Is an employer of record (EOR) legal in Vietnam?

Is it legal to use an EOR in Vietnam?

Using an employer of record in Vietnam is legal, provided the arrangement rests on a recognised legal basis. Vietnam has no dedicated EOR statute, so a lawful EOR is delivered either through a licensed labour sub-leasing company or through ordinary employment by a licensed Vietnamese entity that invoices you under a business-to-business service agreement.

That distinction matters more than it sounds. Because “employer of record” is a commercial label rather than a Vietnamese legal category, a provider cannot point to an “EOR licence” to prove it is operating lawfully. What it can point to is the mechanism underneath — and each mechanism carries its own conditions, limits and liabilities. The rest of this page sets out both routes, cites the instruments they rest on, and flags the points that are genuinely unsettled rather than smoothing them over. For the service itself, see what an employer of record does.

Why there is no “employer of record” in Vietnamese law

There is no statute or licence named “employer of record” in Vietnam. The term is imported from the global HR-outsourcing market; Vietnamese law instead regulates the specific activities an EOR performs — signing an employment contract, running payroll, withholding personal income tax, paying compulsory insurance, and either sub-leasing a worker or employing one directly.

So the legal framework for EOR in Vietnam is assembled from existing instruments, not a single “EOR Act”. The two that matter most are the Labour Code 2019 (Law 45/2019/QH14), which governs employment contracts and labour sub-leasing, and Decree 145/2020/ND-CP, which details the sub-leasing licence.12 On top of those sit ordinary commercial-contract law, tax law and the data-protection rules. A provider that understands which of these it is relying on — and tells you — is a safer counterparty than one that markets a vague “EOR solution” with no legal basis stated.

Vietnam has no law that uses the words “employer of record.” A compliant EOR rests on one of two existing mechanisms — licensed labour sub-leasing, or direct employment by a licensed local entity — and it is the mechanism, not an “EOR licence,” that makes it lawful.

Route A — licensed labour sub-leasing

The first lawful route is labour sub-leasing (labour dispatch, or cho thuê lại lao động). A licensed company employs the worker on a Vietnamese labour contract, then places them to work under a client’s direction while remaining the legal employer (Labour Code 2019, Article 52).1 It is a tightly regulated activity, not something any company can offer.

To hold a sub-leasing licence, a provider must lodge a refundable bank deposit of VND 2 billion and have a legal representative with at least three years’ relevant management experience and a clean record (Decree 145/2020, Article 21). The licence runs for up to 60 months and is renewable (Article 23).2 Crucially, sub-leasing is confined to a closed list of 20 occupations set out in Appendix II to Decree 145/2020 — among them translation and interpreting, secretarial and administrative support, programming, machinery operation and repair, customer care and telemarketing, security and driving. Placing a worker outside that list through sub-leasing is unlawful.2

Two further rules shape how the route can be used. First, a sub-leased worker can be placed with the same client for a maximum of 12 months (Labour Code 2019, Article 53) — the single biggest legal limit on running a long-term EOR this way.1 Second, the worker must be paid no less than the client’s own comparable employees and must not face discrimination in working conditions (Articles 56–57).1 Sub-leasing may be used for demand spikes, cover for maternity, accident or military-duty absences, or specialist needs, but not to replace strikers or staff laid off for economic reasons (Article 53).1 The client signs a written sub-leasing contract, cannot pass the worker on to a third party, and must return the worker at the end of the term. For the licensed-dispatch regime in full — the licence conditions, the refundable deposit, the closed occupation list and how it differs from a staffing agency — see labour outsourcing and dispatch in Vietnam.

Route B — direct employment under a B2B service agreement

The second lawful route is ordinary direct employment. A licensed Vietnamese entity employs the worker on a standard labour contract — running payroll, withholding personal income tax, paying social, health and unemployment insurance, and registering the contract — and invoices the overseas client under a business-to-business service agreement. Because this is ordinary employment rather than sub-leasing, it is not bound by the 12-month placement cap.1

This is how most “EOR Vietnam” services are actually structured, and it is worth being precise about why. Direct employment is not a special EOR permission written into the law; it is a structuring approach that uses the ordinary employment and commercial-contract rules every Vietnamese company already works under. It avoids the Article 53 ceiling because there is no sub-leasing — the employing entity is the genuine, registered employer of the worker, not a dispatcher placing labour with a client. The provider carries the standard employer obligations, including roughly 21.5% in employer social, health and unemployment insurance on Vietnamese staff — about 23.5% once the separate 2% trade-union fee is added4 — which you can read about on employer payroll costs in Vietnam.

