How to Use An Employer of Record in
Vietnam

Vietnam's Labour Code (Law No. 45/2019/QH14) requires mandatory social insurance contributions at 17.5% for employers, plus health and unemployment insurance, alongside strict requirements for written employment contracts in Vietnamese and registration with the Department of Labour, Invalids and Social Affairs within 30 days of hire. An Employer of Record in Vietnam becomes the legal employer on record, handling payroll, statutory filings, and compliance with the Ministry of Labour, Invalids and Social Affairs while you retain full operational control and hire in as little as 5 to 10 business days. This removes the administrative burden of navigating Vietnam's complex compulsory labour union contributions, annual leave accrual rules tied to seniority, and the labyrinth of provincial-level labour regulations that vary across Hanoi, Ho Chi Minh City, and other regions.

What Is an Employer of Record in Vietnam?

An Employer of Record in Vietnam is a third-party organisation that becomes the legal employer of your staff under Vietnamese law, handling all statutory obligations including payroll, tax withholding, social insurance, and compliance with the Labour Code while you retain full operational control over day-to-day work, performance management, and business objectives. The EOR holds the employment contract, manages government registrations, and acts as the employer on all official filings with the Vietnam Social Security and tax authorities.

Under the Labour Code of Vietnam (Law No. 45/2019/QH14, effective 1 January 2021), employment relationships must be formalised through written contracts that include mandatory clauses on job description, workplace location, working hours, salary, and social insurance. Employers must register employees with the Department of Labour, Invalids and Social Affairs within 30 days, contribute to social insurance (21.5% employer, 10.5% employee), health insurance (3% employer, 1.5% employee), and unemployment insurance (1% employer, 1% employee), and comply with collective labour agreements where applicable, particularly in sectors with active trade unions.

You retain complete control over the employee's role, tasks, performance reviews, promotion decisions, and termination recommendations. The EOR owns the legal employment relationship, meaning it signs the contract, runs monthly payroll in Vietnamese dong, withholds personal income tax (PIT) under the progressive scale administered by the General Department of Taxation, files all statutory returns, manages annual leave and sick leave entitlements, and executes termination procedures including severance calculations and final settlement in accordance with Articles 46 to 50 of the Labour Code.

How Does an Employer of Record Work in Vietnam?

When you engage an EOR in Vietnam, the process follows a structured legal and administrative pathway governed by the Labour Code and overseen by the Ministry of Labour, Invalids and Social Affairs. The EOR becomes the legal employer while you maintain full operational direction. Here's exactly how it works, step by step.

Step 1: Define Role and Terms

You define the position, salary, benefits, and working arrangements. The salary must meet or exceed the statutory minimum wage applicable to the region and sector. As of 2026, Vietnam operates four regional minimum wage bands set by the National Wage Council: Region I (major urban centres including Hanoi and Ho Chi Minh City) at 4,960,000 VND per month, Region II at 4,410,000 VND, Region III at 3,860,000 VND, and Region IV at 3,450,000 VND. If the role falls within an industry covered by a sectoral collective labour agreement, you must ensure terms meet or exceed those negotiated standards.

Step 2: EOR Compliance Check

The EOR reviews your proposed terms against the Labour Code, applicable minimum wage for the employee's location, working time limits (8 hours per day, 48 hours per week under Article 105), and overtime restrictions (200 hours per year, extendable to 300 hours with Ministry approval under Article 107). The EOR confirms the role is correctly classified as employee rather than contractor, as misclassification carries fines up to 75 million VND under Decree 12/2022/ND-CP and exposes your company to back-payment of social insurance and benefits. The EOR also verifies whether the role requires a work permit or exemption certificate if the employee is a foreigner.

Step 3: Employment Contract Drafted

The EOR prepares a written employment contract in Vietnamese, as required by Article 14 of the Labour Code. The contract must include mandatory clauses covering job title and description, workplace address, working hours and rest periods, salary and payment terms, social insurance and health insurance, duration (indefinite, fixed-term up to 36 months, or task-based), and probation period (60 days maximum for skilled positions, 30 days for unskilled roles under Article 24). Fixed-term contracts can be renewed once; a second renewal automatically converts the contract to indefinite duration under Article 22. The employee reviews, signs, and the EOR countersigns as the legal employer.

