Guide to Hiring in Vietnam Without a Legal Entity

Hiring in Vietnam sounds straightforward until you realise you will need a local entity and have multiple other things to keep track of, including their labour laws, which are very strict and pro-employee. 

The good news is that there are ways to navigate that effectively, which means you technically do not need even a legal entity while still ensuring full compliance. 

So we put together this guide to cover what you need to know when it comes to hiring in Vietnam and some of the most common hiring models that businesses often rely on in order to build their dedicated team within the country. 

Overview of Hiring in Vietnam 

When it comes to the process of hiring in Vietnam, it all hinges on the Labour Code. Think of it as the rulebook that every hiring decision must be measured against. It covers everything from working hours and overtime to contract types, termination notice periods, and mandatory benefits.

One thing worth knowing early: Vietnam's Labour Code leans heavily in favour of employees. Protections are robust, enforcement has been tightening, and non-compliance — even unintentional — carries real financial and reputational risk.

Vietnam's updated Labour Code took effect in January 2021 and brought one meaningful structural change that every employer should know: contract types were simplified. There are now only two recognised forms of employment contract:

• Indefinite-term contract: No fixed end date. The relationship continues until either party terminates it according to proper legal procedure.
   
• Definite-term contract: A fixed duration, capped at 36 months. Critically, a definite-term contract can only be renewed once. After that, the employer must either convert it to an indefinite-term contract or end the working relationship.

Both parties retain the right to unilaterally terminate a contract, but notice period requirements vary depending on the contract type, duration, and the reason for termination.

If you've read this far, you've probably already noticed that employment contracts, along with managing other responsibilities listed in the Labour Code like tax obligations, require a legal entity in Vietnam. 

It sounds like the unavoidable first step where most businesses hit a wall. Or is it?

Why Companies Want To Avoid Setting Up a Legal Entity?

Establishing a legal entity in Vietnam isn’t something you do over a weekend. While the government has introduced various reforms to attract foreign businesses, the process still involves navigating licenses, tax registration, and compliance requirements. 

In practice, it can take 15 to 45 working days before you can acquire a local entity here, and with it, you still have to fulfil the responsibilities before kickstarting any hiring attempt. 

So for many businesses, consider these situations where skipping (or delaying) it might be the smarter move: 

• You're testing the market: Hiring in Vietnam doesn't have to be a long-term commitment from day one. You can bring on 1 or 2 people to validate how the collaboration works, and decide later whether a full legal presence makes sense.
   
• You want to speed up the hiring process: Without an entity, you can move from ‘waiting on legal approvals to begin hiring’ to ‘they start Monday’ in a matter of weeks.
   
• Your project is short-term: If you only need talent for a defined project (say, 6 to 18 months), building an entire corporate structure around it makes little financial sense.
   
• You don't want operational overhead: A local entity means monthly accounting, payroll runs, and endless compliance filings. If your team's energy is better spent building your product, that's overhead you don't need.

3 Ways to Hire in Vietnam Without a Legal Entity

A. Employer of Record (EOR) Services

An EOR is arguably the most complete solution for hiring in Vietnam without a legal entity — and the one we recommend most often for companies that want speed, compliance, and control without the overhead.

Here's how it works: the EOR provider becomes the official employer on paper. Your chosen candidate is hired under the EOR's existing Vietnamese legal entity, with a fully compliant employment contract, payroll, tax withholding, and statutory benefits all managed on their end. 

A useful way to think about it: you're not building employer infrastructure in Vietnam, you're plugging into infrastructure that already exists and is already compliant.

You decide who to hire, at what salary, and under what terms. The EOR makes it happen legally.

✅ Why companies choose EOR services when hiring in Vietnam:

• Fast onboarding: Employees can be hired and onboarded in as little as 1–2 weeks
• Full legal compliance: The EOR handles labour contracts, mandatory contributions, and local labour law requirements
• No entity required: Zero investment in Vietnamese corporate infrastructure
• Scalable: Easily hire one person or fifty without changing your structure
• Lower risk: One of the more underappreciated benefits: EOR eliminates the legal risk that comes with incorrectly classifying workers as contractors when they should be employees

⚠️ What to be cautious about:

• Service fees: Because you’re using a service, you’ll be charged monthly (often around $500 to $2,000, depending on headcount and the company's needs)
• Less direct control over employment contracts: the formal employer relationship runs through the EOR, not your company
• Dependent on the EOR partner: Unreliable vendors can create compliance issues or harm your employer brand

✔️ Choose this approach when:

Your company wants to hire full-time, long-term employees in Vietnam quickly and compliantly. Ideal for market entry, remote team expansion, and ongoing operations.

