Staff working in small cafes and pubs

[myprivate]

My Thai wife is buying a small established cafe business in Bangkok. The business is an ‘ordinary partnership’ and so she is simply buying the assets (kitchen equipment and furniture) from the existing partners along with a payment for goodwill, and she will be taking over the lease on the building.

 

What I find strange is the staff like waitresses and cooks, they have worked there for several years but don’t seem to have any employment contract, they are paid cash in hand. I’ve asked my wife and says this is normal for small businesses like this and "not to worry". I'm used to being in large businesses where we worry about these things.

 

Is it normal for staff in small businesses like independent cafes and pubs to be paid cash in hand with no contract? I guess so looking at the many small businesses that line every street here but would appreciate some feedback from small business owners here. For example, I wonder what happens if tax officials visit the business, like do they tear the place apart or just accept that this is the way small businesses are run here.

[blackcab]

It's certainly not abnormal. The employees don't get Social Fund deductions and the business owners don't get staff taking them to Labour Court for unfair dismissal.

[realenglish1]

Very normal I had a business with 10 employees and paid cash less deductions if any 

[myprivate]

Thanks for the replies.

I found this mandatory requirement for social security payments, the only relevant exception is 'stall holders and peddlers' (not a cafe).

http://thailawonline.com/en/thai-laws/faq/171-social-security.html

Are people just ignoring these rules?

[khunano]

45 minutes ago, realenglish1 said:

Very normal I had a business with 10 employees and paid cash less deductions if any 

In this case you did not have a work permit because it is a requirement to have at least 4 "official" employees if you want to apply for one. This means staff has to be registered with social security and respective contributions have to be paid by the company. Obviously this needs to be documented when you apply for a work permit or want to extend it. 

[dotpoom]

Considering that many people consider Thailand behind the times when it comes to this sort of thing I would imagine it is very normal.

   When I started to work many people wouldn't consider a job unless it was "cash in hand".  It carried on for many many years that way. When I moved to England it was advertised as " casual workers" wanted. It died out slowly as Governments ability to root these employers got better.

    But now it's creeping back again because of ...low wages and taxes....plus the fact that if you do take a regular job you will be cut off the "dole" which often pays more than the job anyway and also lose all your benifits like ..cheap housing, rent allowance, free medical care, clothes for school children and more.

[hobobo]

1 hour ago, myprivate said:

Thanks for the replies.

I found this mandatory requirement for social security payments, the only relevant exception is 'stall holders and peddlers' (not a cafe).

http://thailawonline.com/en/thai-laws/faq/171-social-security.html

Are people just ignoring these rules?

It would appear so...

[blackcab]

1 hour ago, myprivate said:

Thanks for the replies.

I found this mandatory requirement for social security payments, the only relevant exception is 'stall holders and peddlers' (not a cafe).

http://thailawonline.com/en/thai-laws/faq/171-social-security.html

Are people just ignoring these rules?

 

Yes, along with any others that don't suit them.

[xen]

Cash is King in Asia. Do you know any Asian (not only Thai) who does not prefer cash in any business transaction .

 

The employees probably would not be happy having to go down to the bank to collect their wages rather than getting it in their hot little hands at the end of their shift or last shift for the week . Plus to place money into the employee's bank accounts they will be keeping traceable records that  the Government , bank and perhaps  the employee's spouse may access. Also many Thais who have debts like to keep their income secret to keep their creditors at bay .The employees  probably like to tax their own cash in hand before they take the remainder home to the family. To be paid any other way is just too problematic. 

Edited September 7, 2017 by xen
add another sentence.

[Jip99]

15 minutes ago, xen said:

Cash is King in Asia. Do you know any Asian (not only Thai) who does not prefer cash in any business transaction .

