For EU companies hiring in Vietnam, employer of record vs payrolling is not a straight copy of the payrolling model used in the Netherlands. The closest practical model for most first hires is an Employer of Record. Vietnam also has labor leasing, but that model is restricted to specific approved job titles.
If your team is hiring a software engineer, analyst, project manager, operations specialist, or first Vietnam-based employee, the decision is usually not “payrolling or EOR?” It is whether EOR in Vietnam gives you the employment structure you expected payrolling to cover at home, while meeting Vietnamese labor, payroll, SHUI, PIT, and data-handling rules.
TL;DR
- In the Netherlands, a payroll worker has a contract with the payroll company but works for another company. Since 1 January 2020, Dutch payroll workers have the same employment conditions and legal position as employees hired directly by the hirer.
- In Vietnam, there is no direct general “payrolling” model for foreign companies hiring local staff. The closest model for most EU hiring scenarios is EOR.
- Vietnamese labor leasing exists, but Decree 145/2020/ND-CP restricts it to approved job titles listed in Appendix II, so it is not suitable for most knowledge-worker roles.
What payrolling means at home vs what you will find in Vietnam
If you are used to Dutch payrolling, your starting point is clear: the payrolling company signs the employment contract, handles payroll administration, and the worker performs day-to-day work for the client company. That model is familiar to HR and finance teams because it separates formal employment administration from operational management.
The Dutch government defines a payroll worker as someone with an employment contract with the payroll company who works for another company, the hirer. It also states that, since 1 January 2020, payroll workers have the same employment conditions and legal position as employees directly employed by the hirer.
Vietnam works differently. Vietnamese law does not give foreign companies a broad payrolling model that maps neatly to the Dutch version. The practical options are:
- Your Vietnamese entity employs the worker directly.
- An EOR employs the worker locally and handles payroll, statutory contributions, contracts, and employment administration.
- A licensed labor leasing enterprise assigns workers to a receiving company, but only for approved job titles.
That third model is where confusion starts. Labor leasing in Vietnam is closer to a restricted labor dispatch model than to Dutch payrolling. Decree 145/2020/ND-CP sets the labor leasing framework and links permitted labor leasing jobs to Appendix II.
For most EU companies hiring in Vietnam, EOR is the model that behaves most like the payrolling arrangement they expected: your employee works for your team, while local employment administration sits with the EOR.
For Dutch companies hiring in Vietnam, read the full guide EOR in Vietnam for Dutch companies
Three differences that change the decision
The difference between EOR, payrolling, and labor leasing is not only terminology. It changes who signs the labor contract, who handles SHUI and PIT, and whether the role is even eligible.
Who signs the labor contract and owns employment risk
Under an EOR arrangement, the EOR signs the Vietnamese labor contract with the employee. Your company directs the work, sets the role expectations, and manages performance in practice, but the local employment paperwork sits with the EOR.
Under labor leasing, the labor leasing enterprise signs the labor contract with the worker and assigns that worker to another company. This model is regulated separately under Decree 145/2020/ND-CP. The decree also sets licensing conditions for labor leasing enterprises, including management experience and a deposit requirement.
Under direct employment, your Vietnamese subsidiary or registered entity signs the labor contract. That gives you full employer control, but it also gives you the full employer workload: contracts, payroll, SHUI, PIT, employee files, termination steps, and labor inspections.
For a first Vietnam hire, direct employment usually creates more setup work than the role needs. EOR removes the entity setup question while keeping the worker inside your operating team.
SHUI and PIT: who handles what
SHUI is the common shorthand for Vietnam’s statutory social, health, and unemployment insurance package. PIT means personal income tax.
Under EOR, the EOR handles the local payroll process, including SHUI registration, employer contributions, employee deductions, and PIT withholding. Your team still needs payroll visibility, but it does not need to run Vietnamese payroll filings directly.
Vietnam Social Security states that the current combined social, health, and unemployment insurance contribution package is 32% of the monthly salary base for Vietnamese employees, with employers paying 21.5% and employees paying 10.5%.
For EU companies, employee data also matters. Payroll, contract, identity, salary, and tax data must be transferred and handled under a proper data processing arrangement. Where the EOR processes employee data on behalf of an EU client, the agreement should include GDPR Article 28 processor terms.
Which roles and situations each model covers
This is the point most generic comparisons miss.
EOR is usually suitable for knowledge-worker hiring because it does not depend on the Decree 145 labor leasing job list. Your software engineer, analyst, project manager, or operations specialist can usually be employed under a normal labor contract through the EOR structure, subject to standard Vietnamese employment rules.
