Employer of Record in Vietnam: How It Works, Legal Risks and When to Set Up a Company
: An employer of record (EOR) is generally a provider that signs an employment contract with a worker who performs work for a client. In Vietnam, the term “EOR” does not determine how the arrangement is treated under labour law. A foreign company should check who employs the worker, who directs daily work, what the provider is permitted to do, and whether the arrangement may fall under labour subleasing rules. It should also consider whether setting up its own Vietnam company better fits its long-term plans.
What Is an Employer of Record in Vietnam?
An EOR arrangement usually involves three parties: the worker, a local provider, and the client receiving the worker’s services. The provider may sign the employment contract and administer salary and employment records. The client may define the role and receive the work. The precise division of responsibilities varies between arrangements.
Who signs the employment contract?
Ask which legal entity is named as the employer in the worker’s contract. Review the provider’s agreement with the client as well. Together, these documents should explain the work, payment arrangements, reporting lines, and responsibilities if the relationship ends.
Who manages the employee’s daily work?
The contract is only one part of the answer. Identify who assigns tasks, sets working hours, evaluates performance, supplies tools, and gives day-to-day instructions. If the provider employs the worker while the client directly manages their work, the parties need to assess whether the arrangement has the characteristics of labour subleasing.
What does the foreign client remain responsible for?
A provider’s promise to manage payroll does not settle every responsibility. The foreign client still needs to provide accurate job and payment information, follow the agreed approval process, and understand how its instructions affect the worker. Responsibility for workplace matters, confidential information, employee data, and disputes should be addressed before work begins.
How Does an EOR Arrangement Work in Vietnam?
Define the role and review the provider
Describe the proposed duties, workplace, reporting manager, expected duration, and reason for hiring. Give the provider this information before requesting a final quote. Ask which Vietnamese entity will employ the worker and how that entity is authorised to perform the proposed activity. The response should address the actual job and supervision arrangement.
Review contracts and onboarding documents
Compare the worker’s employment contract with the agreement between the provider and client. The documents should give a consistent account of the role, work location, salary, working arrangements, and each party’s responsibilities. Confirm who communicates employment terms to the worker and who keeps the signed records.
Recruitment support is a separate question. A firm that finds candidates does not necessarily become their employer. VINEX’s Employment Service in Vietnam guide explains that distinction.
Manage payroll, tax, insurance, and records
Agree who prepares payroll inputs, checks calculations, approves payment, and maintains records. Identify who handles applicable tax and insurance administration. If the client pays bonuses or other amounts outside the provider’s payroll process, disclose that information for review.
Employee records must remain accessible when a contract ends or the client establishes its own entity. Agree on the format and timing of that handover at the start.
Plan for changes and termination
Consider what happens if the role changes, the employee is promoted, the client wants to hire the worker directly, or the service agreement ends. Do not assume that the worker can simply be “transferred” to a new employer without reviewing the required employment steps and the worker’s rights.
Is Employer of Record the Same as Labour Subleasing in Vietnam?
No. EOR is a commercial description; labour subleasing is a regulated arrangement under Vietnam’s Labour Code. In labour subleasing, a licensed enterprise employs a worker who then works under the direction of another employer while retaining the employment relationship with the supplying enterprise.
Labour subleasing is subject to restrictions, including rules on the provider, permitted jobs, reasons for use, and assignment duration. Whether a proposed EOR model falls within those rules depends on how it operates, not the name on the sales proposal.
Model | Who employs the worker? | Who directs the work? | Main question |
EOR proposal | Usually the provider named in the employment contract | Depends on the actual arrangement | Does the operating model fall within a regulated activity? |
HR outsourcing | Usually the client company | The client company | Which HR tasks are delegated while the client remains employer? |
Labour subleasing | The licensed supplying enterprise | The receiving employer | Are the provider, job, purpose, and assignment compliant? |
Own Vietnam entity | The Vietnam company | The Vietnam company | Is the company ready for direct employment and continuing administration? |
The practical test is to follow the worker’s instructions. Who tells the person what to do each morning? Who manages performance? Who can initiate a disciplinary process? If those answers differ from the contracts or the provider’s description, review the structure before onboarding. VINEX’s HR Outsourcing in Vietnam guide covers the administrative model in more detail.
