In recent years, the term “Employer of Record” (EOR) has gained popularity in Vietnam. Because of the high demand for human resources from companies overseas that do not intend to be physically present in the country, EOR service has emerged as the most preferred solution for remote hiring and employment outsourcing.

What is EOR service?

An Employer of Record is a company (local entity) that is legally responsible, on behalf of its client, for paying its employees, including dealing with employee taxes, benefits, insurance, visa application, and sponsorship applications, and a great many other transactions and operations concerning human resources.

Why EOR service?

Companies often hire EORs to minimize all the complications and vicissitudes related to human resources operations, market access, market understanding and market participation, and managing payroll for the employees in other countries (Vietnam).

In brief, the EOR company will formally become the employer of its client’s employees. This outsourced service keeps a business in compliance with the local labor law and other fields of related regulations and significantly assists the company during its internationalization.

In international scenarios, regulations regarding benefits and taxes can vary and be very complex. EORs help companies penetrate new markets, manage benefit systems more efficiently, and can even sponsor work visas, work permits, TRC (temporary resident cards) for their foreign employees in Vietnam.

Read more: Understanding Vietnam employment law, practice, and culture

Similar concept

EOR is usually mistaken with Professional Employer Organizations (PEOs). Even though they seem similar and many companies tend to confuse them, Professional Employer Organizations (PEOs) and Employers of Record (EORs) provide very different services.

There are several factors that differentiate these two outsourcing models. Here we focus on the main differences:

• Liability: PEO plays the role of the client’s co-employer. The client company still assumes all liabilities and responsibilities. An EOR, on the other hand, will become the legal employer of the client company’s employees. Because of this, the EOR acquires the liability load.
• Compliance: EORs manage compliance better.
• Insurance: Employer of Records take good care of Insurances for the employees

How EOR service works in Vietnam

The process is simple and straightforward:

1. EOR service contract engagement
2. Initial fee or deposit settlement if any
3. Starts onboarding the employee into its payroll.
4. Legal documents arrangement customized according to the offers (probation contract, labor contract, etc)
5. Enrolls the employee(s) into the state insurance system, in full compliance with local legal and PIT tax requirements
6. Monthly salary, employer tax/duties calculation by the cut-off date
7. EOR company invoices the client monthly for the services, including the employee’s salary, benefits, and expenses.
8. Pay salary to the employee and tax/duties to the government by the payday.

Recruiting foreigners in Vietnam using EOR service

In reality, there are two distinctive practices of employment in Vietnam. Recruiting Vietnamese and recruiting non-Vietnamese (foreigner) can be very different from each other. Compared to employing a local Vietnamese, it is way more challenging if the company decides to hire a foreigner.

As a matter of fact, it is by law that a company has to obtain permits to recruit non-Vietnamese for any job post. This process takes 1-2 months to be completed after a bunch of papers and admin works. Furthermore, the employment of ex-pats must be reported periodically to the government which results in much of a hassle for business operations. This is the reason why many companies, even if they have their own establishments in Vietnam, still seek for EOR arrangements to employ their non-Vietnamese staff. And the EOR company also has different charging rates for this employment category.

Engaging VNBG as your Employer of Record

We are taking pride in being an experienced and competent Employer of Record provider. Our experienced HR and Payroll team can also provide consultation on various situations that happen related to employees in order to contribute to your company’s success.

Among others, our human resource outsourcing services consist of:

1. Consulting on HR and C&B policies for the Vietnam market.
2. Labour contract, probation contract arrangement.
3. Payroll, tax, and compulsory insurance management with calculation and processing.
4. Labour law consultancy and advice.
5. Work visa, work permit, and TRC (Temporary resident card) for foreigners under our sponsorship.

Contact us to obtain the quotation today.