In recent years, Vietnam has become an attractive destination for foreign businesses thanks to competitive labor costs, a young workforce, and an increasingly open business environment. However, the biggest barrier for many international companies entering the Vietnamese market lies not in opportunity, but in labor law, taxation, and compliance obligations.

Establishing a legal entity in Vietnam often requires significant time, cost, and management resources. In this context, EOR (Employer of Record) services have emerged as a solution that allows foreign companies to recruit and manage employees legally in Vietnam, without setting up a local company.

What challenges do foreign companies face without a legal entity in Vietnam?

For international businesses, hiring a small number of employees in Vietnam to explore the market, run pilot projects, or build an initial team often involves many legal obstacles.

First, companies without a legal entity in Vietnam are not allowed to directly sign labor contracts. This means any form of direct hiring may be considered “non-compliant labor” and carries legal risks.

Second, Vietnamese law requires employers to fully comply with obligations related to personal income tax, social insurance, health insurance, unemployment insurance, as well as regulations on working hours, leave, and contract termination. These requirements are difficult for foreign companies to handle independently without a legal presence.

Finally, choosing to establish a legal entity from the outset means dealing with investment procedures, business licenses, periodic reporting, audits, accounting and tax compliance, and long-term operating costs, while market outcomes are still uncertain.

What is EOR, and why is it suitable for companies without a legal entity?

EOR (Employer of Record) is a model in which a Vietnam-based entity acts as the legal employer on behalf of a foreign company, signing labor contracts, fulfilling statutory obligations, and managing HR administration.

In essence, the foreign company retains full control over daily operations, KPIs, and HR strategy, while the EOR takes responsibility for legal compliance.

With EOR services, companies do not need to establish a legal entity, yet they can still:

• Hire Vietnamese employees legally
• Pay salaries and comply with tax and insurance regulations
• Sign labor contracts in accordance with Vietnamese law
• Minimize risks related to disputes and labor inspections

For this reason, EOR is considered a “bridge” that enables foreign companies to enter the market quickly, flexibly, and safely.

When should companies consider using EOR services?

EOR services are particularly suitable when a company is not yet ready, or does not yet need, to establish a legal entity in Vietnam.

For example, many foreign tech companies want to hire a few engineers, developers, or sales staff to test the market. Some e-commerce or retail businesses wish to study consumer behavior before making large investments. Multinational corporations may also need representatives, project managers, or support staff for short-term assignments.

In such cases, setting up a legal entity from the beginning may be inefficient. EOR allows businesses to start small, control risks, and scale when needed.

How do EOR services ensure compliance with Vietnamese law?

One of the greatest values of EOR services lies in ensuring full compliance with Vietnamese labor regulations, an area where foreign companies often struggle.

The EOR is responsible for signing compliant labor contracts, registering personal tax codes, declaring and paying personal income tax, and contributing to mandatory insurance schemes. In addition, the EOR monitors compliance with regulations on working hours, leave, maternity benefits, contract termination, and other statutory obligations.

This not only helps businesses avoid legal risks but also gives employees peace of mind when working for foreign companies.

How is EOR different from traditional outsourcing?

Many businesses confuse EOR with other outsourcing models. In reality, EOR involves a much broader legal scope and responsibility.

Unlike traditional outsourcing, where the service provider manages employees, under the EOR model, employees work full-time for the foreign company and follow its processes, culture, and objectives.

EOR does not provide “shared staff,” but rather a legal framework that allows businesses to legally build and own a dedicated team in Vietnam.

Long-term strategic benefits of EOR services

EOR is not merely a temporary solution; it also offers long-term strategic value. Companies can use EOR as a “pre-entity” phase to test the market, build a core team, and evaluate business performance before making major investments.

When the company is ready to establish a legal entity, employees working under the EOR model can be transitioned to the new entity in a structured way, minimizing disruption and operational risks.

NIC Global’s role in EOR services in Vietnam

With many years of experience in HR and labor compliance in Vietnam, NIC Global provides EOR services with a strong focus on legal compliance, transparency, and flexibility tailored to international businesses.

NIC Global not only supports contract signing and payroll, but also advises companies on workforce structure, tax and insurance obligations, and potential compliance risks, especially important for foreign companies unfamiliar with local regulations.

Rather than treating EOR as a purely administrative service, NIC Global positions it as a strategic HR management solution, allowing businesses to focus confidently on growth.