Employer of Record in Vietnam

Expanding your team into Vietnam requires a clear understanding of local employment regulations. Companies looking to hire employees in this dynamic market typically have a few primary avenues for engagement, each with its own set of administrative and legal considerations. Understanding these options is crucial for compliant and efficient global expansion.

When considering hiring employees in Vietnam, companies generally have three main approaches:

• Establishing a Local Entity: This involves setting up a subsidiary or a branch office in Vietnam, which requires significant upfront investment in time, capital, and navigating complex registration processes.
• Utilizing an Employer of Record (EOR): Partnering with an EOR like Rivermate allows companies to compliantly hire employees in Vietnam without needing a local entity. The EOR acts as the legal employer, handling all local compliance.
• Hiring as Independent Contractors: While seemingly straightforward, classifying workers as independent contractors carries substantial risks in Vietnam if the working relationship resembles that of an employee. Misclassification can lead to significant penalties.

How an EOR Works in Vietnam

An Employer of Record (EOR) service simplifies global hiring by managing the legal and administrative complexities of employment in Vietnam. When you partner with an EOR, your company maintains day-to-day management of your Vietnamese team, while the EOR handles the formal employment aspects. This includes:

• Onboarding: Ensuring compliant hiring documentation, background checks, and local contract generation.
• Payroll Processing: Managing accurate and timely salary payments, including local taxes and social contributions.
• Tax and Social Security Remittance: Handling the calculation and payment of all mandatory employer and employee contributions to Vietnamese authorities.
• Benefits Administration: Facilitating enrollment and management of locally compliant benefits packages.
• HR Compliance: Ensuring adherence to Vietnam's labor laws regarding working hours, leave entitlements, termination procedures, and other employment regulations.

Benefits for Companies Looking to Hire in Vietnam Without Establishing a Local Entity

Choosing an EOR offers several compelling advantages for companies keen on entering the Vietnamese market without the burden of setting up a local entity:

• Rapid Market Entry: Hire employees in Vietnam much faster, bypassing the lengthy and complex process of entity registration.
• Reduced Costs: Avoid the significant capital investment and ongoing operational expenses associated with establishing and maintaining a local legal entity.
• Guaranteed Compliance: Mitigate legal risks as the EOR ensures full adherence to Vietnam's intricate labor laws, tax regulations, and social security requirements.
• Focus on Core Business: Offload administrative burdens, allowing your team to concentrate on strategic objectives and managing your Vietnamese workforce directly.
• Flexibility and Scalability: Easily scale your team up or down in Vietnam without the rigid commitments of a local entity.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Vietnam includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Vietnam.

Vietnam's tax obligations for employers in 2025 include contributions to social insurance, health insurance, unemployment insurance, and a trade union fund. Employers must contribute 17% for social insurance, 3% for health insurance, 1% for unemployment, and 0.5% for work-related accidents, based on employee salaries up to 20 times the base salary. Additionally, a 2% contribution to the trade union fund is required. These contributions are calculated monthly and are essential for compliance.

Employers are responsible for withholding personal income tax (PIT) from employees' salaries, with progressive rates ranging from 5% to 35%, depending on taxable income levels. Employees benefit from deductions such as a personal allowance of VND 11 million/month and VND 4.4 million/month per dependent, along with deductions for insurance contributions and charitable donations. PIT reporting deadlines include monthly returns by the 20th of the following month, quarterly returns if applicable, and annual finalization by March 31.

Foreign workers are taxed based on residency status: residents (≥183 days/year) pay PIT at resident rates, while non-residents are taxed at a flat 20%. Vietnam has DTAs with many countries to mitigate double taxation, and foreign companies may be subject to foreign contractor tax (FCT) on income from services or goods provided in Vietnam. Repatriation of profits is permitted under certain conditions.

Vietnam's salary landscape in 2025 is shaped by rapid economic growth, increasing foreign investment, and evolving labor laws. Industry-specific salaries vary widely, with technology roles like Software Engineers earning between 30-80 million VND/month, and roles in finance, manufacturing, and consumer goods offering competitive packages. The minimum wage is region-dependent, ranging from 3.45 million VND in rural areas (Region IV) to 4.96 million VND in urban centers (Region I).

Employers must comply with minimum wage regulations and often supplement base pay with bonuses and allowances such as Tet bonuses (equivalent to one month's salary), performance bonuses, housing, transportation, meal, and phone allowances. Salaries are typically paid monthly via bank transfer, with tax and social insurance contributions deducted at source. Trends indicate rising salaries driven by demand for skilled labor, inflation, and a focus on comprehensive benefits, alongside increased transparency and digital payroll adoption.

Vietnam's leave policies, governed by the Labor Code, include annual leave, public holidays, sick leave, parental leave, and other special leaves. Employers must comply with statutory entitlements while balancing operational needs.

Annual leave varies by age and occupation:

Unused annual leave can be carried over with mutual agreement, and employees are paid their regular salary during leave.

Public holidays include New Year’s, Lunar New Year (Tet), Hung Kings, Reunification Day, International Labor Day, and National Day, totaling approximately 11 days annually. If holidays fall on weekends, employees receive an extra day off, with full pay.

Sick leave depends on social insurance contributions:

Work-related illnesses may allow longer leave.

Parental leave includes:

• Maternity: 6 months with 100% salary, plus 60 days prenatal leave; additional days for multiple births.
• Paternity: 5–14 days depending on birth type, within 30 days of birth.
• Adoption: 6 months for children under six months, with allowances from social insurance.