Step 4: Government Registrations

The EOR registers the employment relationship with the local Department of Labour, Invalids and Social Affairs within 30 days of the start date, as mandated by Article 47 of Decree 145/2020/ND-CP. The EOR also enrols the employee in the Vietnam Social Security system using Form TK1-TS (initial declaration of participating employees) and submits monthly contribution declarations on Form D02-TS. Late registration incurs administrative fines and delays in social insurance coverage, leaving both the EOR and your company exposed to claims if the employee suffers a work-related injury or illness during the unregistered period. The EOR obtains a tax code for the employee from the General Department of Taxation if not already held.

Step 5: Payroll Execution

The EOR runs monthly payroll in Vietnamese dong. Vietnam operates a progressive personal income tax (PIT) scale: 5% up to 5 million VND, 10% from 5 to 10 million VND, 15% from 10 to 18 million VND, 20% from 18 to 32 million VND, 25% from 32 to 52 million VND, 30% from 52 to 80 million VND, and 35% above 80 million VND per month, applied to taxable income after deductions. The EOR withholds PIT, deducts employee social insurance (10.5%), health insurance (1.5%), and unemployment insurance (1%) contributions, and remits the total to the General Department of Taxation by the 20th of the following month. The EOR pays net salary to the employee's Vietnamese bank account.

Step 6: Ongoing Compliance Management

The EOR manages recurring statutory obligations including monthly social insurance and PIT declarations, quarterly PIT finalisation if required, annual PIT finalisation by 31 March via Form 02/CK-TNCN for employees earning above the threshold, annual labour usage reports submitted to the Department of Labour by 31 January, and updates to employee records following promotions, salary changes, or contract amendments. The EOR maintains a labour registry at the workplace as required by Article 12 of Decree 145/2020/ND-CP. The EOR monitors changes to minimum wage, social insurance rates, and Labour Code amendments issued by the National Assembly or Ministry of Labour, ensuring your employee's terms remain compliant without requiring your intervention.

Step 7: Termination and Severance

When you decide to terminate, the EOR executes the process in compliance with Chapter IX of the Labour Code. Termination must be for just cause as defined in Articles 36 to 38, including business restructuring, redundancy, economic downturn, or employee misconduct. Notice periods are 45 days for indefinite contracts, 30 days for fixed-term contracts of 12 to 36 months, and 3 working days for contracts under 12 months, though collective labour agreements may stipulate longer periods. The EOR calculates severance pay at half a month's salary for each year of service beyond 12 months, based on the average salary of the last 6 months, as specified in Article 46. The EOR issues the termination notice, settles final pay including unused annual leave, remits final social insurance contributions, and provides the employee with a certificate of employment history and social insurance book within 7 days of the last working day.

Employment Laws and Compliance an Employer of Record Handles in Vietnam

When you hire through an Employer of Record in Vietnam, the EOR assumes full legal responsibility for compliance with the Labour Code, tax law, and social insurance regulations administered by the Ministry of Labour, Invalids and Social Affairs and the General Department of Taxation. This removes the need to build in-country HR expertise or risk penalties for non-compliance.

