: EORs have in-depth knowledge of the local market, which can be a valuable resource as you build your team.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Laos includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Laos.

Hiring in Laos can be straightforward when you understand the local landscape. The workforce is young, but you may find it challenging to recruit for highly skilled positions. A key first step is registering your business with the Department of Enterprise Registration and Management. This allows you to legally hire employees in the country. Many companies choose to partner with an Employer of Record (EOR) to navigate the complexities of Lao labor law and handle the administrative side of hiring.

Employment contracts & must-have clauses

You must provide a written employment contract to every employee in Laos. The contract should be in the Lao language. There are two main types of contracts:

• Fixed-term: These are for a specific period or project. If a fixed-term contract, including extensions, goes beyond three years, it's automatically considered a permanent contract.
• Indefinite-term: This is the standard for permanent positions and has no specified end date.

Your employment contracts must include these essential clauses:

• Identities of you and the employee
• Job title and duties
• Work location
• Start date
• Salary and payment details
• Working hours
• Leave entitlements

Probation periods

You can include a probationary period in the employment contract to assess a new hire. The maximum length of this period depends on the type of work:

During probation, either you or the employee can end the employment with a shorter notice period. For unskilled work, the notice period is three days, and for skilled work, it is five days.

Working hours & overtime

The standard workweek in Laos is six days, with a maximum of eight hours per day, totaling 48 hours per week. For work considered hazardous, the limit is six hours per day or 36 hours per week.

Overtime is any work that goes beyond these standard hours. Here’s what you need to know:

• Overtime is limited to 3 hours per day and 45 hours per month.
• You generally need the employee's consent for overtime work.
• Overtime pay rates are higher than the standard hourly wage.

Public & regional holidays

Laos has several public holidays where employees get a paid day off. The government announces the official dates each year. Some of the key holidays include:

• New Year's Day (January 1)
• International Women's Day (March 8)
• Lao New Year (Pi Mai Lao, typically in April)
• Labour Day (May 1)
• National Day (December 2)

If a public holiday falls on a weekend, a compensatory day off is often given on the following Monday.

Hiring contractors in Laos

Engaging independent contractors can be a flexible option for project-based work. Contractors are self-employed and manage their own taxes and social security contributions. This can save you on the costs associated with full-time employees.

However, be careful with how you classify workers. If a contractor relationship looks too much like regular employment, Lao authorities might reclassify the worker as an employee. This is known as misclassification and can lead to penalties, back taxes, and other legal issues.

An Employer of Record (EOR) can help you avoid this risk. An EOR can legally hire employees on your behalf, ensuring compliance with all local labor laws. This lets you access talent in Laos without the risk of misclassifying your workers.

Understanding compensation and payroll in Laos is straightforward. The system is built on a standard workweek and monthly pay schedules. Both employers and employees contribute to social security. Personal income is taxed at progressive rates. Navigating these regulations is key to compliant payroll management in the country.

Payroll cycles & wage structure

In Laos, you typically pay your employees once a month. While bi-monthly payments are an option, this needs to be clearly stated in the employment contract. The standard workweek is 48 hours, spread over six days, with a maximum of eight hours per day. For employees in hazardous conditions, the work week is shorter, at a maximum of 36 hours per week, or six hours per day.

Overtime & minimums

If your employees work beyond the standard hours, you must pay them overtime. For a regular workday, the overtime rate is 150% of their normal hourly wage. On a rest day or public holiday, this increases to 250% for work between 4:00 pm and 8:00 pm, and 350% for work between 10:00 pm and 6:00 am. Keep in mind that you cannot require an employee to work more than 45 hours of overtime in a month or more than 3 hours in a day.

As of October 1, 2023, the minimum wage in Laos is LAK 1,600,000 per month.

Employer taxes and contributions

As an employer in Laos, your main payroll contribution is to the social security fund.

Employee taxes and deductions

Your employees also contribute to social security, and their income is subject to personal income tax. You are responsible for withholding these amounts from their pay.

Personal income tax is progressive, based on the employee's monthly salary.

In Laos, navigating employee benefits and leave is straightforward. The labor law provides clear minimums for time off and other entitlements. This ensures your team gets the necessary support. Understanding these basics is the first step to building a compliant and caring workplace.

Statutory leave

You are required to provide several types of leave. These are the minimums set by law.

• Annual Leave: After one full year of continuous work, employees get 15 days of paid annual leave. For those in hazardous jobs, this increases to 18 days.
• Sick Leave: Employees can take up to 30 days of paid sick leave per year. A medical certificate is required to validate the absence.
• Maternity Leave: Female employees receive at least 105 days of paid maternity leave. At least 42 of these days must be taken after giving birth. If an employee has twins, the leave extends to 120 days.
• Personal Leave: Employees can take 3 days of paid personal leave for specific family events. These events include the injury or death of a parent, spouse, or child, or the employee's own marriage.

Public holidays & regional holidays

Your employees are entitled to paid time off for public holidays. The dates for 2025 are set. There is no readily available information on specific regional holidays.

Typical supplemental benefits

Providing more than the minimum can help you attract and keep great talent. Below is a look at what is required by law versus what you can offer as extra perks.

