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Employer of Record (EOR) in Vietnam

A Vietnam Employer of Record (EOR) is a service provider or company that assists businesses in managing their employment obligations and responsibilities in Vietnam. When a company wants to hire employees in Vietnam but does not have a legal entity or presence in the country, it can partner with an EOR to act as the official employer for employment compliance purposes.

Key Takeaways 

  • A Vietnam Employer of Record (EOR) helps international companies to hire employees in Vietnam.
  • A Vietnam EOR takes over employment compliance, payroll and HR, leaving client companies to focus on what matters. 
  • When choosing a Vietnam EOR, make sure to choose a provider with expertise in the local marketplace and knowledgeable about Vietnam labor lal. 

What is a Vietnam EOR?

A Vietnam Employer of Record (EOR) is a service provider or company that assists businesses in managing their employment obligations and responsibilities in Vietnam. When a company wants to hire employees in Vietnam but does not have a legal entity or presence in the country, it can partner with an EOR to act as the official employer for employment compliance purposes.

The Vietnam EOR handles various administrative tasks related to employment, such as payroll processing, tax withholding, benefits administration, HR compliance, employment contracts, and statutory contributions. They ensure the company’s employees are legally employed and compliant with local labor laws and regulations.

By utilizing the services of an EOR, businesses can establish a presence in Vietnam and engage local talent without the need to set up their legal entity or navigate complex employment regulations independently. This arrangement allows companies to focus on their core operations while leaving employment’s administrative and legal aspects to the EOR.

How does a Vietnam Employer of Record work?

A Vietnam EOR provides a range of services to businesses that seek to employ workers in Vietnam but do not have a legal entity or presence in the country. Here are some common services offered by a Vietnam EOR:

  1. Payroll Management: The EOR handles payroll processing, ensuring that employees are paid accurately and on time. They calculate wages, make deductions for taxes and social security contributions, and manage any other payroll-related tasks.
  2. HR Compliance: The EOR ensures compliance with local labor laws and regulations. They assist with drafting employment contracts, managing employee onboarding and offboarding processes, and handling terminations in accordance with local laws.
  3. Benefits Administration: The EOR administers employee benefits such as health insurance, pension plans, and other statutory benefits required by Vietnamese labor laws. They ensure compliance with benefit regulations and manage the enrollment and administration processes.
  4. Taxation and Statutory Contributions: The EOR handles tax withholding for employees, calculates and remits payroll taxes to the relevant authorities, and manages statutory contributions such as social security and health insurance payments.
  5. Employment Contracts and Documentation: The EOR assists in preparing employment contracts that comply with Vietnamese labor laws. They also manage documentation related to employee records, timesheets, leave management, and other necessary paperwork.
  6. Legal and Compliance Support: The EOR keeps businesses updated on changes in labor laws and regulations in Vietnam. They provide guidance and support to ensure compliance with employment-related legal requirements.
  7. Work Permits and Visas: If hiring foreign workers, the EOR can assist with obtaining work permits and visas, ensuring that the necessary immigration requirements are met.
  8. Employee Relations: The EOR may provide support and guidance on employee relations matters, including dispute resolution, disciplinary actions, and performance management.

It’s important to note that the specific services offered by a Vietnam EOR may vary based on the provider and the agreement reached with the client company.

How to engage a Vietnam Employer of Record

To engage a Vietnam EOR, you should follow these general steps:

