How to use an Employer of Record in Vietnam

As your company grows, you might be looking to add a few remote employees from Southeast Asia, Vietnam specifically. But it’s not as simple a process as posting a job advert on LinkedIn, interviewing candidates, and onboarding them once you've picked the right person for the role.

There’s a lot that goes into hiring remote employees in Vietnam or globally. You’ll typically need to create a local subsidiary, file for employment permits with local authorities, set up payroll and benefits, and stay compliant with Vietnamese labor regulations.

Alternatively, you can use an employer of record (EOR) to do all the heavy lifting for you. An EOR handles all the legal legwork of hiring in Vietnam and provides the infrastructure for sorting out taxes, payroll, benefits, and onboarding new employees. 

In this article, we explain how you can use an EOR to hire in Vietnam, benefits, costs, and how to choose an EOR that’s right for your business.

Six steps to hiring employees in Vietnam using an employer of record

Using the right employer of record will help you manage payroll, benefits, compliance, and administrative tasks like figuring out competitive salaries for new hires, or planning taxes to reduce your burden — that’s if you choose the right EOR.

How do you make sure you partner with an EOR that’s well-positioned to help you hire in Vietnam?

Step 1: Weigh up the pros and cons of each potential partner

Make a shortlist of the features you need to streamline your international hiring process, and use the list to vet potential EOR providers. These can include:

• Fast onboarding for new employees

• Comprehensive global benefits for offering employees pensions, health insurance, retirement accounts, etc.

• Payroll system for paying salaries and processing invoices

• Intellectual property protection

• Enhanced data security backed by relevant certifications

• Compliance assistance

• Reduced paperwork and integrations with your existing HR software

Step 2: Take the time to select the most appropriate EOR service provider 

An employer of record should have a local entity registered in Vietnam and the country where you’re looking to use their services. Make sure that they’re not using third-party entities for their services as you won’t have control over prices, security, or the employee experience as you’re not directly dealing with these companies.

Step 3: Check the reviews, testimonials, and coverage of your shortlist of providers

Read up on reviews and testimonials, especially those published by users in your niche. They’ll help you understand the quality of service you can expect before you get locked into a contract. Check out online press coverage, reviews on third-party sites, and browse social media to gain insights into the way the EOR works and how well (or not) they treat their past and current employees.

Step 4: Ensure that the EOR solution for Vietnam will provide a best-in-class employee experience

Since the EOR manages employees on your behalf, they act as the public-facing extension of your company. Make sure that the EOR treats your employees well. An employer of record should demonstrate that they can pay employee salaries on time, resolve your employees’ queries, onboard new hires quickly, and guarantee 99% uptime.

Step 5: Work with your partner to make sure you always provide a fair and equitable compensation package 

An employer of record understands the local labor landscape better than you, so it’s best to get their guidance with setting salaries and offering benefits. An EOR should provide a modern and competitive salary and benefits, considering the local labor rules in Vietnam, as well as the individual’s role, experience, and skills. You also have to factor in the local cost of living and general market rates to arrive at competitive salaries that’ll bring you A-class candidates.

Step 6: Make sure your partner will guard your intellectual property and maintain data security for your business

Whether it’s SOC 2 or GDPR, an ideal EOR provider should have the infrastructure required to protect your data and secure any intellectual property your remote employees produce for you. Being proactive about IP and inventions helps avoid getting entangled in litigation in a country whose law you may be unfamiliar with.

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What are the benefits of using an employer of record in Vietnam?

An employer of record provides the infrastructure you need to hire Vietnamese employees without setting up a local subsidiary. A key benefit to using an EOR to manage your international hiring is the time, effort, and resources it can save you.

Apart from ensuring compliance with employment regulations in Vietnam, an EOR also handles the HR and admin work involved in onboarding, paying, and managing workers in the country, and globally.

An EOR helps you:

• Maintain a local entity that’s authorized to hire Vietnamese employees

• Onboard new employees faster

• Pay out salaries and process invoices on time, without using costly third-party payment services, etc.

• Offer compliant benefits and perks

• Follow termination procedures when dismissing employees to avoid legal trouble

• Get access to experts on Vietnamese law who can advise you on thorny issues

• Stay compliant with changing local laws

• Withhold and file taxes and payroll contributions like social security, unemployment, etc.

How much does it cost to use an EOR in Vietnam?

EOR costs depend on the kind of services required, and the location and number of workers you want to hire. Generally, costs range from $599 to $2,000 per employee per month.

Older EOR providers that support a large network of countries can charge enterprise rates, whereas the smaller providers may charge less, but may not have the infrastructure or services offered by the traditional providers. You’ll have to make sure they have the capabilities to provide you with compliance and security measures, which are essential when you’re hiring abroad. 

Remote’s EOR services include the full stack of services needed to hire globally — onboarding, benefits, taxes, compliance, payroll, and data protection — and you get all of this at an affordable, flat rate. Take a look at how Remote compares to the competition.

