Closing a Company in Vietnam: How to Shut Down and Retain Key Talent

1. Introduction: Why Companies Close Entities (But Keep Talent)

Mid‑sized Singaporean firms often leave markets like Vietnam for cost efficiency, restructuring, or strategic refocus. However, closing your entity doesn’t mean walking away from invaluable employees.

Local teams bring market insight, client rapport, and multilingual capabilities—retaining them ensures your growth across Asia stays smooth and uninterrupted.

This guide explains how you can close a company in Vietnam while retaining employees without entity, leveraging an Employer of Record Vietnam solution. This enables you to hire in Vietnam without entity and transfer employees after entity closure seamlessly.

2. What Happens When You Close a Company in Vietnam

A. Legal & Compliance Steps

Closing a Vietnam entity follows a formal liquidation and deregistration process:

• Issue a dissolution decision, detailing reasons, liquidation deadline (≤ 6 months), contract auction, and labor obligations
• Distribute it to authorities (Planning & Investment, tax), employees, creditors, and publish it at your offices and on the national portal within 7 working days
• Form a liquidation committee, dispose assets, settle debts to employees, tax and social insurance obligations
• Finalize tax obligations, including customs, VAT, CIT, PIT, and secure clearance certificates
• Close official seals, bank accounts, and submit deregistration documents to Planning & Investment and tax authorities; entity deregistration is typically finalized within 6 months

B. Timeline Overview

C. Employee Obligations: Notice, Severance & Benefits

Under Vietnam’s Labor Code:

• Notice periods:
  • 15 days for fixed-term contracts
  • 45 days for indefinite-term contracts
• Severance allowance:
  • Half-month salary per year of service after 12 months
• Payments due within 7–14 days post-termination
• Must pay final wages, unused leave, and social insurance must be terminated properly

Non-compliance carries penalties—fines range up to VND 50 M and courts may award damages

3. Risks of Talent Loss During Entity Closure

• Operational disruption: Losing those with local expertise can stall projects and affect customers 
• Knowledge drain: Institutional know-how leaves with departing employees 
• Competitive risk: IP and client relationships may transfer to competitors 
• Re-entry setbacks: Rebuilding a team later is resource-intensive and time-consuming 

4. Retaining Employees Without a Legal Entity: What Are Your Options?

Option 1: Independent Contractors

Pros: Fast onboarding

Cons: High risk of misclassification, no statutory benefits, weaker employee loyalty

Option 2: Re-establish a Vietnam Entity

Pros: Full operational control

Cons: Setup costs, lengthy process, requires local office and directors

Option 3: Employer of Record (EOR) — Best Practice

An EOR, like AYP, becomes the legal employer in Vietnam, issuing compliant contracts, managing payroll, social insurance, taxes, and handling compliance—all while you maintain team oversight.

This lets you hire in Vietnam without entity, retain employees without entity, and effectively transfer employees after entity closure.

Explore AYP’s Employer of Record Vietnam service.

‍

5. How EOR Helps You Retain Employees in Vietnam

What an EOR Actually Does

AYP acts as your legal employer of record in Vietnam by:

• Issuing compliant labor contracts
• Managing payroll, withholding tax, and social insurance
• Administering statutory benefits, termination protocols, and dispute handling
• Providing HR and administrative support uninterruptedly

Your team remains operational under your direction while AYP handles all statutory obligations.

Smooth Transition in 5 Steps

1. Identify key employees you want to keep 
2. Issue termination notices with proper timelines or salary-in-lieu 
3. Onboard via AYP under new Philippine contracts immediately 
4. Ensure benefits continuity: social insurance, leave records, etc. 
5. Continue operations: you manage day-to-day business; AYP handles legality 

This enables you to transfer employees after entity closure, ensuring minimal disruption.

AYP’s Competitive Edge

Onboard talent across Asia in days — no entities, no legal risks

• Local expertise. Regional reach
• Fully managed compliance & payroll
• Transparent pricing — no hidden costs, ever

Learn more on our EOR Vietnam solution.

6. Case Study: Fast, Compliant Talent Retention

• Company: Singapore-based SaaS provider 
• Staff in Vietnam: 12 employees 
• Reason: Restructure operations but preserve regional support team 
• Solution: Engaged AYP EOR ahead of official entity closure 

Results:

• 100% retention of engineers and support staff 
• Full compliance with notice periods and severance rules
• Zero operational downtime
• Entity officially closed within 6 months

“AYP helped us retain our Vietnam team through the closure without losing any capacity or risking legal issues.” — Regional Operations Director

7. Key Considerations Before You Close an Entity

1. Timing is Essential

Begin EOR planning before termination to avoid compliance gaps or service disruption.

2. Legal Compliance Risk

• Provide correct notice or payment in lieu
• Calculate severance accurately, deducting unemployment-insured periods
• Maintain clear documentation of terminations to defend against any disputes

3. Employee Communication

• Be clear and transparent about the process
• Emphasize continuity: same role, compensation, benefits
• Align onboarding with AYP to ensure a smooth handover

4. HR & Payroll Readiness

• Complete final payroll cycles and benefits before transition
• Hand over social insurance, payroll records securely
• Maintain clear schedules of last working day vs new contract start

8. Conclusion: Shut Down with Confidence, Keep Your Team Intact

Closing a Vietnam entity doesn’t have to mean abandoning your workforce. With a robust EOR strategy:

• You reduce entity upkeep costs
• Avoid compliance traps
• Retain talent, IP, and client relationships
• Keep growth-ready with minimal disruption

An Employer of Record Vietnam empowers you to close a company in Vietnam cutely, while **retaining employees without entity—and being ready for the next step.

9. Call to Action: Speak to AYP’s Local Experts

Considering entity closure but want to keep your Vietnam talent?

✅ Get a free EOR + closure consultation

✅  Get a complimentary cost simulation

✅ Discover how AYP can onboard your Vietnamese staff in days—not months

Retain Your Team Without a Local Entity →