What is an Employer of Record (EOR) in Vietnam?
An EOR Vietnam provider acts as the legal employer for your staff while you maintain day-to-day management control. This arrangement allows international companies to hire employees in Vietnam immediately while ensuring full compliance with local employment laws. The EOR handles all legal responsibilities including employment contracts, payroll processing, tax compliance, and benefits administration.
Key EOR Vietnam benefits include:
- Immediate market entry without entity setup
- Full compliance with Vietnamese employment laws
- Reduced legal and financial risks
- Local HR expertise and support
- Scalable workforce management
Vietnam Market Overview
Vietnam represents one of Southeast Asia's most compelling expansion opportunities, with a population of over 97 million people and a workforce exceeding 55 million. The country's GDP has grown consistently at 6-7% annually, making it one of the world's fastest-growing economies.
Economic indicators that make Vietnam attractive:
- GDP: $408 billion USD (2024)
- GDP per capita: $4,200 USD
- Workforce: 55.2 million people
- Unemployment rate: 2.3%
- Foreign direct investment: $23.1 billion USD annually
Key industries driving growth:
- Manufacturing and textiles
- Technology and software development
- Electronics and semiconductors
- Automotive assembly
- Financial services
- Tourism and hospitality
Major business hubs:
- Ho Chi Minh City: Commercial capital and largest economic center
- Hanoi: Political capital with strong government and tech sectors
- Da Nang: Emerging tech hub and logistics center
- Hai Phong: Major port city and industrial zone
Language and business culture:
- Official language: Vietnamese
- Business languages: English increasingly common in urban areas
- Currency: Vietnamese Dong (VND)
- Time zone: Indochina Time (ICT, UTC+7)
- Business culture: Relationship-focused, hierarchical, emphasis on respect and harmony
Companies choose Vietnam for expansion due to its strategic location, competitive labor costs, improving infrastructure, and young, educated workforce. The government actively promotes foreign investment through various incentive programs and economic zones.
Employment Laws and Regulations in Vietnam
Understanding Vietnamese employment legislation is crucial for any EOR Vietnam arrangement. The primary employment framework is governed by the Labor Code 2019, which came into effect in January 2021, introducing significant reforms to modernize workplace regulations as supported by the International Labour Organization.
Primary employment legislation:
- Labor Code 2019 (Law No. 45/2019/QH14): Comprehensive employment law framework
- Social Insurance Law 2014: Governs social security contributions and benefits
- Personal Income Tax Law: Regulates taxation of employee earnings
- Decree 145/2020/ND-CP: Implementation guidelines for Labor Code 2019
Working hours and overtime regulations:
- Standard working week: 48 hours maximum (8 hours per day, 6 days per week)
- Alternative arrangement: 40 hours per week (8 hours per day, 5 days per week)
- Overtime limits: 200 hours per year (300 hours with government approval)
- Overtime compensation: Minimum 150% of regular wage (200% for weekends, 300% for holidays)
- Night work: 10 PM to 6 AM, with 30% wage premium
Minimum wage requirements: Vietnam operates a regional minimum wage system with four tiers based on economic development, as regulated by the Ministry of Labour, Invalids and Social Affairs:
- Region 1 (Hanoi, Ho Chi Minh City): VND 4,680,000/month ($195 USD)
- Region 2 (Urban areas): VND 4,160,000/month ($173 USD)
- Region 3 (Provincial towns): VND 3,640,000/month ($152 USD)
- Region 4 (Rural areas): VND 3,250,000/month ($135 USD)
Probation period rules:
- Unskilled positions: Maximum 6 days
- Skilled positions requiring training: Maximum 30 days
- Technical/professional roles: Maximum 60 days
- Management positions: Maximum 180 days
- Probation compensation: Minimum 85% of agreed salary
Employment contract requirements:
- Written contracts mandatory for all employment relationships
- Must specify job description, working conditions, salary, and benefits
- Contracts can be definite term (up to 36 months) or indefinite term
- Foreign employees require work permits before contract execution
- Contracts must be in Vietnamese (bilingual versions acceptable)
Termination and severance regulations:
- With cause: Immediate dismissal for serious violations
- Without cause: Advance notice required based on contract length
- Notice periods: 3 days (probation), 30 days (definite term), 45 days (indefinite term)
- Severance pay: Half month's salary per year of service (minimum)
- Unlawful termination: Up to 2 months additional compensation plus reinstatement
Recent regulatory changes in 2024 include enhanced digital work arrangements, strengthened employee privacy protections, and updated occupational safety requirements. An experienced EOR Vietnam provider ensures compliance with all current and evolving regulations.