  1. Research and Identify Potential EORs: Start by researching EOR service providers in Vietnam. Look for reputable companies with experience in providing EOR services and a good understanding of Vietnamese labor laws and regulations. You can search online, ask for recommendations, or consult with local business associations or professional networks.
  2. Request Proposals: Contact the selected EOR providers and request proposals or quotes based on your requirements. Provide them with relevant details such as the number of employees, job roles, expected start dates, and any specific services you are seeking.
  3. Evaluate Proposals: Review the proposals received from different EOR providers. Consider factors such as service offerings, pricing, experience, reputation, and client references. Assess how well the EOR can meet your specific needs and compliance requirements.
  4. Consultation and Contract Negotiation: Schedule consultations or meetings with shortlisted EOR providers to discuss your requirements in detail. Seek clarification on any questions or concerns you may have. During these discussions, negotiate the terms, including service scope, service level agreements, pricing, and contract duration.
  5. Due Diligence: Before finalizing the engagement, conduct due diligence on the EOR provider. Verify their credentials, reputation, and financial stability. Check for any potential red flags or legal issues that may impact their reliability as an employer of record.
  6. Contract Signing: Once you have selected an EOR provider, review the proposed contract carefully. Ensure that all terms and conditions, including service scope, pricing, responsibilities, and any additional provisions, are clearly defined and agreed upon. Seek legal counsel if necessary. Sign the contract once both parties are satisfied.
  7. Onboarding and Implementation: Work closely with the EOR to provide necessary information, such as employee details, employment contracts, and payroll information. Coordinate the onboarding process for your employees, ensuring that the EOR has all the required documentation and information to legally employ them in Vietnam.

Engaging a Vietnam EOR involves careful consideration of your specific needs, diligent evaluation of service providers, and thorough contract negotiation. It’s crucial to establish a strong working relationship with the EOR to ensure smooth and compliant employment operations in Vietnam.

What are the benefits of a Vietnam Employer of Record?

Engaging a Vietnam EOR offers several benefits for businesses:

  1. Local Market Entry: For companies looking to enter the Vietnamese market, partnering with an EOR allows them to establish a presence and hire employees without the need for setting up a legal entity or subsidiary. This facilitates a faster market entry and reduces the complexities and costs associated with establishing a separate entity.
  2. Compliance with Labor Laws: Vietnamese labor laws and regulations can be complex and subject to frequent changes. EORs have expertise in local labor laws and ensure that your employment practices and contracts comply with these regulations. They help mitigate compliance risks and penalties that may arise from non-compliance.
  3. Talent Acquisition and Retention: EORs can often assist in the recruitment and onboarding of local employees, leveraging their knowledge of the local labor market. They help ensure that you attract and retain top talent by offering competitive compensation packages, benefits, and compliant employment practices.
  4. Cost Efficiency: Engaging an EOR can be cost-effective compared to establishing and maintaining a legal entity in Vietnam. It eliminates the need for hiring additional staff to handle payroll, HR, and legal compliance. EORs often provide services on a scalable basis, allowing you to adjust costs as your workforce grows or contracts.
  5. Flexibility and Scalability: EORs offer flexibility in managing your workforce. They can help you navigate fluctuations in headcount, seasonal employment, and project-based staffing needs. As your business grows, the EOR can accommodate the expansion of your workforce seamlessly.
  6. Local Expertise and Support: EORs possess in-depth knowledge of local employment practices, cultural norms, and business customs. They can provide guidance and support in navigating the Vietnamese business landscape, assisting with local HR practices, and addressing any employee-related concerns.

It’s important to note that the specific benefits may vary depending on the EOR provider and the services agreed upon. It’s advisable to evaluate the offerings of different EORs and choose one that aligns with your business requirements and long-term goals.

What are the disadvantages of a Vietnam Employer of Record?

While engaging a Vietnam EOR can offer numerous advantages, there are also some potential disadvantages to consider:

  1. Limited Control: When you partner with an EOR, you may have limited control over certain aspects of employment, such as payroll processing, benefits administration, and HR policies. The EOR takes care of these functions on your behalf, which means you may have less direct involvement in decision-making and customization.
  2. Dependency on the EOR: As you rely on the EOR to handle critical employment tasks, there is a level of dependency on their services. If there are any issues or disruptions in their operations, it may impact your business’s HR processes and employee management.
  3. Cost Considerations: While engaging an EOR can be cost-effective compared to establishing a legal entity, it still involves costs. EOR services typically come with fees, which may vary based on the provider, services rendered, and the number of employees. It’s important to carefully evaluate the cost structure and ensure that it aligns with your budget.
  4. Potential Compliance Risks: While EORs specialize in managing employment compliance, there is still a shared responsibility between your company and the EOR to ensure compliance with local labor laws. It’s crucial to choose a reputable EOR with a strong track record of compliance to mitigate compliance risks.
  5. Limited Scalability: While EORs offer flexibility and scalability to some extent, there may be limitations on the number of employees or the type of workforce arrangements they can support. If you have unique or specialized staffing requirements, it’s essential to discuss them with the EOR to ensure they can accommodate your needs.
  6. Transition Challenges: If you decide to transition from an EOR to establishing your own legal entity in Vietnam, there can be complexities involved in transferring employees, contracts, and administrative responsibilities. Proper planning and coordination are necessary to minimize any disruptions during the transition.

