Hiring in Vietnam: Four Ways to Build a Team

Your Four Options for Hiring in Vietnam

Vietnamese law requires that whoever employs a worker in Vietnam is a legal entity registered in Vietnam. That single rule drives every option below. You can become that entity by registering, you can borrow one by using an employer of record, or you can avoid the employment relationship entirely by contracting. The four routes are ordered by commitment, lowest first.

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The dividing line is headcount and horizon. Below roughly thirty employees, or under a two-year commitment, the two-to-four-month registration process and the annual compliance overhead of your own entity rarely pays back. Above it, an entity usually does, particularly for manufacturing, and the EOR becomes the more expensive option per head. If you want the detail on that route, see how an employer of record works in Vietnam.

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Can You Hire in Vietnam Without an Entity?

Yes. Hiring in Vietnam without setting up an entity is legal and common, and there are two ways to do it. The first is an employer of record, which employs the person on your behalf through its own licensed Vietnamese entity, runs payroll, and carries the statutory obligations. The second is an independent contractor arrangement, which avoids employment but only works where the relationship is genuinely one of contract for services. Neither requires you to obtain an Investment Registration Certificate, an Enterprise Registration Certificate or a company seal.

• Hire remote employees in Vietnam in days rather than the two to four months a full entity registration takes, with a compliant Vietnamese-language contract from day one.
• Foreign nationals can still be sponsored for a Work Permit and Temporary Residence Card, because the employer of record is a Vietnamese entity and can sponsor through DOLISA.
• Social, health and unemployment insurance, the trade union fee and monthly personal income tax to the General Department of Taxation are handled for you as part of Vietnam payroll.
• You avoid creating a permanent establishment in Vietnam for your foreign parent company, which is the tax exposure most companies miss.

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Contractor or Employee in Vietnam?

Employee misclassification in Vietnam is decided by the working relationship, not by what the contract says. Vietnamese authorities apply a control and integration test: do you direct how the work is performed, is the person integrated into your organisation, and do they depend economically on your business? The Labour Code 2019 goes further than most in the region, treating any agreement that has the substance of paid, directed work as an employment contract regardless of what it is called.

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Hiring Contractors in Vietnam Without Getting It Wrong

You can hire a contractor if the engagement is genuinely project-based. In that case,

• Write the scope around deliverables rather than hours
• Let the contractor decide method and schedule
• Avoid issuing company equipment or an internal email address
• Do not renew the contractor agreement indefinitely

The moment the arrangement starts to look like a full-time role, convert it immediately. Reclassification is retrospective, so the exposure grows with every month the engagement continues. If you decide to bring them in-house, see our guide to converting contractors to employees. Vietnam is stricter than most of the region on this point: the Labour Code 2019 looks at the substance of the arrangement rather than its label, and an engagement of twelve months or more is difficult to defend as anything other than employment.

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Hiring a Foreign National in Vietnam

Hiring a foreigner in Vietnam requires a Work Permit sponsored by a Vietnamese entity and approved by the provincial Department of Labour, Invalids and Social Affairs, followed by a Temporary Residence Card. The contractor route is therefore closed: a contractor cannot be sponsored, because sponsorship presupposes an employment relationship. That leaves two routes: your own entity or an employer of record, and only one of them is fast. For the wider APAC picture, see our work pass and visa guide.

• The employer must first obtain approval that the position cannot be filled by a Vietnamese national, before the Work Permit application itself begins.
• Work Permits are granted for up to two years and are tied to a named employer, position and work location.
• The Temporary Residence Card follows the Work Permit and allows the holder to reside in Vietnam for the permit's duration.
• Foreign employees on an indefinite or twelve-month-plus contract pay social insurance at the same rates as Vietnamese nationals, at 17.5% employer and 8% employee, plus health insurance.

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Which Route Fits Your Situation

Five situations cover most companies hiring into Vietnam for the first time. Find the one closest to yours, then read the recommended route. If you already hold an entity and only need the admin lifted, that is a Professional Employer Organisation rather than an employer of record.

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Switching Routes Later

Most companies change route within two years of their first Vietnamese hire, and both common transitions are routine. Knowing the mechanics up front removes the main objection to starting with a lighter-weight option.

Converting a Contractor to an Employee

Conversion means issuing a compliant Vietnamese-language employment contract under the Labour Code 2019, choosing correctly between a definite-term contract, which may be renewed only once before it becomes indefinite, and an indefinite-term contract. The person is then enrolled in social, health and unemployment insurance and brought onto monthly personal income tax withholding. Continuous service usually restarts from the employment date unless you agree otherwise.

Moving From an Employer of Record to Your Own Entity

Once your Investment Registration Certificate and Enterprise Registration Certificate are issued and your tax and social insurance registrations are live, employees transfer by novation, or by resignation and rehire. Social insurance books transfer with the employee. Work Permits do not: they are tied to a named employer, so a new permit must be applied for and sequenced so the employee is never working without one. Accrued leave and tenure are negotiated as part of the transfer. AYP’s employer of record is a predictable monthly fee per employee, see our pricing page.

Before You Hire in Vietnam

These apply to every employment route. They are the floor, not the whole picture, and they are the numbers most often out of date in a foreign employer's payroll.

For contribution rates, leave entitlements, filing deadlines, termination law and the full 2026 regulatory timeline, see how an employer of record works in Vietnam.

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Questions? We're Here to Help

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