Vietnam is one of the harder places in the region to hire into without setting something up first, and the reason is structural rather than bureaucratic.
Somebody has to sign the labour contract, and that somebody has to exist in Vietnam. They have to register the employee for social, health and unemployment insurance, withhold personal income tax monthly or quarterly, and file an annual finalisation. A company that exists only abroad cannot do any of it.
That leaves three real options, and one of them is more complicated than the marketing suggests.
A representative office
The lightest structure, and the one most foreign companies open first.
A representative office may research the market, promote the parent company’s goods and services, act as a liaison, and monitor contracts and projects. It employs its own staff and registers them for the compulsory insurances, so it genuinely solves the employment problem for the people it is allowed to have.
What it cannot do is earn. No contracts, no invoices, no receiving payment. It exists to look and to represent, not to trade.
Two things are worth knowing before choosing this route.
The chief representative carries real personal tax exposure. They are expected to draw a salary, and the tax follows the role whether or not one is paid. Expenses without proper documentation can be reclassified as personal benefit and taxed. Annual finalisation is not optional, and an incomplete record blocks renewal of the licence, changes of staff, and even closing the office down.
Job titles are evidence. If the office’s staff carry operational titles, the sort that imply production, sales or fulfilment, that is read as a sign of activity beyond the permitted scope. Where a representative office operates outside its scope, the parent company can be found to have a taxable presence in Vietnam, with assessments running backwards plus interest and penalties.
A company or a branch
The full route. A foreign invested company can trade, invoice, hire freely and sponsor work permits. It takes longer, costs more and commits you.
Nothing here is unusual. The reason it comes up in this conversation is that most companies who consider it are really asking whether they can avoid it for now, which brings us to the third option.
An employer of record, and the Vietnamese complication
In most markets, employer of record is simple to describe: a local company employs the person, you direct their work. In Vietnam there is a wrinkle that providers do not always mention.
Vietnamese law has a specific regime for what it calls labour sublease, where one company employs a worker and places them under the direction of another. It is legal, and it is deliberately narrow:
- the lessor needs an operating licence,
- it must maintain a deposit of two billion dong,
- its legal representative must be an enterprise executive with a clean record and at least three years in the field in the last five,
- the work must fall within a list of 20 job types, covering things like interpreting, secretarial work, reception, security, driving, programming and aircraft and ship maintenance,
- and the sublease is capped at 12 months for any one employee.
Read that list again and you will notice what is missing. Most professional roles a foreign company wants to hire in Vietnam, a country manager, a sales lead, an engineer, a finance manager, are not on it.
So what are the providers doing? Structuring the arrangement as something other than labour sublease: employment by a local company under a services agreement with you. That is common, and it is how a great deal of legitimate business is done. It is also an area where Vietnamese law does not expressly recognise the employer of record model, and where authorities can look at substance rather than labels. The pattern that attracts attention is familiar: the local company is little more than payroll and a permit sponsor, the person sits at your premises, and your managers direct their day to day work.
None of that makes an employer of record the wrong answer. It makes the structure worth understanding rather than taking on trust. Two questions separate a serious provider from a broker: who exactly will sign the labour contract, and on what legal basis. A provider who cannot answer both plainly is one to avoid.
Work permits are a separate question
If the person you want to hire is a foreign national, employment is only half the problem. Vietnam’s foreign worker rules were rewritten with effect from August 2025 and the approval process is tighter and faster than it was.
Our employer of record service is for local hires: Vietnamese nationals and others legally entitled to work in Vietnam. A foreign hire needs a work permit sponsored by the company that genuinely employs them, and the previous section explains why: a permit application puts the relationship in front of the authorities in writing.
How to choose
Looking at the market, no revenue in Vietnam. A representative office. Built for it, and it employs staff properly. Budget for the chief representative’s tax position.
One or two hires while you decide, support roles rather than sales. An employer of record, with the structure checked before you sign.
Selling, contracting or invoicing. A company. An employer of record can start your first people, but revenue activity belongs in an entity.
A foreign national in a senior role. Get the work permit position settled first. It often decides the structure.
Before you commit
Ask who signs the labour contract, and see the signed copy.
Match the role to the structure, not the structure to the budget. A sales role on a representative office payroll is the single most common way companies create a tax problem here.
Diarise the twelve month point if any arrangement is genuinely a labour sublease.
Plan the transfer. Moving staff from a provider’s payroll to your own company means new contracts, new insurance registration and questions about continuity of service. It is much easier to design at the start.
Where this sits in our work
People Profilers Vietnam employs people on your behalf through our Ho Chi Minh City entity, licensed under Licence 6208/2024/20/SLĐTBXH-VLATLĐ. The contract, payroll, insurances and filings sit with us. Direction of the work stays with you.
Our part is being straight about the structure, including the cases where the honest answer is that you need your own entity and we are not the right solution.
If you are weighing this up, our employer of record service in Vietnam covers the employment side. If the hire is a foreign national, what changed for work permits in Vietnam is the place to start. And for the statutory cost of employing someone here, see what it really costs to employ staff in Vietnam.
Sources
Verified September 2026. Rules change, so confirm before relying on any of this.
- Permitted representative office activities, the prohibition on contracts, invoices and receiving payment, the chief representative’s personal tax exposure and the consequences of incomplete finalisation, the significance of operational job titles, the obligation to register social, health and unemployment insurance, and the permanent establishment consequence of operating beyond scope: Alitium
- Labour sublease licence conditions, the two billion dong deposit and the legal representative’s three years of experience in the last five: Bizlawyer
- The list of 20 permitted job types with examples, the 12 month maximum sublease per employee, the prohibited uses of subleasing, and the split of obligations between the leasing company and the user company: Le & Tran
- That Vietnamese law does not expressly recognise the employer of record model, and that authorities may look at the substance of the working relationship rather than the contractual label: Resident Vietnam, cross-checked against Rödl & Partner
- Vietnam’s foreign worker framework rewritten with effect from August 2025: covered in our own article on Vietnam work permit changes, sourced there.
