When to use employer of record in Vietnam?

According to statistics from the Ministry of Planning and Investment, as of September 2024, the country had more than 120,000 new enterprises, an increase of 3.42% over the same period in 2023. This is a positive signal for the Vietnamese market, and at the same time raises an urgent need for effective human resource management, ensuring stable business development.

In that context, human resource services are considered a solution to help businesses both save time and optimize available resources. Trusted by many multinational companies around the world, outsourcing employment legally (EOR) is one of those services.

So when to use employer of record, how does it work? How to choose a reputable human resource management service partner? Let’s find out right in this article!

1. What is EOR?

EOR, short for Employer of Record, is a human resource management service provided by a third-party company that acts as a representative of a business to recruit employees even if the business does not have an office in that locality or country. Specifically, these human resource service companies will become the legal employers of employees recruited to work at the business’s branches.

Benefits of employer of record service

2. When does a company need EOR?

If your business needs to recruit employees in a new city or country that has not yet been registered but still wants to ensure employee rights according to Vietnamese law, then the EOR human resource management service is definitely the right choice. According to experts, businesses should use EOR when:

  • Only need to recruit a few employees for the branch.
  • There is a need to recruit freelance/temporary workers.
  • Need to recruit quickly before establishing a local legal entity.

3. Comparing PEO and EOR

Both are outsourced human resource services, but PEO and EOR target different customers and purposes.

Basically, PEO (Professional Employer Organization) is a company that provides professional labor services. When using PEO human resource services, this company will become a co-employer and share with the customer the tasks related to employees. The customer company is still the legal employer on legal documents.

The choice of which HR service to use will depend on the size, business goals and specific requirements of the company. Some benefits of employer of record service providers also facilitate clients to convert from EOR to PEO or vice versa to limit disruptions in business operations.

Scaling with employer of record(EOR) in 2025

4. What are the basic services of EOR?

In the role of a legal representative company for the use of employees, expanding globally with eor will undertake the following functions:

  • Ensuring legal compliance: Ensuring labor contracts comply with local labor laws, minimizing legal risks.
  • Payroll and tax management: Handling tasks and responsibilities related to salaries and bonuses, tax deductions according to the provisions of the labor contract and the law.
  • Welfare management: Consulting and taking responsibility for implementing employee benefits in accordance with the provisions of the contract and local laws.
  • Termination of employment: Carry out procedures in the resignation process, termination of employment contract in compliance with local laws, including compensation (if any).
  • Legal advice: Advise and support clients on issues related to labor law and local legal procedures.

5. EOR service costs

The cost of using EOR human resource services depends on many criteria such as the number of employees to be recruited, the scope of services, and other operating costs. Most EORs apply one of the following two cost models:

  • Fixed monthly fee per employee.
  • Percentage of salary plus related taxes.
  • Before making a decision, discuss carefully with the EOR company to understand what expenses will be incurred when using human resource services.

If you are considering using an EOR, here are four questions to consider when choosing a provider:

  • What is the scope of the EOR company’s operations?
  • Why use an employer of record?
  • Do they have real-world experience in the market you are targeting?
  • Is the company transparent about costs?
  • How responsive and willing is the company to support your business?

Whether you are a startup, a small and medium-sized enterprise or a multinational company like Uber, international hiring solution EOR is an effective human resource service solution that helps the business expansion process take place quickly and conveniently, minimizing risks in human resource management at branches.

However, scaling with employer of record is not a universal solution that can handle all problems that arise during the business expansion process, especially in employee performance management. To effectively utilize the advantages and minimize the impact of disadvantages when using human resource management services, businesses should carefully evaluate current and future operating plans and be proactive in risk response plans.

S4b Vietnam provides Enterprise Resource Planning (EOR) services for businesses of all sizes and industries. Contact S4B Vietnam’s experienced team for more advice!

>>>Read more: Top 5+The best human resource provision service in Vietnam

S4B Vietnam

  • Address: Unit 701B – 701C, Tower A, Handi Resco 521 Kim Ma Street, Ba Dinh District, Hanoi, Vietnam.
  • Tel: + 84 24 3974 4181
  • Email: service@s4b.com.vn

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