In today’s competitive job market, finding the right talent for your organization can be a daunting task. Hiring employees from a foreign country like Laos can be challenging. As an employer, you have to contend with language barriers, cultural differences, and the unfamiliar nuances of local employment laws.
Thankfully, there is a solution that can streamline the hiring process for companies. An Employer of Record (EOR) makes expanding their business into Laos seamless and stress-free.
This article will guide you through the benefits of hiring in Laos, the working culture, and how an EOR can help.
The Benefits of EOR in Laos
For companies that are looking to hire in Laos, an EOR offers many benefits. Firstly, an EOR can fast-track the hiring process, as they already have an established legal and administrative framework in place. With the help of local experienced professionals, companies that use an EOR in Laos can be confident that their documentation is fully compliant with local labor laws.
Compliance is particularly important in Laos, where labor laws are strictly enforced. Employers who violate employment laws can face serious financial penalties and business disruptions. Using an EOR ensures that your company is legally compliant, avoiding unexpected surprises and negative impacts on your reputation.
Why Hire Talent in Laos?
This landlocked Southeast Asian country is home to a talented workforce and has some unique workplace customs you should get to know before bringing your distributed team on board.
Although Laos is primarily known for its work in agriculture, this country of over 7 million is working to harness its digital and high-tech work potential. In 2019, the US Embassy paired with Lao tech incubator TOH-LAO to launch AC STEM lab, a program to promote high-skills training for tech-sector work in Laos. A similar tech-focused partnership between Laos and the Republic of Korea was started in 2022.
All this to say, Laos is not a place to skip when you look into hiring high-skilled workers for your distributed team.
In Laos, workers don’t like to point out mistakes (their own or others’) and don’t generally apologize for them. It’s considered embarrassing to own up to errors in the business culture, so you might find yourself doing some coverup work when it comes to mistakes. The best practice is just to accept your mistake, process it quietly and let it go!
Lao workplace culture is rather slow-paced; don’t always expect immediate results. Workers in Laos like time to process and make things happen patiently. This is an important consideration, especially when working with distributed teams that include Lao workers and Westerners who are more focused on quick outcomes.
In Lao culture, lunch breaks are around 90 minutes long and are considered the perfect time to catch up with your coworkers.
The national language in Laos is Lao, which is spoken in different dialects among ethnic groups. Vientiane Lao is the most common dialect. Vietnamese, Thai, French, and English are commonly understood by Lao residents in big cities, especially by workers in the tourism sector.
Since many Lao citizens were educated in Europe during the 1970s-1990s, more highly educated Lao people often have a good grasp of European languages.
How Can I Legally Hire Employees from Laos?
To hire from Laos, your company needs to have a legal entity operating in the country. Getting an entity set up can be time-consuming and expensive. The cost and efforts are only worth it if you intend to dramatically expand your business into the Lao market in the long term.
An EOR service provider like Borderless can be an invaluable resource when it comes to hiring employees in Laos. Not only can they help you navigate complex labor laws and regulations, but they can also offer a range of services to support your business operations. From payroll and tax management to onboarding and offboarding processes, an EOR service can help streamline your business operations.
Laos Employment Documents
In Laos, employment contracts must be written in any language that best suits the employee and employer. Written employment contracts need to show:
- Name, last name, and address of employee and employer.
- Scope of work
- Term of employment
- Wages or salary
- Work days, rest days, and holidays
- Employee benefits on expiry or termination of contract
- And a few other legally mandated requirements.
Vacation, Breaks, and Holidays
On the cultural front, Laos observes a number of national and civic holidays you should consider when building your distributed team.
Lao people celebrate:
- January 2: New Year’s Day
- January 20: Armed Forces Day
- March 8: International Women’s Day
- April 14 - 16: Lao New Year
- May 1: Labour Day
- December 2: Lao National Day
Taxes and Payment
Foreign workers in Laos who are paid from their home countries must pay income tax in Laos on their worldwide income if they live in Laos, continuously or not, for over 183 days a year. This holds true unless determined otherwise by a double taxation agreement with the foreign worker’s country of origin, or occasionally by an agreement between the Lao government and relevant investors.
The same principle applies to Lao nationals working abroad.
Laos has a minimum wage of LAK1,200,000 (Lao Kips) per month for employees. This minimum wage is set to increase to LAK1,300,000 per month on May 1, 2023.
Laos residents must pay Lao income tax on their global earnings. Income tax rates are based on monthly salaries and other earnings, like benefits. The rates follow a progressive taxation model and range from 0% and 25%, depending on income bracket.
Now that you know the basics of Lao labor customs, standards of living, and lifestyle, keep reading for a step-by-step on bringing your new Lao team on board.
Step 1: Determine Your Hiring Needs
To ensure a successful hiring process from Laos with EOR, it is essential to start with a clear idea of the positions you need to fill, the skills required, and the type of employment contract. This will guide the rest of the process and ensure that you are identifying candidates that meet your business needs.
Step 2: Choose an EOR Service Provider
It is crucial to research the EOR service providers available in Laos and select one that meets your company’s specific needs. Look for a provider who offers comprehensive services, local knowledge, pricing transparency, and a proven track record of compliance.
Step 3: Define Employee Onboarding and Management Process
Once your EOR is in place, establish a streamlined onboarding process for your new hires that includes employee management policies, job performance standards, and disciplinary procedures. Ensure that all practices are legally compliant.
Step 4: Jointly Select and Hire Qualified Candidates
Collaborate with your EOR in the recruitment process, and conduct interviews to ensure that you are selecting the most qualified candidates for your organization. Ensure that all employment laws and regulations are adhered to in the hiring process.
Step 5: Maintain Effective Communication and Record-Keeping
Maintain clear communication with your EOR and your new hires, and keep accurate records of all employment-related data and transactions.
How Borderless Can Help
As an Employer of Record (EOR) service, Borderless is an excellent solution for companies looking to hire in Laos. By outsourcing your hiring administration tasks to a third-party provider like Borderless, your company can save time and money, and focus on your core business objectives.
The outlined five-step guide to hiring your dream team will help ensure a successful hiring process and lay the foundation for a productive and efficient workforce. Book a demo with Borderless today to see how we can help you put those five steps to work!
Disclaimer
Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