How an EOR can help with setting up benefits

Setting up a benefits plan in a new country can be complex. An Employer of Record (EOR) simplifies this process for you.

An EOR already has a legal entity in Laos. This means you don't have to set one up yourself. They handle the administrative and legal requirements of managing employee benefits.

Here’s what an EOR does:

• Ensures Compliance: An EOR understands local labor laws. They make sure your benefits packages meet all legal requirements.
• Manages Administration: They take care of everything from enrolling employees in social security to managing payroll deductions.
• Offers Competitive Packages: EORs have experience in the local market. They can help you create benefits packages that are attractive to local talent.
• Saves Time: You can focus on your business goals. The EOR handles the time-consuming HR tasks.

Using an EOR makes hiring and managing employees in Laos easier and more efficient.

Ending a working relationship in Laos, like any country, has its own set of rules. You need to follow specific steps to make sure the process is fair and lawful for everyone. This involves giving proper notice, calculating final pay correctly, and handling all the paperwork. It’s about ending things on the right note and staying compliant with local labor laws.

Notice periods

When you decide to terminate an employment contract, you must give the employee advance written notice. The amount of notice depends on how long the employee has worked for you and the type of work they do.

• Unskilled labor: 30 days notice.
• Skilled labor: 45 days notice.

For employees on a probationary period, you only need to provide 3 days' notice.

In some cases, you might offer payment in lieu of notice. This means you pay the employee their salary for the notice period, and their employment ends immediately.

Severance pay

If you terminate an employment contract for reasons that are not the employee's fault, you are required to pay severance. The amount is based on the employee's final salary and how long they have worked for the company.

The calculation is 10% of the employee's last salary multiplied by the total number of months they worked.

However, if you terminate the contract for reasons deemed unjustified under the law, the compensation increases to 15% of the last salary multiplied by the number of months worked.

You do not have to pay severance if you terminate an employee for serious misconduct, such as:

• Causing deliberate damage to your business.
• Repeatedly breaking company rules after receiving a warning.
• Being absent for four consecutive days without a good reason.
• A court sentences them to prison.
• Violating the rights of other employees after a warning.

How Rivermate handles compliant exits

When you partner with an Employer of Record like Rivermate, we manage the entire offboarding process for you. We make sure every step follows Lao labor law to protect you from legal risks.

Here’s how we help:

• Clear Communication: We handle all communication with the departing employee, ensuring they understand the reasons for termination and the next steps.
• Correct Calculations: We calculate the final salary, any outstanding benefits, and the correct severance pay according to the legal requirements.
• Proper Documentation: We prepare all necessary termination documents, including the written notice and final pay statements.
• Compliance Checks: Our local experts review every detail to ensure full compliance with the latest labor regulations in Laos.

We take care of the complexities so you can focus on your business.

Getting the right visa and work permit in Laos can be complex. The process involves multiple government bodies and requires a sponsoring employer in the country. This guide breaks down what you need to know to stay compliant.

Employment visas & sponsorship realities

The most common route for working in Laos is the LA-B2 Labor Visa, which requires sponsorship from a locally registered company. This is where an Employer of Record (EOR) can help. An EOR is a third-party organization that acts as the legal employer for your workers in Laos.

An EOR simplifies hiring in Laos by handling all the legal and administrative tasks. This includes managing payroll, taxes, benefits, and ensuring compliance with local labor laws. Using an EOR allows you to hire employees without setting up your own legal entity in the country.

Here’s what an EOR can typically sponsor:

• LA-B2 Labor Visa: This is the standard visa for foreign employees working in Laos. The EOR, as the registered employer, can sponsor this visa.
• Work Permits: A work permit is required in addition to the visa. The EOR will handle the application process with the Ministry of Labour and Social Welfare.

However, there are limitations. An EOR generally cannot sponsor:

• NI-B2 Investor Visas: These are for individuals investing in a Lao business and require proof of that investment.
• Visas for independent contractors: The LA-B2 visa requires an employer-employee relationship, which doesn't apply to freelancers.

The most practical route for hiring employees in Laos is to partner with an EOR. The EOR will guide you through the process, which generally looks like this:

1. Government Approval: The EOR secures approval from the Ministry of Labor and Social Welfare to hire a foreign worker.
2. Documentation: You and your employee provide the necessary documents, such as the employment contract and educational qualifications.
3. Visa Application: The EOR submits the visa application to the Department of Immigration.
4. Work Permit: Once the visa is approved, the EOR applies for a work permit.

Business travel compliance (short-term visits)

For short-term business trips, such as meetings or training, the Non-Immigrant Visa (NI-B3) is the appropriate option. This visa is for temporary business activities and does not authorize employment.

Key things to know about the NI-B3 visa:

• Permitted Activities: Use this visa for attending conferences, negotiating contracts, or participating in training.
• Restrictions: You cannot use this visa for long-term work.
• Application: You can apply for this visa at a Lao embassy or consulate in your home country.

Always choose the correct visa for your activities in Laos to avoid legal issues. If you have any doubts, it's best to consult with an expert.