How EOR Works in Vietnam
Implementing an EOR Vietnam solution follows a structured process designed to ensure legal compliance while enabling rapid market entry. Here's how the process works step-by-step:
- EOR partner selection and setup: Your chosen EOR Vietnam provider conducts initial consultation to understand your hiring needs, budget, and timeline. They'll assess role requirements, compensation expectations, and any specific compliance considerations. The EOR establishes the legal framework for employment relationships and prepares country-specific documentation templates.
- Job role definition and compensation planning: Working with local HR experts, you'll define precise job descriptions, required qualifications, and competitive salary ranges based on Vietnamese market standards. The EOR provides market intelligence on compensation benchmarks, mandatory benefits, and total employment costs including taxes and social contributions.
- Employment contract drafting and legal compliance: The EOR Vietnam provider drafts legally compliant employment contracts incorporating all mandatory terms under Vietnamese law. These contracts reflect your company culture and requirements while ensuring full regulatory adherence. All documentation is prepared in Vietnamese with English translations as needed.
- Employee onboarding and registration: Once candidates are selected, the EOR handles all legal employment procedures including contract execution, social insurance registration, and personal income tax setup. They coordinate work permit applications for foreign employees and ensure all government registrations are completed properly.
- Ongoing payroll and benefits management: The EOR processes monthly payroll including base salary, overtime, bonuses, and deductions for taxes and social contributions. They manage statutory benefits like social insurance, health insurance, and unemployment insurance, plus any additional benefits you choose to provide.
- Compliance monitoring and updates: Your EOR Vietnam partner continuously monitors regulatory changes, ensures ongoing compliance with employment laws, and provides regular reporting on workforce costs and legal requirements. They handle government inspections, update employment practices as laws evolve, and provide guidance on best practices.
Throughout this process, you maintain full control over day-to-day employee management, performance evaluation, and business operations while the EOR handles all legal employer responsibilities and administrative burdens.
Payroll and Tax Requirements in Vietnam
Vietnamese payroll and taxation requirements are complex, making professional EOR Vietnam services essential for compliance. Understanding these obligations helps companies budget accurately and avoid costly penalties as governed by the General Department of Taxation.
Payroll frequency and currency requirements:
- Monthly salary payments are standard and legally required
- Payment must occur by the 10th of the following month
- Salary payments in Vietnamese Dong (VND) are mandatory
- Foreign currency payments require central bank approval
- Overtime and bonus payments follow the same currency rules
Personal income tax rates (progressive brackets): Vietnamese personal income tax uses a progressive system with the following brackets for monthly income according to Vietnam tax administration guidelines:
| Monthly Income (VND) |
Monthly Income (USD) |
Tax Rate |
| Up to 5,000,000 |
Up to $208 |
5% |
| 5,000,001 – 10,000,000 |
$208 – $417 |
10% |
| 10,000,001 – 18,000,000 |
$417 – $750 |
15% |
| 18,000,001 – 32,000,000 |
$750 – $1,333 |
20% |
| 32,000,001 – 52,000,000 |
$1,333 – $2,167 |
25% |
| 52,000,001 – 80,000,000 |
$2,167 – $3,333 |
30% |
| Over 80,000,000 |
Over $3,333 |
35% |
Social security contributions: Both employers and employees contribute to Vietnam's social insurance system:
| Insurance Type |
Employer Rate |
Employee Rate |
Salary Base |
| Social Insurance |
17.5% |
8% |
20x regional minimum wage |
| Health Insurance |
3% |
1.5% |
20x regional minimum wage |
| Unemployment Insurance |
1% |
1% |
20x regional minimum wage |
| Total Contributions |
21.5% |
10.5% |
|
Mandatory employer contributions:
- Trade union fees: 2% of total payroll fund
- Occupational accident insurance: 0.5% of payroll
- Vocational training fund: 1.5% of payroll (companies with 10+ employees)
Bonus and 13th-month salary requirements:
- 13th-month bonus (Tet bonus) is customary but not legally mandated
- Performance bonuses are common and tax-deductible for employers
- Tet holiday bonuses often equal 1-3 months' salary depending on company performance
- All bonuses subject to personal income tax using the same progressive rates
Payroll processing timelines:
- Salary calculation: By 25th of each month
- Tax and social insurance declarations: By 20th of following month
- Payment to employees: By 10th of following month
- Government remittances: By 15th of following month
Annual tax reconciliation: Employees earning over VND 100 million annually must file annual tax returns by March 31st. Employers must provide annual income statements and assist with tax compliance. Your EOR Vietnam provider handles all these requirements, ensuring accurate calculations and timely submissions to avoid penalties.
