What is the difference between EOR and PEO?
EOR (Employer of Record) is a model in which a service provider — like Nhân Kiệt — acts as the legal employer on behalf of a foreign enterprise. Businesses that do not need to have a legal entity in Vietnam can still legally recruit.
PEO (Professional Employer Organization) is a co-employment model: the business already has a legal entity in Vietnam, the PEO only supports processing contracts, payroll, and social insurance in parallel with the business.
Core difference: EOR is suitable when the business does not have a company in Vietnam; PEO is suitable when a business already has a company but wants to reduce personnel and administrative work.
Quick comparison table
| Criteria | EOR | PEO |
|---|---|---|
| Need legal entity in Vietnam | No | Yes |
| Who is in charge of the labor contract? | EOR unit | Enterprise (jointly named) |
| Deployment time | 3-7 days | Need the company to operate first |
| Stage appropriate | Market survey, rapid expansion | Already operating, want to optimize operations |
| Labor legal liability | The EOR unit is responsible | Share between two parties |
Which business should choose EOR?
Foreign companies that are in the process of exploring the Vietnamese market, opening a representative office, or urgently needing to recruit 1-20 employees but do not want to commit to long-term investment capital often choose EOR because of its fast deployment speed and no company establishment costs.
Frequently asked questions
Does Vietnam have a true PEO like in the US? Vietnam's legal framework does not have a separate PEO concept; Service providers often deploy it in the form of labor subleasing or outsourcing payroll services, close to the PEO nature.
Is it difficult to move from EOR to starting your own company? Not difficult. After the EOR period, businesses can establish legal entities and Nhân Kiệt supports the transfer of labor and social insurance records to the new company without interrupting employee benefits.
Are EOR costs higher than PEO? Depends on size. With less than 20 employees, EOR is often more economical because it does not incur legal entity operating costs; When the scale is larger than 50 people, the PEO model/establishing a separate company may be more optimal in the long term.