 

The employees probably would not be happy having to go down to the bank to collect their wages rather than getting it in their hot little hands at the end of their shift or last shift for the week . Plus to place money into the employee's bank accounts they will be keeping traceable records that  the Government , bank and perhaps  the employee's spouse may access. Also many Thais who have debts like to keep their income secret to keep their creditors at bay .The employees  probably like to tax their own cash in hand before they take the remainder home to the family. To be paid any other way is just too problematic. 

 

 

Even in Thailand they have ATM cards.

 

Even in Thailand they have confidentiality laws.

[mike324]

Every thing in cash, no need to pay much tax, no trails to follow when the tax man comes knocking. Tax man has bigger fish to catch, so they will never knock on a cafes door anyways.

[TravelerEastWest]

13 minutes ago, mike324 said:

Every thing in cash, no need to pay much tax, no trails to follow when the tax man comes knocking. Tax man has bigger fish to catch, so they will never knock on a cafes door anyways.

 

Simply not true.

 

Revenue agents will tax even street vendors with no books.

 

They stand and watch traffic and assign an amount to be paid in tax.

 

Many types of small business in Thailand have automatic expense percentages set by the government such as lets say: (only as an example) 60% for contract clothing makers. The income is supposed to be correct...

[mike324]

7 minutes ago, TravelerEastWest said:

 

Simply not true.

 

Revenue agents will tax even street vendors with no books.

 

They stand and watch traffic and assign an amount to be paid in tax.

 

Many types of small business in Thailand have automatic expense percentages set by the government such as lets say: (only as an example) 60% for contract clothing makers. The income is supposed to be correct...

 

True, if the tax officers wants to catch people, they can do so, but how many revenue agents have you seen watching street vendors? Like I said, they have bigger fish to catch then street vendors. 

 

Its not many types of small business, its all business have set tax rates, and there are tax brackets for different incomes. Everyone's income is different, so I don't see how a government can know if an income is correct or not, if a business is making or losing money. 

 

 

[toofarnorth]

Still on topic I hope , is the minimum wage.  A very good Thai friend of mine lost jobs due to lack of people mainly in the noodle shop.bars up here. He/she now has a job getting 150 B per day 7 days a week. The place is a noodle shop where the boss charges 120 B for two U beers and a bucket of ice , if there is only one beer in the fridge he goes off on his scooter to by a couple more. So even the boss has little cash. My friend who works there said " 150 B per day or no job ".

[allane]

The following deduction information is from the Revenue Dept. website, rd.go.th  :

  -universal deduction:  40% of income up to a maximum of B 60,000.

 - personal deduction B 30,000

 Example 1:  Let's assume: minimum wage of B 300 day x 24 days per mo. x 12 mo. = annual income of B 86,400.

                       Taxable income: B 86,400 - 64,560 = B 21,840

Example 2 : Salary of B 15,000/mo. or B 180,000/yr. 

                      Taxable income: B 180,000 - 90,000 = B 90,000

Example 3:  Salary of B 19,000/mo. or B 228,000/yr.

                      Taxable income B 138,000

Since no income tax is payable on the first B 150,000 of taxable income (ref.Revenue Dept. website), none of these example employees have to pay any income tax. They know it, their employer knows it and the Revenue Department knows it. That leaves.. guess who....

... a lot of stupid farang who not only think they see corruption everywhere, but don't go home happy unless they do see it.

      

Edited September 7, 2017 by allane
x

[LivinLOS]

1 hour ago, mike324 said:

 

True, if the tax officers wants to catch people, they can do so, but how many revenue agents have you seen watching street vendors? Like I said, they have bigger fish to catch then street vendors. 

 

Its not many types of small business, its all business have set tax rates, and there are tax brackets for different incomes. Everyone's income is different, so I don't see how a government can know if an income is correct or not, if a business is making or losing money. 

 

 

While there is no doubt, hard and hard revenue collectors, both legit and not legit, its much more painful in the tourist areas or cities, where cops and collectors have paid for the position of collecting. 

