You found the right engineer in Manila or the right designer in Hanoi. Now comes the part nobody warns you about: actually paying them, legally, every month, in a country whose labor code you have never read.
Payroll is where remote hiring gets real. Get it right and your new hire feels secure and stays for years. Get it wrong and you are looking at fines, a demotivated employee, or a misclassification claim that costs more than the salary you were trying to save. This guide walks through how payroll actually works across Southeast Asia, the four ways to run it, and how to stay compliant without building an HR department.
Why payroll is the hard part of remote hiring
Sourcing talent in Southeast Asia is easy. There are millions of skilled engineers, marketers, and designers, and salaries run 60 to 80% below US rates. The hard part is everything that happens after the offer letter.
Every country has its own rules for income tax withholding, mandatory social security, health insurance, pension contributions, 13th-month pay, and pay frequency. A "salary" is never just the salary. On top of it sit employer contributions you are legally required to pay, and those change the moment you cross a border.
You cannot simply wire money to someone's personal account each month and call it payroll. That is either an informal arrangement with no legal protection, or a contractor relationship that may not hold up if the person works for you full-time.
Employer contributions vary by country
Before you agree a salary, you need to know the true cost of employment. Here is a high-level view of the region. Rates change, so always confirm current figures with each country's official agency, linked below.
| Country | Approx. employer on-cost | Main statutory schemes | Pay cycle | Currency |
|---|---|---|---|---|
| Philippines | ~10 to 12% | SSS, PhilHealth, Pag-IBIG, 13th-month | Semi-monthly | PHP |
| Vietnam | ~21.5% | Social, health, unemployment insurance | Monthly | VND |
| Indonesia | ~10 to 11% | BPJS health & employment, THR | Monthly | IDR |
| Malaysia | ~13 to 16% | EPF, SOCSO, EIS | Monthly | MYR |
| Thailand | ~5% | Social Security Fund | Monthly | THB |
Two things stand out. First, the spread is wide: Vietnam's employer burden is more than four times Thailand's. Second, several countries mandate an extra month of pay. The Philippines requires 13th-month pay by law, and Indonesia requires a religious holiday allowance (THR). Miss these and you are not just non-compliant, you have broken a promise your employee was counting on.
Four ways to run payroll in Southeast Asia
There is no single "best" answer. The right model depends on how many people you are hiring, whether you want them on your books, and how much HR capacity you have.
| Model | Best for | Speed | Compliance risk |
|---|---|---|---|
| Own local entity | 20+ hires in one country, long-term | Slow (2 to 6 months) | Yours to manage |
| Employer of Record (EOR) | 1 to 20 full-time hires, fast start | Fast (days) | Handled by the EOR |
| Contractor agreement | Genuine project or part-time work | Instant | High if the role is really full-time |
| Managed hiring partner | Full-time hires without HR overhead | Fast (days) | Handled for you |
What an Employer of Record actually does
An EOR is the fastest way to hire a full-time employee compliantly in a country where you have no legal presence. You pay the EOR one consolidated invoice: the salary, the statutory employer contributions, and a service fee. They handle the rest. For teams hiring a handful of people across several countries, this removes months of setup and a permanent compliance obligation.
The trade-off is the service fee, and the fact that you are one step removed from local employment. A good managed partner closes that gap by combining EOR-style compliance with hands-on talent management.
How to set up payroll, step by step
- 1Confirm the modelDecide between entity, EOR, contractor, or managed partner before you make the offer
- 2Calculate the true costAdd employer contributions and any mandatory extra-month pay to the base salary
- 3Sign a compliant contractUse a local-law employment agreement with correct notice, leave, and probation terms
- 4Register and withholdEnrol the employee in statutory schemes and set up correct tax withholding
- 5Pay in local currencyRun payroll on the local cycle and issue a clear, itemised payslip every period
- 6Keep recordsRetain payslips, filings, and contributions for audits and future reference
Country notes at a glance
Philippines. English-heavy talent, semi-monthly pay, and three mandatory schemes (SSS, PhilHealth, Pag-IBIG). The 13th-month pay is required by law and due by December 24. A strong choice for marketing and support roles.
Vietnam. Deep engineering and AI talent, but the highest employer burden in the region at around 21.5% across social, health, and unemployment insurance. Monthly pay in VND.
Indonesia. Large talent pool and lower cost. Contributions run through BPJS for health and employment, and the THR religious allowance is a mandatory extra payment.
Malaysia. High English proficiency and strong DevOps and cloud talent. EPF (retirement) is the biggest employer line, plus SOCSO and EIS.
Thailand. The lightest statutory burden in the region at roughly 5%, capped monthly. Good for design and content roles.
What compliant payroll actually covers
A realistic timeline
- Week 1Choose the model, calculate the fully loaded cost, and send a compliant offer
- Week 2Sign the local-law contract and collect tax and banking details
- Week 3Register the employee in statutory schemes and configure withholding
- Week 4Run the first payroll in local currency and deliver the first payslip
Let Asiatal handle payroll and compliance
If reading five sets of labor rules is not how you want to spend your quarter, this is exactly what we do. Asiatal hires, pays, and manages remote engineers, marketers, and designers across the Philippines, Vietnam, Indonesia, Malaysia, and Thailand. We act as the Employer of Record, run local payroll, remit every statutory contribution, and keep you compliant, while your new team member works directly for you.
Our pricing is simple. On the Retainer plan, you pay the agreed talent compensation plus a flat $499/mo retainer fee, and we manage payroll and compliance end to end. Prefer to bring the hire onto your own payroll later? The Recruiting Partner option is a one-time placement fee of 15% of first-year salary, or 12% per hire for three or more.
Payroll should not be the reason you pass on a great hire. Get the model right, price in the true cost, stay compliant, and pay people well and on time. Do that and remote hiring in Southeast Asia becomes one of the best decisions your company makes.
Ready to build your team without the payroll headache? Start hiring with Asiatal or read our full guide to hiring remote employees in Southeast Asia.
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