Laos is nestled in Southeast Asia, surrounded by countries including Vietnam, Cambodia, and Thailand. Unlike its neighbors, Laos is a landlocked country.
And, while it may not have the same coastal attractions, Laos is full of natural wonders, including waterfalls, the Mekong River, and UNESCO World Heritage sites that boast a compelling mix of French colonial and traditional Lao architecture.
Laos may maintain a relatively low profile, but it’s gaining a reputation as a good choice for hiring remote workers, particularly in technical support roles. The country is also becoming a hotspot for digital nomads and freelancers seeking natural beauty combined with low living costs.
Advantages of Hiring in Laos
Laos is in the early stages of evolving away from its status as a primarily agricultural country. As part of this push, investment in training and education is on the rise, resulting in a growing skilled workforce.
Laos is part of the Association of Southeast Asian Nations (ASEAN), a collection of 10 countries in Southeast Asia that focuses on growth, progress, and stability in the region. Because of the emphasis on training and skill development, sectors like banking and technology are on the rise.
Here’s a snapshot of some of the basics to know about Laos.
- Language: Lao
- Currency: Lao kip (LAK)
- Capital City: Vientiane
- Population: 7.3 Million
Laos: A Developing Nation
The Laos government is in the middle of a development push to bring more opportunities to the country and further develop its infrastructure, including improving internet speed and connectivity. The plan has six goals the government would like to achieve before 2025. They are:
- Steady economic growth
- Increased training to meet the needs of development
- Improved living conditions
- Reducing the risk of natural disasters
- Strengthen infrastructure
- Improve the efficiency of government management and administration
The ultimate hope is that the plan will lead to 4% growth and an increased per capita income.
Hiring Compliantly in Laos
Employment Contracts
Employment contracts are mandatory when hiring in Laos. There are two types of contracts: fixed-term and indefinite-term. Fixed-term contracts may not exceed three years. However, if they include renewals and extend beyond three years, they automatically convert into indefinite-term contracts.
Contracts should contain the following details:
- Employer and employee names and addresses
- Job title and responsibilities
- Employment terms
- Wages and schedule
- Employee benefits and PTO information
- Leave entitlements
Working Hours & Pay
The standard Laos work week is 48 hours, or eight hours a day, six days a week. In 2023, the minimum monthly wage increased to LAK 1,600,000 (approximately USD 82).
Overtime is limited to three hours a day and can’t exceed 45 hours within a month. Compensation for overtime ranges from 150% to 350% of the employee’s standard wage, and the pay rate depends on factors like what time of day the overtime work was performed and whether it occurred on a public holiday.
Probation Periods
Probation periods in Laos vary depending on the nature of the work being performed. For skilled workers, the probation period is a maximum of 60 days, with five day’s notice required for termination during this period. For unskilled workers, it’s 30 days probation, with three day’s notice required for termination.
Employer Taxes
Payroll deductions are 11.5% of the employee’s salary. The employer contributes 6%, and the employee contributes 5.5%.
Additionally, employers must register employees in the National Social Security Fund (NSSF), which covers health care subsidies, maternity leave, pensions, and more. Employers must contribute up to LAK 4,500,000 per employee to the NSSF.
Termination Process & Severance Pay
Laotian employees with fixed-term contracts can be terminated at any time as long as there is a mutual understanding between both parties. For full-time employees with open-ended contracts, 45 day’s notice is required.
In both instances, the employee is entitled to severance pay. The amount due is 10% of their last monthly salary multiplied by the number of months of employment. For example, an employee with five years of service would be paid 10% of their salary x 60 months.
For unjustified termination, severance increases to 15% of the monthly salary multiplied by the number of months of employment.
Paid Leave Laws in Laos
Vacation and Holiday
Employees employed by a company for over one year are entitled to up to 15 days of vacation.
Along with vacation days, there are numerous paid public holidays, including:
- New Year’s Day
- Children’s Day
- Boat Racing Festival
- That Luang Festival
- National Day
Sick Leave
Employees are entitled to up to 30 days of sick leave. To qualify, the employee must have worked for the employer for at least 90 days and provide a medical certificate. Employees working daily or hourly are entitled to sick leave only if they have worked for the same employer for more than 90 days.
Maternity and Paternity Leave
In Laos, female employees are entitled to a standard maternity leave of 105 days, including taking at least 42 days of leave after giving birth.
Maternity leave is extended to 120 days in the case of multiple births. Employees receive their full salary while on maternity leave.
New fathers are entitled to up to three days of paternity leave.
Why Digital Nomads Love Laos
Digital nomads and expats are drawn to Southeast Asia and countries like Laos due to the laid-back lifestyle, low cost of living, and increased amenities like coworking spaces and cafes with faster, more reliable WiFi internet connections.
Along with destinations like Luang Prabang, a world heritage site in northern Laos, the country is becoming a must-visit location for digital nomads.
Laos doesn’t offer a digital nomad visa. Still, aspiring nomads can apply for an online single-entry tourist e-visa to perform remote work while living in the country. This visa is good for stays of up to 30 days in Laos. Another option is a tourist visa, which allows visitors to stay in Laos for up to 60 days.
The visa can be extended twice for an additional 30 days. To obtain the visa, you must apply at the Lao embassy or consulate in your home country, or in a neighboring country like Thailand or Vietnam.
Hire in Laos with RemoFirst
Hiring employees in other countries can be a complicated process. Working with an Employer of Record (EOR) like RemoFirst ensures you’re compliant with local laws. An EOR can handle everything from contracts to global payroll, giving you more time to focus on running your business instead of the hassle of worrying about labor law compliance.
If you’d like to learn more about how we can help, contact us today to book a demo.