Under this route the employing entity does everything a direct employer must. It issues and registers a Vietnamese-law labour contract, runs monthly payroll in Vietnamese dong, withholds and remits personal income tax, pays compulsory social, health and unemployment insurance, and handles onboarding and offboarding. For a foreign hire it also sponsors the work permit and residence paperwork. The written quote you receive should name the specific entity that will employ the worker and state which of these duties it assumes — see Vietnam work permits for foreign employees and how personal income tax is withheld for what sits inside that scope. If the employing entity is not named, you cannot verify that the arrangement is genuine employment rather than an informal pass-through.

Which route a compliant EOR uses, and why it matters to you

Which route a compliant EOR uses determines your exposure, so it is the first question to put to any provider. Sub-leasing is the right fit for short, genuinely temporary placements in one of the 20 permitted occupations; direct employment is the usual basis for ongoing EOR hiring because it is not capped at 12 months. The table below sets the two side by side.

The route also decides where liability sits. Under either one the Vietnamese entity is the legal employer and answers for contracts, insurance and tax filings. What differs is the residual risk you keep: sub-leasing adds the 12-month cap and the occupation list as hard limits, while direct employment removes those but leaves the permanent-establishment and co-employment questions squarely in view, because the worker is performing your business under your direction. Neither route is a shortcut past the risks set out below; they simply distribute them differently, which is why the structure belongs in the service agreement rather than in marketing copy.

The legal risks you keep

Using an EOR narrows your risk but does not erase it. Four points deserve attention before you rely on one. Three are genuinely unsettled or turn on the facts, and an honest provider will name them rather than promise them away; the fourth — misclassification — is settled law whose bite depends on how the relationship is actually run. Each is stated as of October 2026.

Long-term sub-leasing renewal is unsettled

The law caps a sub-leasing placement at 12 months and does not clearly say whether back-to-back placements of the same worker can be renewed (Labour Code 2019, Article 53 is silent on renewal).1 As of October 2026 this is an unsettled area, so stacking consecutive placements carries regulatory risk. Confirm the structure with Vietnamese counsel before relying on repeated placements — and treat it as a reason many providers use direct employment instead.

Permanent-establishment and tax-presence risk

Using an EOR does not by itself remove the risk that your company is treated as having a taxable presence — a permanent establishment — in Vietnam. If the worker concludes contracts for, or acts as a dependent agent of, the foreign principal, the tax authorities may assert a permanent establishment with corporate-tax exposure, subject to the Law on Corporate Income Tax and the applicable double-tax treaty. As of October 2026 this depends on the facts; take specific tax advice before assuming an EOR avoids it. For the dependent-agent trigger, the roles most exposed and how to reduce the exposure, see permanent establishment risk in Vietnam.

Co-employment is an untested argument

If an overseas client directs the worker in the way an employer would, there is an argument — not settled in Vietnamese law — that employer liabilities could attach to the client as well as to the EOR, by reference to the substance test in the Labour Code.1 As of October 2026 this is untested. The practical response is to keep day-to-day direction with the legal employer and to take advice on how you manage the worker. For why Vietnamese law has no co-employment concept — and what that means for “PEO” offerings that market one — see whether co-employment is legal in Vietnam.

Misclassification remains your exposure if the arrangement is wrong

If a “contractor” is in substance an employee, a labour inspector can reclassify the relationship from the start, with back-dated social insurance (about 21.5% employer plus 10.5% employee of gross, roughly 32% in total)4, back personal income tax and interest. The fine for not signing a required written contract is tiered by the number of affected workers — from VND 2–25 million for an individual employer, and double that for a company, up to VND 50 million (Decree 283/2026/ND-CP, which replaced Decree 12/2022/ND-CP from 10 September 2026; doubling under Article 7).3 A properly structured EOR employs the person correctly and removes this; for the detail, see the full contractor-versus-employee comparison and Vietnam’s employment-contract rules and the Article 13 substance test.

How to stay on the right side of the law

Staying compliant with an EOR in Vietnam comes down to knowing the legal basis of your arrangement and keeping it genuine. The structure is lawful; the risk is in the detail. A short, practical checklist:

1. Ask which route they use. A credible provider will say whether you are on licensed labour sub-leasing or direct employment, and will name the Vietnamese employing entity in writing.
2. Check the occupation if it is sub-leasing. Confirm the role sits within the 20 permitted occupations and that the placement will not exceed 12 months.
3. Keep day-to-day direction with the legal employer. This reduces the co-employment and permanent-establishment arguments against you.
4. Take tax advice on permanent establishment. Especially where the worker negotiates or signs contracts on your behalf.
5. Get the structure in the contract. The service agreement should state the legal route, the employing entity and who bears which liability. For how to compare providers on exactly these points, see how to choose an EOR in Vietnam and the EOR-versus-PEO and co-employment question.

Those five checks cover the legal structure; the operational detail — payroll, tax, work permits, leave and termination — runs across the Vietnam employer guides.