• Written Employment Contracts: The Labour Code (Law No. 45/2019/QH14) requires every employment relationship to be documented in a written contract in Vietnamese, covering job description, salary, working hours, and insurance. Failure to provide a written contract within the first month of employment triggers fines of 5 to 10 million VND under Decree 12/2022/ND-CP and exposes the employer to claims that the contract is indefinite.
• Personal Income Tax Withholding: The EOR withholds monthly PIT from employee salaries according to Circular 111/2013/TT-BTC (as amended by Circular 92/2015/TT-BTC), applying the progressive tax scale from 5% to 35%, and remits to the General Department of Taxation by the 20th of the following month. Late payment incurs interest at 0.03% per day plus penalties of up to 20% of the outstanding amount.
• Social Insurance Contributions: Employers contribute 17.5% of gross salary (14% pension, 3% sickness and maternity, 0.5% occupational accident), plus 3% health insurance and 1% unemployment insurance, under the Law on Social Insurance (No. 58/2014/QH13). Employees contribute 10.5% (8% pension, 2% sickness and maternity, 0.5% unemployment). Non-payment results in fines of 12 to 18% of the outstanding amount and suspension of social insurance benefits for affected employees.
• Annual Leave and Statutory Days Off: Employees accrue 12 days of paid annual leave per year, increasing by one day for each five years of service, under Article 113 of the Labour Code. Vietnam observes 10 public holidays including Lunar New Year (Tet, typically 5 days), Reunification Day, and National Day. Failure to grant leave or pay in lieu exposes the employer to claims and fines.
• Termination and Severance: Termination requires just cause and adherence to notice periods (45 days for indefinite, 30 days for fixed-term 12 to 36 months, 3 days for contracts under 12 months) under Articles 36 to 38. Severance is payable at half a month's salary per year of service after 12 months, calculated on the average of the last 6 months. Unlawful termination results in reinstatement orders, back pay, and compensation equal to at least two months' salary under Article 42.
• Working Time and Overtime: The Labour Code limits regular working time to 8 hours per day and 48 hours per week, with overtime capped at 200 hours per year (extendable to 300 with Ministry approval). Overtime pay is 150% on weekdays, 200% on weekends, and 300% on public holidays (Articles 105 to 109). Violations result in fines of 50 to 75 million VND and back-payment claims.
• Occupational Health and Safety: Employers must register occupational health and safety plans with the Department of Labour, conduct workplace risk assessments, provide personal protective equipment, and report workplace accidents within 24 hours under the Law on Occupational Safety and Health (No. 84/2015/QH13). Non-compliance carries fines up to 200 million VND and criminal liability in cases of serious injury or death.
• Employee Data Protection: Vietnam's Law on Cybersecurity (No. 24/2018/QH14) and Decree 13/2023/ND-CP on Personal Data Protection require employers to obtain consent for collection and processing of employee personal data, implement security measures, and store data domestically or notify the Authority of Information Security if transferred abroad. Breaches result in fines of 50 to 100 million VND and orders to cease processing.
• Collective Labour Agreements: If your industry or workplace is covered by a collective labour agreement negotiated between the employer and trade union, the EOR ensures compliance with terms that exceed statutory minimums, such as higher leave entitlements, longer notice periods, or additional allowances. Vietnam's trade union structure under the Vietnam General Confederation of Labour is legally recognised, and non-compliance with collective agreements can lead to labour disputes and strikes.
• Compulsory Trade Union Contributions: Employers must contribute 2% of the total payroll fund to the Vietnam General Confederation of Labour, regardless of whether employees are union members, under Article 26 of the Law on Trade Unions (No. 174/2012/QH13). The EOR calculates and remits this quarterly to the local trade union. Non-payment results in fines and potential labour inspection actions.

How Much Does It Cost to Use an Employer of Record in Vietnam?

When you hire in Vietnam through an Employer of Record, you pay two distinct cost components: the EOR service fee and the statutory employer on-costs mandated by Vietnamese law. Statutory costs are fixed by the Labour Code and social insurance law and apply to every employer in Vietnam, whether you operate through an EOR or your own entity. Playroll's Employer of Record service fee starts from $399 per employee per month, billed separately from payroll and statutory contributions. This fee covers contract preparation, government registrations, monthly payroll processing, tax and social insurance filings, ongoing compliance monitoring, and termination administration.

Let's look at an example that includes a base salary and the EOR service fee.

The EOR service fee covers all administrative and legal responsibilities: drafting and maintaining the employment contract in Vietnamese, registering the employee with the Department of Labour and Vietnam Social Security, processing monthly payroll and tax withholding, filing monthly declarations (Form D02-TS for social insurance, PIT returns to the General Department of Taxation), managing annual leave accrual and public holiday entitlements, responding to employee queries, and executing compliant termination and severance when required.

Employer of Record vs Setting Up an Entity in Vietnam

The core decision when hiring in Vietnam is whether to engage an Employer of Record or establish your own legal entity. Foreign companies typically incorporate a limited liability company (either a single-member LLC wholly owned by the foreign parent or a multi-member LLC with local partners), which requires a business registration certificate from the Department of Planning and Investment, a tax code from the General Department of Taxation, and a company seal. Realistic timelines run from 8 to 16 weeks depending on the business sector and whether you need an Investment Registration Certificate for restricted industries. Setup costs range from $8,000 to $25,000 including legal fees, notarisation, translation, and registration charges, with ongoing costs for office lease, accounting, audit, annual license renewals, and in-house HR or external payroll service providers.

For companies hiring fewer than 15 employees in Vietnam, an Employer of Record is almost always the faster and more cost-effective route.

Playroll also supports your long-term growth through its Global Entity Setup product, which handles entity incorporation and local payroll in 120+ countries, so you can transition from EOR to your own compliant entity in Vietnam when the time is right, without switching providers or rebuilding your HR processes.

How Long Does It Take to Hire Someone in Vietnam Through an Employer of Record?

The total timeline to hire and onboard an employee in Vietnam through an Employer of Record typically ranges from 5 to 10 business days, assuming the employee has all required documentation ready and you provide final approval promptly.

