Why do businesses think they have to set up a company to hire people?
According to the traditional way, to have employees working legally in Vietnam, foreign companies must apply for an investment certificate, establish a legal entity, open a corporate bank account, register a tax code and seal - a process that can take 2-4 months and incur expensive legal, accounting and annual audit costs even though the staff size is only a few people.
How does EOR work?
EOR (Employer of Record) is a model in which Nhân Kiệt acts as the "legal employer" - signing labor contracts, paying salaries, paying social insurance - health insurance - unemployment insurance, deducting and finalizing personal income tax for employees - while that employee still works and reports directly to the foreign enterprise in terms of expertise and daily work. Thanks to that, businesses can hire personnel in Vietnam in just 1-2 weeks without needing to establish a company.
Compare the two paths
| Criteria | EOR (no incorporation) | Establish your own company |
|---|---|---|
| Deployment time | 1-2 weeks | 2-4 months |
| Initial cost | There are no legal fees for establishment | Consulting, legal fees, charter capital |
| Maintenance costs | Service fee per person/month | Accounting, auditing, and periodic tax reporting whether there is revenue or not |
| Appropriate scale | Under 20-30 people, test the market | Large scale, long-term investment, needs independent legal entity |
| Conversion capabilities | You can switch to establishing your own company later | — |
When should I switch from EOR to starting my own company?
When the number of employees increases significantly, businesses need to issue invoices directly in Vietnam, or have plans to invest in fixed assets (factories, machinery), they should consider establishing their own legal entity. Nhân Kiệt supports transferring all personnel records, labor contracts and insurance to a new legal entity when the business is ready, without interruption to employee benefits.
Is EOR legal in Vietnam? Yes. EOR is not a separate type of business under Vietnamese law, but a way of organizing services based on current labor regulations, in which the service provider (like Nhân Kiệt, which has a full operating license) signs a legal labor contract.
Is there a limit to the number of employees hiring in Vietnam through EOR? There is no hard limit, but with a scale of over a few dozen people, businesses should consider the route to switching to establishing their own legal entity to optimize long-term costs and be more proactive in operations.