Other leaves include bereavement (3 days), marriage (3 days for self, 1 day for child's marriage), with optional study or sabbatical leave based on employer policies.

Vietnam mandates several core employee benefits to ensure social security and welfare. Employers must provide social insurance, health insurance, unemployment insurance, paid public holidays, and paid annual leave. Additionally, a Tet bonus (Lunar New Year bonus) is customary, and severance allowances are required for employees with over a year of service upon redundancy. The minimum wage varies by region, and contribution rates for social, health, and unemployment insurance are shared between employers and employees.

Beyond legal requirements, many employers offer optional benefits to attract and retain talent, including private health and life insurance, performance bonuses, allowances (transportation, housing, meals), training programs, company cars, employee assistance programs, and additional leave days. Private health insurance often complements mandatory coverage, providing access to private healthcare services, with costs typically covered fully by employers.

Retirement benefits include social insurance pensions based on contributions and service years, with some companies offering supplementary pension plans funded jointly by employers and employees. Benefit packages differ by industry and company size; multinational corporations tend to offer comprehensive benefits like private health and life insurance, while SMEs may focus on basic mandatory benefits and essential allowances. The tech industry emphasizes flexible work and development opportunities, whereas manufacturing companies often prioritize allowances and occupational health benefits.

Employment agreements in Vietnam are vital for legal compliance and establishing clear employer-employee relationships. They must follow the Labor Code, which specifies contract types, essential clauses, probation periods, and termination procedures. Properly drafted contracts help prevent disputes and ensure both parties' rights are protected.

Vietnam recognizes two main contract types: fixed-term and indefinite-term. Key contractual clauses include job description, salary, working hours, probation period, and termination conditions. Employment agreements must include these essential clauses to be legally valid.

Employers should ensure employment agreements include these key clauses and adhere to legal standards to maintain compliance and foster positive employment relationships.

Vietnam's economy is increasingly adopting remote work, driven by the need for flexibility, productivity, and cost savings. As of 2025, companies are actively implementing remote policies, with legal frameworks evolving to support this shift. Employers must navigate labor laws, clearly define remote work terms in employment contracts, and ensure health, safety, and data protection compliance. Key legal considerations include establishing policies for full-time, hybrid, flextime, compressed workweeks, and job sharing arrangements.

Data security is paramount, requiring companies to enforce strict access controls, data encryption, employee training, and incident response plans. Equipment provision and expense reimbursement policies should be clearly outlined, including stipends for home office setup and internet costs. Reliable technology infrastructure—such as VPNs, cloud collaboration tools, remote monitoring, and technical support—is essential for effective remote work.

In Vietnam, employment termination must comply with the Labor Code, including specific notice periods based on contract type and reason for termination. Employers should adhere to these timelines to avoid legal disputes and liabilities. The notice periods vary as follows:

Employers must provide notice in advance, and severance obligations may also apply depending on the circumstances of termination. Proper adherence to these regulations ensures lawful termination processes and minimizes legal risks.

Vietnam's economy is increasingly adopting flexible work arrangements, with freelancing and independent contracting gaining traction across various sectors. This shift provides businesses with agility and access to specialized skills while offering individuals autonomy and diverse work opportunities. Employers must understand the legal, contractual, and tax frameworks to avoid misclassification risks and penalties. Key distinctions between employees and contractors include control over work, integration into business operations, provision of tools, financial risk, duration, exclusivity, and payment methods.

Independent contractor relationships in Vietnam are governed by service agreements, which should clearly define the scope of work, deliverables, timelines, payment terms, and other conditions. These agreements fall under civil or commercial law rather than labor law. Intellectual property rights should be explicitly addressed in contracts to prevent disputes, with common arrangements including contractor retention, client acquisition, or joint ownership of IP rights.

Contractors are responsible for their own tax obligations, including Personal Income Tax and potentially Value Added Tax, depending on revenue thresholds. They must register for a tax code, calculate PIT based on deemed rates, and file returns quarterly and annually. Insurance is not mandatory for contractors, who must arrange their own health and professional indemnity insurance. Key industries utilizing independent contractors include IT, creative services, consulting, education, media, and professional services, driven by the need for specialized skills and flexible staffing.

Note: Rates are illustrative and subject to change based on regulations and revenue thresholds.

Vietnam's work permit and visa regulations are vital for foreign professionals and employers to ensure legal compliance. Common visa types include the DN (up to 12 months, for business), LĐ (up to 2 years, with a valid work permit), ĐT (up to 5 years, for investors), and DL (tourist, up to 3 months). Most foreign workers require a work permit, which involves meeting age, qualification, health, and criminal record criteria, along with submitting documents such as passport copies, CV, qualifications, health checks, and references. The application process includes employer approval from MOLISA, followed by the worker's permit application, typically taking 15-20 working days, with fees varying by case.

Permanent residency is limited to those with significant contributions, long-term residence (over 3 years), or marriage to Vietnamese citizens, involving applications to the Ministry of Public Security. Dependents (spouse and children under 18) can obtain TT visas with supporting documents like marriage or birth certificates. Employers must ensure all foreign staff hold valid permits and visas, report changes, and support renewal processes, while employees must maintain valid documentation and comply with laws. Non-compliance risks fines, deportation, and penalties, emphasizing the importance of staying informed and seeking professional guidance.