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HR Insight
Published:
August 12, 2026
Last updated:
August 12, 2026
Vietnam has spent the past year rewriting the rules for how foreign employers enter the market. A 7.2% minimum wage increase that took effect on 1 January 2026, work permit processing cut from roughly five weeks to ten working days once Decree 219/2025/ND-CP came into force, and the new Investment Law, operational since 31 March 2026 under Decree 96/2026/ND-CP, that now lets qualifying investors register a company before their investment registration is even finalised, just to name a few.
Despite these changes, the core question for anyone planning market entry to Vietnam or looking to expand their business to Vietnam is still: can you legally put someone on payroll before your entity exists? The answer is yes, through an Employer of Record (EOR). This guide covers how that works, what changed in Vietnam's employment law for 2026, and how to weigh EOR against contractor and direct-entity routes.
There are several ways you can hire in Vietnam without an entity. In this article, we’ll cover three:
Three regulatory shifts landed within about eight months of each other, and any HR team hiring into Vietnam right now needs to be working from the current version, not last year's:
Minimum wage rose 7.2% on 1 January 2026. Under Decree 293/2025/ND-CP, the regional minimum wage is now VND 5,310,000/month in Region I, down to VND 3,700,000/month in Region IV. The decree explicitly bars employers from clawing the increase back by cutting overtime pay, night-shift allowances, or other lawful entitlements. Vietnam's 2025 provincial mergers also reshuffled which localities sit in which wage region, so payroll teams should re-map addresses against the updated regional list rather than assume last year's classification still holds.
Statutory contribution ceilings rose again on 1 July 2026. Decree 161/2026/ND-CP lifted the base salary used as the social and health insurance reference level, pushing the contribution ceiling from VND 46.8 million to VND 50.6 million a month. Contribution rates themselves didn't move: employees still pay 8% social insurance and 1.5% health insurance; employers still pay 17.5% and 3%. Add the standard 1% unemployment insurance split both ways and a 2% employer-funded trade union contribution, and total employer statutory cost lands around 23.5% of the capped salary base. Only employees earning above the old ceiling are affected by the July change, but it's worth checking every payroll above roughly VND 46.8 million a month.
The Vietnam work permit process got dramatically faster. Decree 219/2025/ND-CP, in force since August 2025, collapsed the old two-step process (a separate foreign labour demand approval, then the permit application) into a single digital application through the National Public Service Portal, covering the permit and the follow-on Vietnam work visa application together. Standard processing dropped from about five weeks to ten working days. This is genuinely good news for teams sending expat managers or technical leads into Vietnam on short notice.
Entity setup got faster too, but not as fast as the headlines suggest. The new Investment Law's Track A route is a real change: qualifying investors can be legally incorporated within a week. But Track A doesn't mean fully operational within a week. The IRC still has to be filed within 12 months of incorporation or the ERC is revoked, and most companies still need several weeks beyond incorporation to open bank accounts, register for tax, and stand up payroll. For HR planning purposes, treat "one to two months to a working entity" as the realistic floor, not "a few days."
Vietnamese labour law draws the line under Article 13 of the Labour Code 2019: if the relationship involves paid work plus management and supervision, it's employment, regardless of what the contract is titled. Vietnamese labour inspectors and tax authorities look for the same signals a lot of foreign companies drift into without noticing: fixed working hours, regular reporting to a manager, use of company tools or a company email address, exclusive engagement with no parallel clients, and a flat monthly fee that looks like a salary rather than a payment against deliverables.
Get reclassified and the exposure is retroactive: back payments of social, health, and unemployment insurance contributions, back personal income tax, and potential fines, applied across the full period the relationship existed. For genuinely project-based, deliverables-driven work, a contractor agreement is fine. For anything that looks and functions like a job, an EOR removes the classification risk entirely because the employment relationship is real and correctly documented from day one.
Whether you're testing market entry to Vietnam or ready to expand your business to Vietnam at scale, AYP Group has an in-country team on the ground who work employment law and payroll compliance here every day, not a partner network passing your case along. Book a call with AYP's Vietnam specialists to get your first hire compliant and onboarded now.
Yes. An Employer of Record employs the worker on your behalf through its own licensed Vietnamese entity, which is the legal employer of record for payroll, tax, and statutory compliance purposes. This is standard, fully compliant practice under Vietnamese labour law, not a workaround.
An EOR is the legal employer and requires no entity of your own. A PEO co-employs staff alongside you, which means you need a registered Vietnamese entity already in place. For companies without an entity, EOR is the relevant model.
Under the new Track A route, qualifying investors can obtain an Enterprise Registration Certificate in three to five working days, but the Investment Registration Certificate must still be finalised within 12 months, and full operational readiness (bank account, tax registration, payroll) typically takes several additional weeks. Companies that don't qualify for Track A are looking at the standard 25-to-60-day licensing process.
Employees contribute 8% to social insurance and 1.5% to health insurance; employers contribute 17.5% and 3% respectively, plus 1% unemployment insurance and a 2% trade union fund contribution. Total employer statutory cost is roughly 23.5% of the capped contribution base.
Following the 7.2% increase under Decree 293/2025/ND-CP, effective 1 January 2026, the regional minimum wage ranges from VND 5,310,000/month in Region I to VND 3,700,000/month in Region IV.
Generally yes, subject to specific exemptions. Since Decree 219/2025/ND-CP took effect, the application process is a single digital submission through the National Public Service Portal, with standard processing around ten working days, down from roughly five weeks under the old two-step process.
Authorities can reclassify the relationship as employment if it shows signs of management and supervision. That triggers retroactive social, health, and unemployment insurance contributions, back personal income tax, and potential fines, applied across the full period of the engagement.
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