Vietnam is rapidly emerging as one of Asia’s top destinations for foreign investment, driven by strong GDP growth, an expanding middle class, and a skilled, cost-effective workforce. From manufacturing to IT, global companies are increasingly turning to Vietnam for business expansion and talent acquisition. However, navigating Vietnamese labor laws, tax systems, and HR compliance requirements can be challenging for companies without a local presence. This is where an Employer of Record (EOR) becomes essential.

Using an Employer of Record in Vietnam allows foreign businesses to hire talent compliantly and efficiently without establishing a legal entity. Whether you’re trying to hire remote employees, manage payroll outsourcing, or simply enter the market faster, an EOR reduces legal, financial, and operational risks significantly.

Understanding the Risks of Direct Hiring in Vietnam

Before diving into the benefits of an Employer of Record, it’s crucial to understand the risks associated with direct hiring in Vietnam. These include:

• Complex labor laws: Vietnam has specific regulations around employment contracts, probation periods, severance, social insurance, and employee rights. Missteps can lead to lawsuits or fines.
  
• Tax compliance challenges: Payroll taxes, corporate income taxes, and VAT filings are not only mandatory but vary by region and employee type.
  
• Cultural and language barriers: A lack of local knowledge can make employee onboarding and retention more difficult.
  
• Entity setup delays: Setting up a foreign entity in Vietnam can take several months and comes with significant administrative overhead.
  

To mitigate these risks, many companies opt for global employment solutions like an EOR or Professional Employer Organization (PEO) model.

What Does an Employer of Record Do?

An Employer of Record is a third-party organization that legally employs staff on your behalf in a foreign country. While your company manages day-to-day tasks and performance, the EOR handles legal employment, payroll outsourcing, compliance, benefits, and local HR responsibilities.

In Vietnam, this means you can onboard talent quickly while ensuring that employment contracts meet local labor law standards. It also means you avoid the costs and legal obligations of setting up a company.

Why an EOR Is Essential for Risk Mitigation in Vietnam

Here are key reasons why an Employer of Record is your best ally in minimizing risk when hiring in Vietnam:

1. Legal Compliance Without a Local Entity

Vietnam’s Labor Code is strict about employee contracts, terminations, and social benefits. Using an Employer of Record ensures that every employment relationship is fully compliant. Your EOR partner will manage contracts in Vietnamese and English, register employees with local authorities, and handle mandatory contributions to social insurance, health insurance, and unemployment funds.

This is especially valuable if you’re looking to hire remote employees based in Vietnam while operating your business from another country.

2. Payroll Accuracy and Tax Filing

Handling payroll internally in Vietnam requires expertise in local tax brackets, benefit deductions, and reporting standards. Mistakes can result in penalties or employee dissatisfaction. With payroll outsourcing through a trusted EOR, you ensure that employee salaries, benefits, and taxes are calculated accurately and paid on time.

An EOR will also submit monthly reports to Vietnamese tax authorities, offering peace of mind and freeing your internal team from complex compliance work.

3. Fast Market Entry

Setting up a local subsidiary can take up to six months and involves registration with multiple government departments. An Employer of Record lets you bypass these delays entirely. Within days, you can hire remote employees in Vietnam and begin operations, giving your business a competitive edge.

This agile model is ideal for testing new markets or launching short-term projects without long-term commitments.

4. Reduced Liability

By employing your workforce under the EOR’s entity, you reduce direct liability for labor disputes, wrongful termination claims, or benefits disputes. The EOR assumes legal responsibility as the official employer, shielding your company from potential litigation.

In a country like Vietnam, where legal systems and employee rights can differ significantly from Western norms, this protection is invaluable.

5. Improved Employee Experience

An experienced Professional Employer Organization or EOR provides local support for onboarding, benefits administration, and employee relations. Your Vietnamese employees receive clear, locally compliant contracts, access to benefits, and a point of contact who understands their language and culture.

This helps improve employee satisfaction and retention, which is crucial in Vietnam’s competitive labor market.

Comparing EOR vs PEO in Vietnam

While the terms Employer of Record and Professional Employer Organization are often used interchangeably, they have distinct differences.

• A PEO typically co-employs your staff and requires your company to have a legal entity in the country.
  
• An EOR is the sole legal employer of the staff and is ideal for businesses that do not want to set up a local entity.
  

In Vietnam, most foreign companies without an established presence opt for an Employer of Record, as it provides full compliance without the need for incorporation.

When to Use an EOR in Vietnam

You should consider working with an Employer of Record if:

• You want to hire remote employees in Vietnam but don’t have a local entity.
  
• You are running a short-term project or pilot program.
  
• You want to scale quickly while remaining compliant.
  
• You aim to reduce operational costs and HR workload.
  
• You seek expert assistance navigating local employment laws and cultural nuances.
  

Team APAC: Your Trusted EOR in Vietnam

At Team APAC, we specialize in helping companies expand into the Asia-Pacific region through reliable global employment solutions. Our Vietnam EOR services are designed to help you manage risk, hire remote employees with ease, and stay compliant at every step.

We provide:

• End-to-end international payroll services
  
• Fully localized employment contracts
  
• Tax and benefit administration
  
• Compliance monitoring and updates
  
• Employee onboarding and support
  

Final Thoughts

Vietnam offers incredible opportunities for businesses ready to tap into its dynamic labor market and fast-growing economy. However, hiring without understanding the legal, tax, and cultural landscape can put your business at risk.

Partnering with an Employer of Record allows you to focus on what matters most—growing your business—while we handle the legal, administrative, and HR details. From payroll outsourcing to full compliance support, an EOR is your gateway to success in Vietnam.

Ready to hire in Vietnam with confidence? Let Team APAC’s Professional Employer Organization solutions empower your growth with seamless, compliant, and strategic workforce management.