Employee Benefits and Leave Policies
Vietnamese employment law mandates comprehensive employee benefits and leave entitlements that any EOR Vietnam arrangement must provide, as outlined by MOLISA regulations. Understanding these requirements helps companies budget appropriately and attract top talent.
Annual leave entitlements:
- Standard annual leave: 12 days per year for employees with under 5 years' service
- Extended leave: 14 days for employees with 5-10 years' service
- Senior employee leave: 16 days for employees with 10+ years' service
- Additional leave: One extra day per year for employees working in harsh conditions
- Leave accumulation: Unused leave can be carried forward with employer approval
Public holidays (2025 dates): Vietnam observes 10 national public holidays annually:
| Holiday |
Date |
Duration |
| New Year |
January 1 |
1 day |
| Lunar New Year (Tet) |
January 29–February 2 |
5 days |
| Hung Kings Day |
April 18 |
1 day |
| Reunification Day |
April 30 |
1 day |
| International Labor Day |
May 1 |
1 day |
| National Day |
September 2 |
2 days |
Sick leave policies:
- Paid sick leave: Covered by social insurance at 75% of salary
- Medical documentation: Required for absences over 1 day
- Maximum duration: Up to 180 days per year depending on service length
- Chronic illness: Extended leave available with medical certification
- Occupational illness: 100% salary compensation
Maternity and paternity leave:
- Maternity leave: 6 months (26 weeks) at 100% salary via social insurance
- Paternity leave: 5 days for fathers
- Adoption leave: 6 weeks for adoptive parents
- Multiple births: Additional 30 days per additional child
- Prenatal care: Paid time off for medical appointments
Other mandatory benefits:
- Social insurance: Covers retirement, disability, survivorship, sickness, and maternity
- Health insurance: Universal healthcare coverage
- Unemployment insurance: Support during job transitions
- Occupational accident insurance: Coverage for work-related injuries
Common discretionary benefits: Many companies provide additional benefits to attract talent:
- Private health insurance and medical coverage
- Life insurance policies
- Transportation or fuel allowances
- Meal allowances or subsidized cafeterias
- Mobile phone and internet allowances
- Professional development and training budgets
- Performance bonuses and profit sharing
- Flexible working arrangements
Your EOR Vietnam provider ensures all statutory benefits are properly administered while helping you design competitive discretionary benefit packages that align with local market expectations and your company culture.
Work Permits and Visas for Foreign Employees
EOR Vietnam services include comprehensive support for foreign employee visa and work permit processes. Vietnam has specific requirements for international workers that must be carefully managed to ensure compliance with Vietnam Immigration Department regulations.
