EOR vs PEO in Vietnam: what’s the difference?

What is an employer of record (EOR)?

An employer of record (EOR) in Vietnam is a company that legally employs your worker through its own Vietnam-registered entity, so you can hire without opening one yourself. The EOR signs the Labour Code employment contract, runs monthly payroll in Vietnamese dong, pays statutory social, health and unemployment insurance, and withholds personal income tax, while you direct the day-to-day work.

The defining feature of an EOR is that it is the single, unambiguous legal employer. One Vietnam-registered company signs one contract and carries every employer obligation and liability under Vietnamese law; you are the functional manager, not a second employer. On top of gross salary that employer bears about 23.5% in statutory on-costs — 17.5% social insurance, 3% health insurance, 1% unemployment insurance and a 2% trade-union fee — as of October 2026.12 The itemised breakdown sits on Vietnam’s employer payroll costs and the roughly 23.5% statutory on-cost, and the full definition is on what an employer of record is and how it works.

Because Vietnam has no statute that uses the words “employer of record”, an EOR runs on one of two lawful routes: direct employment by a Vietnam-registered company under a service agreement, or licensed labour sub-leasing. Which route a provider uses decides who bears liability — set out under the two lawful routes an EOR can use in Vietnam. What matters for this comparison is that, either way, the employer is one defined Vietnamese entity, not a shared pair.

What is a PEO (professional employer organisation)?

A professional employer organisation (PEO) is a model from the United States in which the provider and the client act as co-employers of the same worker. The PEO administers payroll, tax filings and benefits under its own registration, while the client stays the common-law employer that directs the staff and remains legally responsible for them — the two share employer duties under a contractual split. The crucial point is what a genuine PEO does not do: it does not let you employ people in a country where you have no legal presence. It works precisely because the client is already an employer with its own entity — the opposite of the problem an EOR solves, which is hiring when you have no entity at all.

The term has also drifted: some providers market a “global PEO” that, on inspection, is an EOR — the legal employer abroad, not a co-employer alongside you. So the useful question about any “PEO” offer is not what it is called but who signs the employment contract and who is liable. What a PEO really means in this market, and why most offers here are something else, is set out on what a PEO in Vietnam actually is.

Does co-employment exist in Vietnam?

Co-employment has no clean basis in Vietnamese law. The Labour Code is built around a single legal employer for each contract and codifies no shared-employer relationship, and it applies a substance test: any arrangement with paid work, wages and one party directing or supervising the worker is treated as an employment relationship, whatever the document is called (Labour Code 2019, Art. 13).3 As of October 2026, whether employer liabilities could also attach to an overseas client that directs the worker is an untested argument, not settled law — so keep day-to-day direction clear and take advice.

That is why a “PEO Vietnam” offer is almost always something else in substance: an EOR that directly employs the worker through its own entity, or a payroll and HR service bolted onto an entity you already own — not a true co-employer alongside you. The full legal picture, including the joint-employer and shared-liability arguments, is set out on whether co-employment is legal in Vietnam; the related permanent-establishment risk when using an EOR is covered under co-employment and permanent-establishment risk when using an EOR.

Which should you use in Vietnam?

Which to use in Vietnam is usually straightforward. If you have no Vietnamese entity and want to employ someone there, you need an EOR, because only a Vietnam-registered company can be the legal employer. A PEO in the US co-employment sense does not apply. If you already run a Vietnamese entity and only want payroll and HR administration, an administrative service — sometimes labelled a “PEO” — can take that load.

In other words, the choice is rarely EOR against a true PEO; it is EOR against doing it yourself through an entity you own or set up. If you are weighing that, the cost and speed trade-off is worked through under using an EOR versus setting up your own entity in Vietnam, and what an engagement actually costs is on what an EOR in Vietnam costs. If instead you are tempted to avoid employment altogether by paying someone as a contractor, read first about the misclassification risk of engaging a contractor who is really an employee, then how to hire and pay a contractor in Vietnam compliantly.

Whatever a provider calls its product, judge it on who signs the contract, who is the legal employer, and who is liable — and ask it to put the answer in writing. The questions worth asking before you sign are set out under how to choose an EOR provider in Vietnam, or — if a provider is pitching a “PEO” — how to choose a PEO in Vietnam; the wider rules for employing people in Vietnam run across our Vietnam employer guides. EOR Vietnam provides the employer-of-record service in Vietnam directly, as the single legal employer, so if you would rather we assess your situation, request a costed EOR Vietnam quote.