Hiring in Vietnam

Vietnam’s primary labor law is the 2019 Labor Code, which came into effect on January 1, 2021. 

Employment contracts and agreements in Vietnam

All employment contracts and agreements must align with the provisions made in Vietnam’s Labor Code to be recognized legally. Oral and written contracts are equally valid and should specify terms such as:

• The work to be performed

• Working hours and rest periods

• Salaries and designated workplace

• Duration of the contract

• Provisions made for occupational safety, health, and social security

Labor compliance in Vietnam

Employers are required to self-inspect to ensure they comply with labor standards outlined in the Vietnamese Labor Code.

Employees must be protected from any form of discrimination or harassment based on gender, ethnicity, race, skin color, social class, religion and beliefs, HIV status, age, pregnancy, marital status, family responsibility, disability, and trade union participation.

Likewise, employers are to limit working hours to 48 hours per week or 36 per week, for workers employed in hazardous, heavy, or toxic conditions.

Workers are entitled to 1.5 times the normal wages for overtime work, and double their normal rate for overtime work carried out on the weekend.

The Vietnamese Labor Code recognizes certain protected worker classes that can’t be terminated at will, such as:

• Employees on sick leave,

• Workers who’re on leave taken with the employer’s consent,

• An employee detained without trial or awaiting results of an investigation by state authorities, and

• Part-time trade union officials

Payroll and payroll taxes in Vietnam

Personal income and payroll taxes are capped at 35% and 10.5% respectively and are to be withheld by the employer. Employer payroll contributions are equal to 21.5%, covering:

• 0.50%: Social Insurance (Labor, Accident, and Occupational Disease Fund)

• 14.00%: Social Insurance — Retirement and Death Gratuity Fund

• 3.00%: Social Insurance — Sickness and Maternity Fund

• 3.00%: Health Insurance

• 1.00%: Unemployment Insurance

Employment benefits and compensation in Vietnam

Vietnamese law requires that you provide certain statutory benefits for your employees.

Remote can help you go above and beyond with optional benefits and perks that’ll help you attract and retain the best employees.

Maternity and paternity leave

Expectant mothers are entitled to six months of maternity leave, or up to seven months off for complicated or multiple births. New fathers can take anywhere between five and 14 days of paid paternity leave.

Maternity and paternity benefits are equal to 100% of an employee’s wages, paid out by Vietnam’s Social Insurance Authority.

Vacations and public holidays

There are 13 public holidays. Employees are entitled to at least 12 days per year, which increases by a day for every five years of service.

Healthcare and sick leave

Employees are entitled to 30 days of paid sick leave (60 days in exceptional or severe situations) with illness benefits (75% of the normal salary) paid by the Social Insurance Authority.

Other benefits Remote can help you roll out

Here at Remote, we believe companies should be able to hire anyone across the world. And that the best talent should get exceptional treatment. This is why we offer a range of country-specific global benefits for your distributed team.

Remote can help you roll out custom benefits such as:

• 401k retirement account

• Health, vision, and dental care insurance, and

• Life insurance

Severance pay and employee terminations in Vietnam

Employers must follow the process outlined in the Vietnamese Labor Code unless they can prove an employee is guilty of misconduct, such as dishonesty, fraud, negligence, etc. A notice of termination must be given to the employee in writing, and it should be filed with the authorities.

Normal severance payments are equal to half of an employee’s regular salary for every year of service. If the employee is let go for redundancy because of internal changes, technological restructuring, etc. the employee must receive a month’s salary for every year worked.

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What are the risks of employee misclassification in Vietnam?

Misclassifying your employees involves incorrectly classifying your workers as independent contractors to deny them access to critical benefits like health care, without providing adequate compensation. 

Vietnamese authorities may consider any case of misclassifying employees as deliberate and may impose fines or order you to pay damages for any entitlements a worker should have been entitled to.

Here’s our guide to understanding the risks of employee misclassification, so you can make sure you’re not cutting your employees short.

Get started with an employer of record for Vietnam

If you’re expanding your team in Asia, it might be a good idea to look for local talent in Vietnam. Hiring and paying workers in Vietnam or elsewhere in the world is no easy feat. An EOR reduces all the hassle and effort involved in global hiring to just a few clicks. Remote’s global HR platform offers everything you need to hire Vietnamese talent without worrying about local entities, taxes, or filing for employment permits. Remote provides the infrastructure you need to:

• Manage payroll and benefits

• Stay up to date with changes to Vietnam’s Labor Code

• Scale your team with global talent

• Hire through a local entity

• Roll out benefits that suit your employees’ lifestyles, an

• Secure your intellectual property and sensitive data 

Learn more about how Remote can offer the best value for growing companies looking to hire international employees. Get started with Remote and start building your team in Vietnam right away!

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