Visa categories for employment:
- Business visa (DT): Short-term business activities, 3-month validity
- Temporary residence card (TRC): For work permit holders, 1-3 year validity
- Multiple entry visa: For frequent business travelers
- Diplomatic/official visas: For government representatives
Work permit application process: Foreign employees must obtain work permits before starting employment. The process involves:
- Criminal background check: From home country, apostilled and translated
- Health certificate: Medical examination by approved Vietnamese facilities
- Educational credentials: Degrees verified and apostilled from issuing country
- Employment authorization: Proof of relevant experience (2+ years minimum)
- Work permit application: Submitted through the Department of Labor
Required documentation:
- Passport with minimum 6 months validity
- Notarized and apostilled criminal background check (valid 6 months)
- Medical certificate from approved Vietnamese hospital
- Educational certificates (bachelor's degree minimum for most positions)
- Employment history documentation proving relevant experience
- Labor contract signed with Vietnamese employer (EOR)
Processing timeframes:
- Work permit processing: 15 working days from complete application
- Temporary residence card: 15 working days after work permit approval
- Total timeline: 4-6 weeks for complete process
- Express processing: Available for additional fees in some provinces
Costs and fees:
- Work permit fee: VND 1,000,000 ($42 USD)
- Temporary residence card: VND 1,000,000 ($42 USD)
- Medical examination: VND 800,000-1,200,000 ($33-50 USD)
- Document authentication: Varies by country of origin
- Legal and processing fees: Handled by EOR provider
Renewal requirements:
- Work permits valid for 2 years maximum
- Renewal applications must be submitted 45 days before expiration
- New health certificates required for renewals
- Updated criminal background checks needed every 3 years
Your EOR Vietnam partner manages the entire work permit process, ensuring all documentation meets requirements and deadlines are met to avoid employment delays or compliance issues.
Hiring and Onboarding Process in Vietnam
Successful talent acquisition in Vietnam requires understanding local recruitment practices, cultural expectations, and legal requirements. An experienced EOR Vietnam provider offers valuable insights into effective hiring strategies.
Recruitment best practices:
- Local job boards: VietnamWorks, CareerBuilder Vietnam, and TopCV are most popular
- Professional networks: LinkedIn increasingly important for senior roles
- University partnerships: Direct recruitment from top universities like Hanoi University and Ho Chi Minh City University of Technology
- Recruitment agencies: Local headhunters for specialized or senior positions
- Employee referrals: Highly effective given relationship-oriented culture
Background check requirements:
- Criminal history: Mandatory for all employees, especially finance and management roles
- Educational verification: Degree authentication through Vietnamese authorities
- Employment history: Reference checks with previous employers
- Professional licenses: Verification of industry-specific certifications
- Credit checks: Required for financial services positions
Employment contract essentials: Vietnamese employment contracts must include specific mandatory elements:
- Employee and employer identification details
- Job title, description, and reporting structure
- Place of work and working hours
- Salary, benefits, and payment schedule
- Contract duration and termination conditions
- Confidentiality and non-compete clauses (where applicable)
- Dispute resolution mechanisms
Onboarding procedures: Effective onboarding in Vietnam incorporates both legal requirements and cultural considerations:
- Legal documentation: Social insurance registration, tax code assignment, and work permit verification
- Company orientation: Introduction to company culture, values, and expectations
- Role training: Job-specific training and performance expectations
- Cultural integration: Understanding of local business customs and communication styles
- Technology setup: IT equipment, system access, and security protocols
Probation period management:
- Performance expectations: Clear goals and evaluation criteria
- Regular feedback: Weekly or bi-weekly check-ins during probation
- Documentation: Detailed records of performance and any issues
- Extension options: Probation can be extended once with employee agreement
- Termination process: Simplified procedures during probation period
Cultural considerations and local customs:
- Hierarchy respect: Vietnamese workplace culture values seniority and formal relationships
- Face-saving: Avoid public criticism; provide feedback privately
- Relationship building: Investment in personal relationships enhances work effectiveness
- Holiday considerations: Tet (Lunar New Year) significantly impacts scheduling and productivity
- Communication style: Indirect communication common; listen for implicit messages
Your EOR Vietnam provider combines legal expertise with cultural knowledge to ensure smooth hiring and onboarding processes that comply with regulations while respecting local customs.
Termination and Employee Exit Process
Understanding termination procedures is crucial for any EOR Vietnam arrangement, as Vietnamese employment law provides strong employee protections requiring careful compliance to avoid legal complications.