My wife wanted to run her own biz, she set up a food shop, a few months in revenue collectors turned up. She had no books at all.. They were also collecting for 'sign tax'.. She told them she had no money, only been open a few months, etc.. She gave them a couple of bowls of noodles, chatted for a while, gave them a beer (they pointed out she had no alcohol license DOH).. And basically just let her off everything. They told her, take a beer out of the visible glass fridge, put it in the closed icebox at the bottom, and try to have a alcohol license by next year. 

Off they went.. No money.. No fine.. Just an assurance that 'by next year' she would pay something and sort her beer license out. This was 20 mins outside of Chaing Mai downtown. I can only imagine the hassle if it was on Phuket or something. 

[Saladin]

Perfectly normal as it was in the West until fairly recently, when the widespread use of computers by Big Brother created a proliferation of government paper pushers costing $billions, complicating daily life, and producing nothing.

[Billy Bloggs]

This is sort of stretching what the OP wrote about, its also large supermarkets not paying cash in hand but getting employees to work overtime then telling them there is no money to pay them and saying you can take the time off for those hours(of cause that is a problem in its self).

[samsensam]

6 hours ago, blackcab said:

 

Yes, along with any others that don't suit them.

 

 

haha, welcome to thailand!

[jak2002003]

3 minutes ago, Billy Bloggs said:

This is sort of stretching what the OP wrote about, its also large supermarkets not paying cash in hand but getting employees to work overtime then telling them there is no money to pay them and saying you can take the time off for those hours(of cause that is a problem in its self).

That happened to me in my job in the UK... working in retail...  and other staff that worked there.  We were pressured into overtime, than when the pay check came we did not get paid for it...boss promised it would go in next month.. still nothing, told we could take the time off, but then never allowed the extra time off because of various excuses, like they were understaffed, important renovations going on, busy time of year, training extra staff etc.

 

They would use us and play on our conscience about 'team spirit' and letting others on the team down, etc, or get extra friendly with me and begging me to come in as they were so short staffed etc.

 

 

[bazza73]

7 hours ago, dotpoom said:

Considering that many people consider Thailand behind the times when it comes to this sort of thing I would imagine it is very normal.

   When I started to work many people wouldn't consider a job unless it was "cash in hand".  It carried on for many many years that way. When I moved to England it was advertised as " casual workers" wanted. It died out slowly as Governments ability to root these employers got better.

    But now it's creeping back again because of ...low wages and taxes....plus the fact that if you do take a regular job you will be cut off the "dole" which often pays more than the job anyway and also lose all your benifits like ..cheap housing, rent allowance, free medical care, clothes for school children and more.

I don't understand the relevance of the comment. AFAIK Thailand does not have a dole. It has an age pension which pays 800 baht/month. Not enough to live on.

Everyone works, cash in hand or registered employment. It's that, live off other family members, or starve.

[myprivate]

3 hours ago, LivinLOS said:

While there is no doubt, hard and hard revenue collectors, both legit and not legit, its much more painful in the tourist areas or cities, where cops and collectors have paid for the position of collecting. 

My wife wanted to run her own biz, she set up a food shop, a few months in revenue collectors turned up. She had no books at all.. They were also collecting for 'sign tax'.. She told them she had no money, only been open a few months, etc.. She gave them a couple of bowls of noodles, chatted for a while, gave them a beer (they pointed out she had no alcohol license DOH).. And basically just let her off everything. They told her, take a beer out of the visible glass fridge, put it in the closed icebox at the bottom, and try to have a alcohol license by next year. 

Off they went.. No money.. No fine.. Just an assurance that 'by next year' she would pay something and sort her beer license out. This was 20 mins outside of Chaing Mai downtown. I can only imagine the hassle if it was on Phuket or something. 

This is the sort of thing I'm worried about. I doubt they would be so lenient in BKK, especially if they found out that there is foreign money in the background (I believe that husband and wife are jointly liable for one another's finances here).