When Should a Foreign Company Consider an EOR in Vietnam?
A foreign company may explore an EOR arrangement when it has a limited initial hiring need and has not decided whether to establish a Vietnam company. It should first confirm that the proposed role, supervision, provider, and contractual structure can operate lawfully.
An EOR proposal needs closer scrutiny if the company plans to direct a permanent local team, expand its commercial activities, or use the same arrangement for several roles. Hiring through a provider does not automatically resolve every issue associated with carrying on business in Vietnam. A review of the structure can be part of broader employment and HR legal advisory.
VINEX’s view: The expected second and third hires are often as important as the first. Before signing for one employee, map the team the business expects to have in a year. That makes it easier to assess whether the initial arrangement supports the hiring plan or whether incorporation should begin earlier.
EOR vs Setting Up a Company in Vietnam
Situation | What to compare |
One initial hire | The role, supervision, legality of the provider’s model, full provider fee, and the cost and time of establishing an entity |
A growing local team | Direct control of staff, planned Vietnam activities, ongoing administration, cost across multiple hires, and the transition of existing workers |
For one initial hire, legal review of the proposed arrangement comes before the cost comparison is decisive. For a growing team, a Vietnam entity may offer a clearer structure for direct employment and continuing operations. Incorporation also brings registration, accounting, tax, and employment administration that should be included in the budget.
Plan any later move from a provider to the new company. Review the contractual steps, payroll cutover, records handover, and accrued employee entitlements. Establishing a company does not automatically move existing employment contracts to it. VINEX’s LLC registration documents checklist is a starting point for the incorporation side of that decision.
Questions to Ask Before Choosing a Vietnam EOR Provider
Employment and supervision: Which entity signs the employment contract? Who directs daily work and manages performance?
Legal structure: What licence or permission is relevant to the proposed model? Can the specific job be performed through it?
Full cost: What do the fee, recruitment charges, payroll administration, applicable contributions, contract changes, and termination support cover?
Approvals and records: Who approves salary changes? How are errors corrected? Who holds the employee records?
Future incorporation: How will employment documents, payroll information, and outstanding obligations be handled if the client forms a Vietnam company?
Request answers for the specific role and proposed arrangement, rather than relying on a standard EOR sales description.
Frequently Asked Questions
Can a foreign company hire in Vietnam without incorporating?
There may be structures to consider, including engaging an appropriately operating local provider. The answer depends on the job, who directs the worker, the contractual relationships, and the foreign company’s activities in Vietnam. Review the actual arrangement before hiring.
Is EOR legal for every job in Vietnam?
No such blanket conclusion should be drawn from the term “EOR.” If the arrangement constitutes labour subleasing, restrictions on providers, permitted work, use, and duration must be assessed. Other arrangements also need to reflect their real operating model.
Is EOR the same as payroll outsourcing?
No. With payroll outsourcing, the client generally remains the worker’s employer and delegates payroll administration. Under a typical EOR proposal, the provider signs the employment contract. Check the contracts and actual supervision in each case.
When should a business move from EOR to its own entity?
Review the decision when hiring becomes a continuing plan, the team grows, or the company’s Vietnam activities require more direct control. Plan the employment and records transition before assuming existing workers can move to the new entity.
How VINEX Can Help Assess a Hiring Structure in Vietnam
VINEX can help foreign companies assess their proposed Vietnam hiring structure, review employment and compliance questions, and plan company formation where appropriate. It can also support HR administration according to an agreed service scope.
To begin an assessment, share the proposed role, number of hires, reporting structure, expected duration, and Vietnam business plans. Those facts help identify the questions to resolve before you choose a provider or begin setting up a company.
Legal information reviewed: 7 October 2026.
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