Legal termination categories:
- Termination with cause: Immediate dismissal for serious violations
- Termination without cause: Standard termination with notice and severance
- Mutual agreement: Consensual contract termination
- Contract expiration: Natural end of fixed-term contracts
- Redundancy: Position elimination due to business restructuring
Notice periods by employment length: Vietnamese law mandates specific advance notice requirements:
| Employment Duration |
Notice Period |
| Probation period |
3 days |
| Less than 12 months |
30 days |
| 12–36 months (definite term) |
30 days |
| Indefinite term contracts |
45 days |
| Management positions |
45 days |
Severance pay calculations: Employees terminated without cause are entitled to severance payments:
- Standard rate: Half month's salary per year of service
- Minimum payment: Half month's salary regardless of service length
- Calculation base: Average salary of 6 months preceding termination
- Maximum cap: No statutory limit on severance payments
Example severance calculation: Employee with 3 years service, monthly salary VND 20,000,000:
- Severance = (VND 20,000,000 ÷ 2) × 3 years = VND 30,000,000
Wrongful termination protections: Vietnamese law provides substantial employee protections:
- Prohibited grounds: Cannot terminate for pregnancy, union activities, or whistleblowing
- Documentation required: Clear evidence for cause-based terminations
- Compensation for unlawful dismissal: 2 months' salary plus reinstatement or additional severance
- Legal proceedings: Labor disputes handled through conciliation, arbitration, or courts
Exit procedure compliance: Proper termination requires systematic documentation:
- Termination notice: Written notice specifying reasons and effective date
- Final pay calculation: Salary, unused leave, overtime, and severance
- Benefits cessation: Social insurance notification and final contributions
- Asset return: Company property, equipment, and confidential materials
- Final documentation: Work certificates and employment references
Specific termination scenarios:
- Poor performance: Requires documented performance improvement plans and warnings
- Misconduct: Must follow progressive discipline procedures except for serious violations
- Attendance issues: Pattern of absence must be documented with warnings
- Redundancy: Consultation with employee representatives and alternative placement efforts
- Business closure: 45-day advance notice to employees and authorities
Your EOR Vietnam provider ensures all terminations follow proper legal procedures, minimizing risk of disputes while protecting both employee rights and business interests through compliant documentation and process management.
Entity Setup vs. EOR Comparison in Vietnam
Companies expanding into Vietnam must choose between establishing a local entity or using EOR Vietnam services. Each approach offers distinct advantages depending on business objectives, timeline, and resource availability.
Entity establishment requirements: Setting up a legal entity in Vietnam involves multiple regulatory steps:
- Representative office: Market research only, no revenue generation
- Branch office: Limited activities, parent company liability
- Limited liability company: Most common structure, 1-50 shareholders
- Joint stock company: For larger operations, can issue shares publicly
- Joint venture: Partnership with Vietnamese entity for certain sectors
Timeline and cost comparison:
| Aspect |
Entity Setup |
EOR Vietnam |
| Timeline |
3–6 months |
1–2 weeks |
| Initial costs |
$15,000–50,000 USD |
$0 setup fee |
| Monthly overhead |
$3,000–8,000 USD |
Per-employee fee |
| Compliance burden |
High – ongoing reporting |
Managed by EOR |
| Local expertise required |
Yes – legal, accounting |
Provided by EOR |
Ongoing compliance obligations for entities:
- Corporate income tax: 20% standard rate (preferential rates available)
- VAT registration: 10% standard rate, 5% for certain goods/services
- License renewals: Annual business license updates and fee payments
- Audit requirements: Annual audited financial statements
- Labor compliance: Direct employment law adherence
- Regulatory reporting: Quarterly and annual government filings
EOR advantages and limitations:
EOR Vietnam advantages:
- Immediate market entry capability
- No entity setup or maintenance costs
- Built-in legal and HR expertise
- Reduced regulatory burden and compliance risk
- Scalable workforce management
- Local market knowledge and cultural guidance
EOR limitations:
- Higher per-employee costs for large teams
- Limited business activities beyond employment
- Dependency on EOR provider capabilities
- Less direct control over some HR processes
- May require entity setup for certain business activities
Decision-making framework: Choose EOR Vietnam when:
- Testing market viability with small teams
- Need rapid market entry (under 6 months)
- Limited local expertise or resources
- Uncertain about long-term commitment
- Hiring 1-20 employees initially
- Want to minimize regulatory complexity
Choose entity setup when:
- Committing to long-term market presence
- Planning significant local operations
- Hiring large teams (50+ employees)
- Need direct control over all business functions
- Engaging in complex business activities beyond employment
- Have resources for ongoing compliance management
Many successful companies use a hybrid approach: starting with EOR Vietnam services for initial market entry and talent acquisition, then transitioning to a local entity once they've proven market viability and grown their local presence substantially.