B. Independent Contractors

When it comes to hiring in Vietnam, one option is to engage a Vietnamese individual directly as an independent contractor (also called a freelancer or self-employed professional) through a service agreement. The contractor invoices you for their work, manages their own taxes, and is not entitled to employee benefits under Vietnamese labour law — in theory.

These individuals can be found and hired via job boards like JDI Central for IT roles, or Upwork for a wider range of positions.

✅ Why companies choose independent contractors

• Very low administrative overhead: No payroll infrastructure needed on your side
• Flexible arrangements: Easy to scale up or down, engage for specific projects
• Cost-effective for short engagements: No obligation to provide statutory benefits
• Quick to start: Can begin work almost immediately

⚠️ What to be cautious about:

• Misclassification risk is serious: If a contractor is found to be a de facto employee (fixed hours, sole client, company equipment, management direction), both parties can face penalties
• No retention levers: Contractors are free to take other clients or leave with short notice
• Limited IP protection: Without a robust contract, ownership of work product can be murky

✔️ Choose this approach when:

The work is short-term or project-based, with clearly defined deliverables (such as software development sprints, design projects, or consulting engagements). Not suitable for roles that function like full-time employment.

C. Representative Office (RO)

This will require a bit more nuance. An RO cannot be an independent legal entity. It remains legally tied to the parent company, which bears ultimate responsibility for all liabilities.

So you're not creating a Vietnamese legal entity, you're registering a presence under your existing foreign company. In other words, it is not "entity-free" but a way to bypass that if you already have an existing entity in Vietnam.

Then, why are we including it here?

Because in practice, a foreign company already has a legal entity in Vietnam, either by setting up years ago, inherited through an acquisition, or simply never fully activated, but isn't ready to run it properly. Standing up payroll, accounting, and HR infrastructure under that entity takes time, money, and local expertise they may not have yet.

An RO offers a middle path: a leaner, lower-obligation presence that's enough to hire staff and maintain compliance, without the full weight of operating an active Vietnamese company.

✅ Why companies choose RO for hiring in Vietnam

• Direct employment: you can hire Vietnamese employees under your own (representative) brand
• Official presence: provides credibility, a local address, and a liaison point in the market
• Setup cost: Lower than a full legal entity

⚠️ What to be cautious about:

• Requires longer setup time: Takes roughly 4–8 weeks before you can start hiring in Vietnam
• Annual license renewal: Ongoing administrative requirement
• Limited scope: Cannot be used if you want to actually sell products or services here

✔️ Choose this approach when:

The company plans to enter Vietnam’s market and wants a semi-permanent base for business development, partnerships, and talent relations, but is not yet ready to commit to a full foreign-invested enterprise or a limited liability company.

Quick Comparison of the 3 Models

What You Need to Know Before Hiring in Vietnam

When entering this market, there are several things worth researching before you make your first hire:

A. Employment Contracts

Must be in writing and in Vietnamese (bilingual is fine, but the Vietnamese version is legally binding). Fixed-term contracts can only be renewed once. After that, they automatically become indefinite.

B. Hiring Cost

Hiring in Vietnam involves more than just base salary. Your total hiring cost also includes mandatory employer contributions (including social insurance, health insurance, and/or the trade union fund), which add up to around 21.5% to 23.5% on top of gross salary.

While not legally required, most employers also offer a 13th-month salary as a performance bonus and retention tool. In practice, candidates expect it.

Curious what your hiring cost would look like? Try our Vietnam Salary Calculator:

C. Working Hours & Leave

Most white-collar roles run 40 hours a week (5 business days). Employees get a minimum of 12 days of annual leave, and overtime must be paid extra.

D. Termination

Notice periods range from 3 to 45 days, depending on contract type. Termination must always come with a valid legal reason; you cannot let someone go without proper grounds.

E. IP & Confidentiality

Vietnamese law recognises IP ownership, but enforcement could be inconsistent in some cases. Hence, always include IP assignment and confidentiality clauses in every contract, whether employment or contractor.

💡 Something to consider: If you're not familiar with the local labour laws, working with an EOR or a trusted local hiring vendor is highly recommended. It means you have someone in your corner who knows the rules, so you don't have to learn them the hard way.

Start Hiring in Vietnam Today with an Employer of Record Partner

If you’re ready to explore EOR solutions, Talent JDI is here to support your next step.

We’ve helped more than 300 companies build and manage teams across Singapore and Vietnam, earning the trust of leading enterprises worldwide, from startups, SMEs, to large corporations.

Our local team offers hands-on guidance across payroll, labour compliance, HR processes, and employee benefits management, making sure everything runs smoothly behind the scenes. 

Whether you’re hiring only one employee or scaling a big team, we make the process easier.

And if you're not ready to commit, our free 1-on-1 consultation will still leave you with a clearer plan either way. Ask us anything here!