Laos PEO & Employer of Record

WeHG provides an International PEO and global Employer of Record service in Laos to companies willing to enter the Lao market or hire local/expat employees in this country.

The common approach requires establishing a subsidiary in Laos.  After all, our solution allows you to set up the operations in Laos within days hence save your resources.  WeHG would hire candidates on your behalf while you maintain full operational control of their work. So legally they would be our employees, on our local payroll, 100% compliant but will work on your behalf.

Laos fast facts

Population, million: 7
Land area: 237,955 km²
Capital: Vientiane
Local currency: Kip (₭) (LAK)

GDP per capita:$ 8,458
GDP in currency:$ 58.329

Laos, landlocked country of northeast-central mainland Southeast Asia. It consists of an irregularly round portion in the north that narrows into a peninsula-like region stretching to the southeast. Overall, the country extends about 650 miles (1,050 km) from northwest to southeast. The capital is Vientiane (Lao: Viangchan), located on the Mekong River in the northern portion of the country

Hiring, Negotiating and Doing Business in Laos

Necessity of written employment contract

An employment contract must be in writing between the employer and employee.

Different forms of engagement: employment, contracting, work with private entrepreneur

A person, Lao or foreigner may engage in business in the form of a sole proprietorship, limited liability company (including foreign-owned company and joint venture company), partnership, branch of a foreign corporation, a representative office, or business cooperation by contract.
The most common form of entity used in Lao PDR is the limited liability company.
Under Lao law, a branch office can be established to carry on only specific business (e.g. commercial banks, airlines, etc.), while a representative office cannot generate any income in Lao PDR.
Certain businesses require approvals or licenses from relevant authorities.

Laos Employment Contract

Types of employment agreements

The contract can either be for a fixed term or an indefinite period. If a fixed term contract, including any extensions, is longer than 3 years, the contract will be deemed to be an indefinite employment contract.

Laos working hours

Normal hours of work are 6 days a week, no longer than 8 hours a day or 48 hours a week.

Overtime

The employer may request the employee to work overtime. When overtime is necessary for more than 45 hours per month or 3 hours per day, the employer must request a particular authorization from the Labour Administration Agency and either the trade union, worker’s representative or the majority of employees in the labour unit. Overtime cannot be worked for more than 4 consecutive days (except in the case of natural disaster).

Vacation leave in Laos

Workers employed under an employment contract made for an indefinite period or for a definite period of one year or more, who have already worked for one full year shall be entitled to 15 days of annual leave, at full pay. If the employee is unable to take their annual leave days by fault of the employer, the employee shall receive full pay for such day/s.

Laos Maternity Leave

• A woman is entitled to at least 105 calendar days of fully paid maternity leave, at least 45 days of which must be after the birth.
• During the year after birth, the woman is entitled to have one hour a day of rest in order to feed and take care of the child.
• If a woman suffers a miscarriage, she is entitled to leave on full pay for a period as determined by a doctor. On the birth of a baby, a woman is entitled to an allowance as specified in the Social Security Law.

Laos Severance Laws

• An employment contract for a fixed term will terminate upon expiration or may be terminated by mutual agreement or for reasons of breach by one of the parties.
• An employment contract made for an indefinite period may be terminated any time by either party, with 30 days’ notice for manual work and 45 days’ notice for specialized skills.

Laos Tax

Personal income tax 

• 1% of gross revenue for manufacturing on agriculture, industry, and other production industries.
• 2% of gross revenue for commerce.
• 3% of gross revenue for services.

Social security contributions due by an employer and an employer

Insured person: 2.5% of gross monthly covered earnings; 8% for civil servants, and police and military personnel.

• The minimum monthly earnings used to calculate contributions are the legal monthly minimum wage.
• The legal monthly minimum wage is 1,100,000 kip.
• The maximum monthly earnings used to calculate contributions are 4,500,000 kip.

Self-employed person: 5% of monthly declared earnings.

• The minimum monthly earnings used to calculate contributions are the legal monthly minimum wage.
• The legal monthly minimum wage is 1,100,000 kip.
• The maximum monthly earnings used to calculate contributions are 4,500,000 kip.

Employer: 2.5% of gross monthly covered payroll.

• The minimum monthly earnings used to calculate contributions are the legal monthly minimum wage.
• The legal monthly minimum wage is 1,100,000 kip.
• The maximum monthly earnings used to calculate contributions are 4,500,000 kip.

Government: 8.5% of monthly payroll as an employer for civil servants, and military and police personnel.

Health Insurance Benefits in Laos

Workers paid on a monthly basis have the right to sick leave with full pay for 30 days a year, on presentation of a medical certificate.

Additional Benefits in Laos

Every workplace shall make payments to the National Social Security System with respect to their employees in accordance with the new Social Security Law governs social security payments.

General market practice benefits/additional allowances

The Lao government vision is to establish Laos from the Land-Locked Country to the Land-Linked Nation. At the Moment, there are several routes to connect ASEAN to China such as Road No. 3 (R3) connecting Thailand-Laos-China (called North-South Corridor), in the central there is East-West Corridor, which is Road No. 9 connecting Thailand-Laos-Vietnam. In addition, the government of Laos also established the potential of economic zones such as Savan-Seno Economic Special Zone (Savannakhet Province).

Integrated to the regional and international arena:

• Member of international organizations
• General Special Preferences (GSP) Privileges with 42 countries
• Normal Trade Relations (NTR) with USA (04/02/2005)
• Bilateral Investment Treaties with 27 countries
• In process of joining World Trade Organization (WTO)

Comparative Advantages:

• Plentiful Natural Resources with unexploited
• Large Area of Fertile Agricultural Land
• Varieties of Tourism Development Sites
• Virtually no damaging natural disaster

Competitive Advantages:

• One of the most Politically Stable Country in the Region
• Socio-Economic and Financial Stability
• High Security (Low Crime Rate)
• Low Labor Costs compared to neighboring countries
• GSP Privileges given from 42 countries
• Liberal Laws and Regulations creating favorable business and investment environments

Laos Holidays

Workers have the right to at least one day’s rest a week. Lao employees must be given 6 public holiday days as listed in the Labour Law, with foreign workers additionally entitled to the national day of their country.

Why Choose WeHireGlobally

WeHG takes care of all the onboarding hurdles, payroll, compensation and benefits, tax filing, and termination of employment. Our Employer of Record solution allows you to manage your overseas teams efficiently while minimizing cost and risk.