It’s important to assess these potential disadvantages against your specific business needs and evaluate the trade-offs between outsourcing employment responsibilities to an EOR and establishing your own legal presence in Vietnam.

Top 5 Vietnam Employers of Record

  1. Skuad: Skuad focuses on providing remote team-building solutions. The company offers a comprehensive global employment platform, handling hiring, onboarding, payroll, compliance, and more. They stand out as a Vietnam PEO by facilitating remote work with full legal compliance and less administrative hassle for employers.

  2. Horizons (also known as New Horizons Global Partners): Horizons provides customized, comprehensive international PEO/EOR, recruitment, and payroll services. Their bespoke approach to meeting specific client needs might give them an edge in the Vietnamese market, allowing companies to focus on their core business.

  3. Bradford Jacobs: Bradford Jacobs offers global PEO/EOR services and specializes in ensuring businesses can expand without establishing a foreign entity. Their experience and expertise in managing complexities around international business expansion might make them a favorable choice in Vietnam.

  4. Multiplier: Multiplier’s platform enables companies to hire and manage remote workers worldwide in a compliant manner. They have a technology-driven approach, which streamlines operations and brings efficiency to businesses hiring in Vietnam.

  5. Papaya Global: Papaya Global provides a comprehensive global workforce management solution, ranging from global payroll to EOR services. Compared to other Vietnam EORs, the distinguishing factor of Papaya is their unified platform, which simplifies the management of a global workforce, making hiring and payroll in Vietnam a seamless experience for businesses.

Vietnam Employer of Record — choose wisely

In conclusion, Vietnam EORs provide businesses with a streamlined solution for employing workers in Vietnam. They offer valuable support in managing payroll, compliance with labor laws, benefits administration, and other administrative tasks. Engaging an EOR can help companies enter the Vietnamese market efficiently, reduce costs, ensure legal compliance, and provide access to local expertise. However, there are considerations such as limited control, potential communication challenges, and the need to carefully assess the suitability of an EOR for your specific business needs.

FAQs

While both Vietnam EORs and staffing agencies provide services related to employment, they have different roles and functions. An EOR acts as the legal employer of record for your employees, handling payroll, compliance, and HR administration on your behalf. They take on the employer responsibilities and liabilities associated with employment in Vietnam. On the other hand, a staffing agency primarily focuses on sourcing and providing temporary or contract workers to meet your specific staffing needs. Staffing agencies typically do not take on the legal employer role and may not handle payroll or compliance in the same comprehensive manner as an EOR. The choice between an EOR and a staffing agency depends on your requirements for long-term employment management versus short-term staffing solutions.

Yes, it is possible to transition from an EOR arrangement to establishing your own legal entity in Vietnam. However, the process can involve certain complexities and considerations. It typically requires setting up a legal entity such as a subsidiary or representative office, obtaining necessary permits and licenses, transferring employees from the EOR to the new entity, and assuming employer responsibilities directly. The transition may involve legal, financial, and HR implications that need to be carefully planned and coordinated with the support of legal and business professionals. It's advisable to discuss your long-term goals with the EOR and seek guidance from experts to determine the most suitable path for your business.

Remember that specific requirements and processes may vary based on individual circumstances, so it's crucial to consult with professionals familiar with Vietnamese laws and regulations for accurate and tailored advice.

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