• Stage 1: Contract preparation and signing (1 to 2 business days): The EOR drafts the employment contract in Vietnamese with all mandatory clauses under the Labour Code, incorporating your agreed salary, job title, working hours, and probation period. You review, the employee reviews and signs, and the EOR countersigns as the legal employer. Speed depends on how quickly all parties return executed documents.
• Stage 2: Government registrations (2 to 5 business days): The EOR submits the employment registration to the local Department of Labour, Invalids and Social Affairs (required within 30 days but typically completed within a few business days) and registers the employee with Vietnam Social Security using Form TK1-TS. The employee must be registered before the first payroll cycle to ensure social insurance and health insurance coverage commence on the start date. Delays in obtaining the employee's identity documents or residential address can extend this stage.
• Stage 3: Payroll configuration and first cycle (1 to 2 business days): The EOR configures the employee in the payroll system, sets up tax withholding according to their personal deductions and dependants, and schedules the first pay cycle. Vietnam operates monthly payroll with payment typically at the end of the month. If the employee starts mid-cycle, the first payslip will be pro-rated. This stage runs in parallel with registrations.
• Stage 4: Vietnam-specific requirements (1 to 3 business days): If the employee is a foreign national, the EOR verifies that a valid work permit or work permit exemption certificate is in place before the start date, as required under the Law on Employment (No. 38/2019/QH14) and Decree 152/2020/ND-CP. Processing a new work permit takes 15 to 25 business days and falls outside the EOR onboarding timeline. If the employee requires a health check for sectors like food processing or childcare, this adds 1 to 3 business days but can run in parallel with contract signing.

Timelines can extend if the employee lacks a Vietnamese bank account (opening takes 1 to 3 business days), if the employee is in a sector requiring additional licenses or background checks, or if your internal approval process for the contract takes longer than anticipated. Public holidays, particularly Tet (Lunar New Year, typically late January to early February), can add 5 to 10 business days to government processing times.

In contrast, setting up your own limited liability company in Vietnam and hiring through that entity takes 8 to 16 weeks from incorporation to first payroll, plus 4 to 6 weeks if you need to secure office premises and register the workplace with the Department of Labour.

How Playroll's Employer of Record Process Works in Vietnam

Playroll's Employer of Record service in Vietnam is designed around speed, legal precision, and transparent communication from the moment you decide to hire.

1. You define the role and terms

You provide the job title, salary, working hours, start date, and any benefits or allowances. Playroll reviews your terms against the applicable regional minimum wage (Region I, II, III, or IV), confirms the classification is employee rather than contractor, and flags any sector-specific requirements such as collective labour agreement provisions or trade union obligations. You retain full control over role scope, reporting structure, and performance expectations.

2. Playroll prepares the employment contract

Playroll drafts a written employment contract in Vietnamese that complies with the Labour Code (Law No. 45/2019/QH14), including mandatory clauses on workplace location, job description, working hours and rest periods, salary and payment terms, social insurance enrollment, probation period (maximum 60 days for skilled roles, 30 days for unskilled), contract duration (indefinite, fixed-term up to 36 months, or task-based), and termination notice provisions. The contract is issued in the name of Playroll as the legal employer, and you review and approve before it goes to the employee for signature.

3. Employee onboarded and payroll goes live

Playroll registers the employment relationship with the local Department of Labour, Invalids and Social Affairs and enrolls the employee in Vietnam Social Security using Form TK1-TS, all within 5 to 10 business days of contract signing. Playroll obtains or verifies the employee's tax code with the General Department of Taxation, configures monthly payroll in Vietnamese dong, and ensures the first pay cycle includes correct withholding for personal income tax, social insurance (10.5% employee, 17.5% employer), health insurance (1.5% employee, 3% employer), unemployment insurance (1% employee, 1% employer), and the employer's 2% trade union contribution.

4. Playroll manages ongoing compliance and growth

Playroll handles all recurring filings including monthly social insurance declarations on Form D02-TS, monthly and annual personal income tax returns submitted to the General Department of Taxation, annual labour usage reports to the Department of Labour by 31 January, and updates following salary changes, promotions, or contract amendments. Playroll monitors changes to Vietnam employment law issued by the National Assembly and the Ministry of Labour, automatically updating contracts, payroll, and policies to remain compliant. If your hiring in Vietnam grows to where establishing your own entity makes commercial sense, Playroll supports that transition through its global entity setup product, which incorporates your limited liability company, transitions your employees to the new entity payroll, and ensures continuity of employment records and social insurance history without disruption.