[blackcab]

40 minutes ago, myprivate said:

This is the sort of thing I'm worried about. I doubt they would be so lenient in BKK, especially if they found out that there is foreign money in the background (I believe that husband and wife are jointly liable for one another's finances here).

 

The company I work for owns some commercial properties in Bangkok which they lease out. We have a number of small businesses that lease small shop units from us. A couple of months ago officials from the District Office walked down the entire road where we lease some units out and asked every single business about their licenses and tax payments. They asked our manager about our affairs and they asked our tenants about their affairs. Obviously the officials already have the list of Par See Rong Ruan and sign tax payments that have been made so they know a large percentage of what is going on anyway,

 

Most of our tenants were unregistered/unlicensed and didn't pay any tax. They were all sent to the District Office to apply for the correct permits and a couple had to pay in a bit of money for something or other (receipt given). Nobody was given a really hard time from what I understand.

[myprivate]

1 hour ago, blackcab said:

 

The company I work for owns some commercial properties in Bangkok which they lease out. We have a number of small businesses that lease small shop units from us. A couple of months ago officials from the District Office walked down the entire road where we lease some units out and asked every single business about their licenses and tax payments. They asked our manager about our affairs and they asked our tenants about their affairs. Obviously the officials already have the list of Par See Rong Ruan and sign tax payments that have been made so they know a large percentage of what is going on anyway,

 

Most of our tenants were unregistered/unlicensed and didn't pay any tax. They were all sent to the District Office to apply for the correct permits and a couple had to pay in a bit of money for something or other (receipt given). Nobody was given a really hard time from what I understand.

Interesting stuff. May I ask if the tenancy agreements are mostly with individual people, or partnerships/companies?

[blackcab]

1 hour ago, myprivate said:

Interesting stuff. May I ask if the tenancy agreements are mostly with individual people, or partnerships/companies?

 

The leases for smaller units are all in the individual name of the business owner who is operating as a sole trader, even if in a couple of the premises the owner is rarely there.

 

We don't actually have any formal partnerships renting from us, although there is no problem from our point of view if this was to happen.

 

We have limited companies and public limited companies renting larger spaces too.

[mike324]

22 hours ago, LivinLOS said:

While there is no doubt, hard and hard revenue collectors, both legit and not legit, its much more painful in the tourist areas or cities, where cops and collectors have paid for the position of collecting. 

My wife wanted to run her own biz, she set up a food shop, a few months in revenue collectors turned up. She had no books at all.. They were also collecting for 'sign tax'.. She told them she had no money, only been open a few months, etc.. She gave them a couple of bowls of noodles, chatted for a while, gave them a beer (they pointed out she had no alcohol license DOH).. And basically just let her off everything. They told her, take a beer out of the visible glass fridge, put it in the closed icebox at the bottom, and try to have a alcohol license by next year. 

Off they went.. No money.. No fine.. Just an assurance that 'by next year' she would pay something and sort her beer license out. This was 20 mins outside of Chaing Mai downtown. I can only imagine the hassle if it was on Phuket or something. 

There are many different revenue officers, the most common that appear are not there for income tax. Those that appear are normally from local district and they are seeking to collect tax, like you said - Signage tax. Along with checking operating licenses such as for food and alcohol. Signage tax is very low if only in Thai and most can afford to pay it, that is why they are pretty strict on collecting this one.

 

[TravelerEastWest]

On 9/7/2017 at 11:12 AM, mike324 said:

 

True, if the tax officers wants to catch people, they can do so, but how many revenue agents have you seen watching street vendors? Like I said, they have bigger fish to catch then street vendors. 

 

Its not many types of small business, its all business have set tax rates, and there are tax brackets for different incomes. Everyone's income is different, so I don't see how a government can know if an income is correct or not, if a business is making or losing money. 

 

I have heard of exactly one Revenue person doing this; but she did it regularly.

 

Maybe in the past it was rare but in the future it won't be - as the Revenue department is getting more aggressive.

 

 

On 9/7/2017 at 11:12 AM, mike324 said: