Vietnam’s burgeoning economy and skilled workforce make it an attractive destination for businesses seeking global talent. However, establishing a full legal entity can be a time-consuming and complex process. Fortunately, there are compliant and efficient ways to hire employees in Vietnam without going through this lengthy setup.  This article will walk you through the viable options for hiring employee in Vietnam without a legal entity, helping you tap into the Vietnamese talent pool quickly and effectively.

Why Hire in Vietnam Without a Legal Entity?

Several reasons might lead your business to explore hiring in Vietnam without establishing a local entity:

• Market Testing: You might want to test the Vietnamese market before committing to a full-fledged legal structure.
• Short-Term Projects: Your hiring needs might be project-based and not require a permanent local presence.
• Remote Teams: You might be building a remote team and want to hire skilled individuals based in Vietnam.
• Cost Efficiency: Avoiding the initial costs and complexities of setting up a legal entity can be a significant advantage.

The Challenges of Direct Hiring Without a Legal Entity

Directly hiring employees in Vietnam without a legal entity is generally not feasible or legally compliant. Vietnamese labor laws require employers to have a registered business entity to directly employ individuals. Attempting to do so can lead to legal complications, penalties, and difficulties with payroll, taxation, and benefits.

Your Compliant Options for Hiring Without a Local Entity:

Instead of direct hiring, here are the compliant and effective solutions you can leverage:

1. Partnering with an Employer of Record (EOR)

An Employer of Record (EOR) is a third-party company that acts as the legal employer for your employees in Vietnam. This allows you to hire and manage talent without establishing your own legal entity.  

How an EOR Works:

• Legal Compliance: The EOR handles all aspects of local labor laws, including employment contracts, payroll, taxes, social insurance, and benefits.  
• Onboarding and Offboarding: They manage the entire employee lifecycle, from onboarding to termination, ensuring compliance with Vietnamese regulations.  
• Payroll and Taxation: The EOR processes payroll in Vietnamese Dong (VND), handles tax withholdings and remittances, and ensures accurate and timely payments.  
• Benefits Administration: They can administer employee benefits in accordance with local laws and your company’s policies.  

Benefits of Using an EOR:

• Speed and Efficiency: Hire employees quickly without the lengthy process of entity formation.
• Legal Compliance: Ensure full adherence to Vietnamese labor laws and regulations.
• Reduced Risk: Minimize the risks associated with non-compliance.
• Simplified Administration: Outsource complex HR and payroll tasks.  
• Focus on Core Business: Concentrate on your business objectives while the EOR handles employment matters.

2. Engaging with a Professional Employer Organization (PEO)

A Professional Employer Organization (PEO) is similar to an EOR but typically involves a co-employment relationship. In this model, your company retains control over the day-to-day tasks and responsibilities of your employees, while the PEO handles HR administration, payroll, benefits, and compliance.  

Key Differences from an EOR:

• Co-Employment: You share certain employer responsibilities with the PEO.  
• Integrated Services: PEOs often offer a broader range of HR services, including talent management and employee development.

Benefits of Using a PEO:

• Comprehensive HR Solutions: Access a wider array of HR services and expertise.
• Scalability: Easily scale your workforce up or down as needed.
• Improved Employee Experience: Offer competitive benefits packages through the PEO’s network.

3. Hiring Independent Contractors

If your hiring needs are for specific projects or tasks, engaging independent contractors can be a viable option. However, it’s crucial to correctly classify workers as contractors to avoid misclassification issues and potential legal repercussions.

Key Considerations for Hiring Contractors:

• Control and Direction: Contractors typically have more control over how, when, and where they perform their work.  
• Financial Risk: Contractors usually bear their own business expenses and risks.
• Integration: Contractors are generally not integrated into your core business operations as employees are.  

Important Note: Vietnamese authorities have strict rules regarding the classification of workers. Misclassifying an employee as a contractor can lead to significant penalties. Ensure you have a clear understanding of the distinctions and seek legal advice if needed.  

4. Utilizing Recruitment Agencies

While not directly hiring, partnering with a trustful recruitment agency in Vietnam can help you find qualified candidates. The agency will handle the sourcing, screening, and initial interview process, presenting you with a shortlist of suitable individuals. You would then typically engage these individuals through one of the compliant methods mentioned above (EOR, PEO, or as contractors).

Step-by-Step Guide to Hiring in Vietnam Without a Legal Entity (Using an EOR):

1. Identify Your Hiring Needs: Determine the roles, skills, and number of employees you need in Vietnam.
2. Research EOR Providers: Look for reputable EOR companies with experience in the Vietnamese market. Consider factors like cost, service offerings, compliance expertise, and client reviews.
3. Request a Proposal: Contact potential EOR providers and request a detailed proposal outlining their services and fees.
4. Select an EOR Partner: Choose the EOR provider that best aligns with your business needs and budget.
5. Onboard Your Employees: Work with the EOR to onboard your chosen candidates. This will involve providing necessary information and ensuring compliance with local employment regulations.
6. Manage Your Employees: Your employees will be legally employed by the EOR, but you will retain control over their daily tasks and responsibilities. The EOR will handle payroll, benefits, and HR administration.  
7. Ensure Compliance: Stay informed about any changes in Vietnamese labor laws and work with your EOR partner to ensure ongoing compliance.

Legal and Compliance Considerations:

Even when using an EOR or PEO in hiring Employees in Vietnam, it’s essential to be aware of key aspects of Vietnamese labor law, including:

• Employment Contracts: Understand the requirements for employment contracts, including mandatory clauses and termination procedures.
• Working Hours and Leave: Familiarize yourself with regulations regarding working hours, overtime, annual leave, and public holidays.
• Social Insurance and Health Insurance: Ensure your employees are covered by the mandatory social and health insurance schemes.
• Taxation: Understand the personal income tax obligations for employees in Vietnam.
• Termination Procedures: Be aware of the legal requirements for terminating employment contracts.

Choosing the Right Approach for Your Business:

The best approach for hiring in Vietnam without a legal entity will depend on your specific needs, budget, and risk tolerance.

• EOR: Ideal for businesses seeking a fully compliant and hassle-free solution for hiring employees without a local entity.  
• PEO: Suitable for companies looking for a more comprehensive HR solution and a co-employment model.
• Independent Contractors: A viable option for short-term projects or specific tasks, but requires careful attention to classification rules.  
• Recruitment Agencies: A helpful resource for finding talent, which can then be engaged through other compliant methods.  

Conclusion:

Hiring employees in Vietnam without a legal entity is achievable through strategic partnerships with EOR or PEO providers, or by carefully engaging independent contractors. By understanding your options and prioritizing legal compliance, you can effectively tap into Vietnam’s talented workforce and achieve your business objectives in this dynamic market. Contact us today to learn more about how Invest Talent JSC’s services can assist you in hiring in Vietnam.