PEO in Vietnam: What It Covers and When You Need an EOR Instead

A PEO in Vietnam works differently than a PEO in the United States. The US model rests on co-employment, where two companies legally share employer status. However, the 2019 Labor Code of Vietnam has no equivalent structure.

In Vietnam, the term covers HR and payroll outsourcing for companies that employ staff through their own local entity.

Knowing that changes how you evaluate your options.

There are three different forms of employment support in Vietnam: PEO-style HR and payroll outsourcing, licensed labor leasing, and Employer of Record services. Which one fits depends almost entirely on whether you have a registered Vietnamese entity.

What PEO services cover in Vietnam

A Vietnam PEO arrangement is HR and payroll outsourcing built around your existing entity. Your company signs the employment contracts and is responsible for ensuring compliance. The PEO provider runs the administration behind that relationship and assists with:

• Monthly payroll processing, payslips, and salary transfers in VND
• Registration and monthly remittance of social, health, and unemployment insurance with Vietnam Social Security
• Personal income tax withholding and the annual finalization
• Onboarding paperwork, labor books, and the mandatory labor usage reports

Essentially, the PEO does all the work on your behalf while the legal obligation stays with your company. If a terminated employee files a claim, or a labor inspector finds contributions underpaid, your entity is the responsible party regardless of who processed the numbers. A PEO arrangement in Vietnam reduces your administrative load, not your legal exposure.

Employer costs a PEO administers for you

The statutory costs stay with your entity no matter who runs the payroll. As of 2026, employers in Vietnam contribute 21.5% on top of gross salary for each Vietnamese employee:

• Social insurance: 17.5%, including the 0.5% occupational accident and disease fund
• Health insurance: 3%
• Unemployment insurance: 1%

Employees contribute a further 10.5% of their own, which the employer withholds from salary.

On top of the insurance contributions, there is the trade union fee. Every employer pays 2% of the social insurance salary fund, whether or not the company has a union.

If you have foreign employees, the rules are slightly different. Anyone on a contract of 12 months or longer joins social and health insurance at the same rates, but is exempt from unemployment insurance. Their employer rate works out to 20.5%.

The floors and ceilings move with government wage decisions. Contribution floors follow the regional minimum wage, which rose an average of 7.2% under Decree 293/2025/ND-CP from January 1, 2026. Region I, covering urban Hanoi and Ho Chi Minh City, now sits at VND 5,310,000 per month.

Social and health insurance contributions are capped at 20 times the state base salary, and unemployment insurance at 20 times the regional minimum wage.

So what does a hire cost in total? A Hanoi employee on VND 30,000,000 gross costs the employer roughly VND 37,050,000 per month. That is the salary, plus 21.5% in insurance contributions, plus the 2% union fee.

You can run your own numbers in our Vietnam salary calculator to understand the total cost to you as an employer. 

Labor leasing: the closest structure to co-employment

Vietnam does regulate a structure where one company employs workers and places them under another company's management. The Labor Code calls it labor leasing (thuê lại lao động). In practice, its scope is much narrower than a general-purpose PEO.

Labor leasing is a conditional, licensed business. Under Article 54 of the 2019 Labor Code and Decree 145/2020/ND-CP, a leasing enterprise needs the following:

• A provincial license
• A VND 2 billion deposit
• Legal representative with at least three years of experience in the field.

The bigger restriction, however, is the job list. Leasing is only permitted for the 20 job categories in Appendix II of the decree. This includes roles such as interpreters, secretaries, receptionists, telemarketers, security guards, drivers, and a handful of technical and support roles. Furthermore, placements are capped at 12 months per worker.

For a foreign company looking to hire a software engineer, an accountant, or a country sales manager, labor leasing is not a suitable route.

Hiring without an entity: where EOR comes in

None of the above helps if you have no Vietnamese entity. Both structures assume one exists.

On the other hand, direct employment requires local incorporation. And setting up a foreign-invested company in Vietnam typically takes two to four months before you can put anyone on payroll.

An employer of record closes that gap. The EOR employs your Vietnamese team through its own licensed entity and handles the following:

• It signs the labor contracts
• Registers and pays the insurance contributions
• Withholds personal income tax
• Carries the full employment liability

As a result, you can hire employees in Vietnam without waiting to setup a company. Onboarding, in this case, takes 3-5 working days rather than months. If your plans change later, there is no entity to maintain or wind down either.

The structure, costs, and compliance details are covered in our guide to Employer of Record services in Vietnam. 

PEO, labor leasing, or EOR: which structure fits

To understand it better, let's take a look at an example.

A manufacturer with a Binh Duong factory and 200 staff wants payroll off its plate. In this case, PEO-style outsourcing is a suitable option.

However, if the same factory needs 15 extra drivers for a six-month peak season, that is what labor leasing, through a licensed provider, is designed for.

Meanwhile, a SaaS company in Singapore wants two Vietnamese engineers on payroll next month with no entity on the ground. For this case, an EOR is the only compliant option of the three.

If we look at the cost, it usually points the same way at small headcounts.

Entity setup and annual maintenance in Vietnam cost USD 5000-15000 once licensing, accounting, and audit are counted. In comparison, EOR fees at RecruitGo are 10% of total monthly employer cost, with a USD 49.99 minimum and a USD 250 cap per employee. For a team of one to 10-15 people, the arithmetic rarely favors incorporation. Past 20 employees, setting up your own entity might start making sense. 

How RecruitGo Employs Your Vietnam Team

RecruitGo operates as the employer of record for your Vietnamese hires. We issue compliant labor contracts under the 2019 Labor Code and register each employee with Vietnam Social Security.

From there, we run monthly payroll in VND, remit the employer contributions and the trade union fee, and handle personal income tax withholding through to annual finalization.

Your side of the arrangement is directing the work and approving one monthly invoice.

Onboarding a Vietnamese employee typically completes within a week. If you decide to incorporate later, we transfer your employees to the new entity with continuous service preserved. 

You can fill out the form below to discuss your needs with our team.