Choosing an EOR Provider in Vietnam
Selecting the right EOR Vietnam partner is crucial for successful market entry and ongoing compliance. The provider you choose will handle critical legal and financial responsibilities, making their expertise and reliability essential for your success.
Essential selection criteria:
Local expertise and track record:
- Minimum 5+ years operating in Vietnam
- Deep understanding of Vietnamese employment law and cultural nuances
- Proven track record with companies in your industry
- Local HR and legal team based in Vietnam
- Strong relationships with government authorities and agencies
Technology platform capabilities:
- Modern, user-friendly HR management system
- Real-time payroll processing and reporting
- Employee self-service portals for leave requests and document access
- Integration capabilities with your existing HR or accounting systems
- Mobile accessibility for both employers and employees
- Data security and privacy protections
Compliance management:
- Proactive monitoring of regulatory changes
- Automated tax and social insurance calculations
- Regular compliance audits and reporting
- Experience handling government inspections
- Insurance coverage for compliance errors
- Documentation management and record keeping
Customer support quality:
- Dedicated account management team
- Local support in Vietnamese and English
- Responsive communication (24-48 hour response times)
- Regular business reviews and strategic guidance
- Emergency support for urgent issues
Service scope and pricing transparency:
- Clear fee structure without hidden costs
- Comprehensive service inclusion (payroll, benefits, compliance, HR support)
- Transparent pricing for additional services
- Flexible contract terms and scalability options
- Cost benchmarking against local market rates
Red flags to avoid:
- Providers without local Vietnamese presence
- Unclear or constantly changing pricing structures
- Limited technology platforms or manual processes
- Poor references from existing clients
- Lack of relevant industry experience
- Inadequate insurance coverage or financial backing
Due diligence questions to ask:
- How long have you operated in Vietnam, and what's your client retention rate?
- What government registrations and licenses do you maintain?
- How do you stay current with employment law changes?
- What's your process for handling compliance issues or government inquiries?
- Can you provide references from clients in similar industries?
- What technology integration options do you offer?
- How do you handle employee disputes or termination procedures?
- What insurance coverage protects against compliance errors?
Making the final decision: Evaluate potential EOR Vietnam providers through:
- Reference checks: Speak with current clients about their experiences
- Technology demos: Test platform functionality and user experience
- Contract review: Ensure clear terms and appropriate service level agreements
- Team meetings: Assess the expertise and responsiveness of key personnel
- Pilot program: Consider starting with a small team to evaluate service quality
The right EOR Vietnam partner becomes an extension of your team, providing strategic guidance and operational excellence that enables successful market expansion while ensuring full compliance with Vietnamese regulations.
Conclusion and Next Steps
Vietnam represents an exceptional opportunity for international companies seeking to access Southeast Asia's most dynamic growth market. With its young, educated workforce, competitive costs, and improving infrastructure, Vietnam offers compelling advantages for businesses ready to expand their operations.
Key benefits of EOR Vietnam services:
- Immediate market entry without entity setup delays or costs
- Full compliance with complex Vietnamese employment regulations
- Access to local HR expertise and cultural knowledge
- Reduced legal and financial risks through professional management
- Scalable workforce solutions that grow with your business
Your path to success in Vietnam: Success in the Vietnamese market requires more than just legal compliance—it demands deep local knowledge, cultural sensitivity, and strategic guidance. The right EOR Vietnam partner provides not just administrative services, but strategic insights that help you build effective teams and sustainable operations.
Whether you're testing market viability with a small team or planning significant expansion, EOR Vietnam services offer the fastest, lowest-risk path to accessing Vietnam's tremendous business opportunities.
Ready to expand into Vietnam?
AYP Group's comprehensive EOR Vietnam services combine deep local expertise with modern technology platforms to ensure your success. Our experienced team in Ho Chi Minh City and Hanoi provides the guidance and support you need to build effective teams while maintaining full compliance with Vietnamese regulations.
Contact our Vietnam experts today to discuss your expansion plans and discover how our EOR Vietnam solutions can accelerate your market entry while minimizing risks and maximizing opportunities.
Take the next step: Schedule a consultation with our local team to explore how EOR Vietnam services can support your Southeast Asian expansion strategy and connect you with Vietnam's exceptional talent pool.