Labor leasing is different. Decree 145 states that labor leasing can only be used for jobs listed in Appendix II. The list includes roles such as translation, administrative assistant, receptionist, tour guide, sales support, project support, certain production-machine programming work, document editing, security, telemarketing/customer care, and selected technical or transport-related roles.
That list does not create a general route for foreign companies to hire software teams, product managers, designers, analysts, or operations roles through labor leasing. If your role sits near one of the listed categories, get legal review before assuming it qualifies.
Table 1: EOR vs labor leasing vs direct employment in Vietnam
| Dimension | EOR | Labor leasing (staffing services) | Direct employment |
|---|---|---|---|
| Legal employer | EOR company | Licensed labor leasing enterprise | Client or Vietnam subsidiary |
| Who signs the labor contract | EOR | Labor leasing enterprise | Client |
| SHUI/PIT handled by | EOR | Labor leasing enterprise | Client |
| Role restrictions | No labor leasing job-list restriction | Approved jobs only under Decree 145 Appendix II | No labor leasing job-list restriction |
| Maximum duration | No labor leasing duration cap | Temporary model; verify role and duration before use | No model-specific cap |
| Work permit for foreign employees | EOR may support if the worker and role are eligible | Labor leasing enterprise may support if the role qualifies | Client or subsidiary sponsors |
| GDPR DPA needed for EU client data | Yes | Yes | Internal controller obligations |
| Best fit | Most EU knowledge-worker hires in Vietnam | Specific approved temporary roles | Companies with an established Vietnam entity |
When EOR is the right model for your Vietnam team
EOR is usually the right model when your team needs the person working before entity setup makes sense.
If this is your first hire in Vietnam, EOR gives your HR and finance teams a local employment structure without waiting for incorporation, tax registration, payroll setup, and statutory account processes. Your hire can start under a Vietnamese labor contract, with payroll and statutory contributions handled locally.
EOR also fits when your role is a knowledge-worker role. If your engineer, analyst, product manager, or operations specialist does not match the labor leasing list, labor leasing should not be treated as a workaround.
For a Vietnamese national, EOR onboarding is usually planned in a 2–4 week window once commercial terms, contract inputs, and employee documents are ready. For a foreign national, the work permit process adds a separate step. Decree 219/2025/ND-CP took effect on 7 August 2025, and Vietnam Social Security’s summary states that authorities must decide on work permit issuance within 10 working days from receiving a valid dossier. Preparation, document legalization, translations, and scheduling can add time before that formal clock starts.
For a clear comparison of whether to choose EOR or entity setup, read on: EOR vs entity setup in Vietnam
Your first Vietnam hire should not wait for a local entity if the role can be employed safely through EOR.
Sunbytes EOR supports EU companies with Vietnamese labor contracts, SHUI, PIT, payroll, onboarding, and compliant offboarding. Payroll runs on time. Offboarding within 24 hours. For Vietnamese nationals, onboarding is planned in 2–4 weeks once documents are ready.
Talk to the Sunbytes Employer of Record team
When labor leasing might apply
Labor leasing may apply when the role appears on the approved list under Decree 145 Appendix II and the engagement is genuinely suited to that model. It can work for specific temporary or operational roles, especially where the job title clearly matches the legal list.
It is not the right default model for a software developer, data analyst, product manager, designer, or general operations hire. If your role has a mixed title or sits close to one of the listed categories, confirm the classification before proceeding.
Cost and timeline comparison
For most early Vietnam hires, the cost question is not only monthly fee versus payroll fee. It is how much employment infrastructure your team must build before the person can legally start.
EOR usually carries a setup fee or onboarding cost, then a monthly management fee plus statutory employment costs such as employer SHUI. Do not compare that fee only against payroll processing. Compare it against entity setup, local HR administration, payroll compliance, and the time your internal team would spend managing a country they do not yet operate in.
Labor leasing cost depends on the licensed provider, the role, and the engagement length. If the role is not on the approved list, the price is not the main issue. The model simply may not fit.
Direct employment can be cost-effective when you already have a Vietnam entity and enough headcount to justify in-house compliance. Before that point, your first hire can spend months waiting for the structure around the role to catch up.
| Model | Setup | Monthly cost | Timeline |
|---|---|---|---|
| EOR | Low to moderate setup | EOR management fee + statutory employer costs | Often 2–4 weeks for Vietnamese nationals once documents are ready |
| Labor leasing | Provider setup and role eligibility check | Labor leasing margin + labor cost | Depends on role eligibility and provider process |
| Direct employment | Entity setup and local compliance infrastructure | No EOR fee, but full in-house employer workload | Entity must be ready before hiring |
How Sunbytes helps EU companies choose the right Vietnam hiring model
For most EU companies hiring employees in Vietnam, EOR covers what your payrolling arrangement handled at home and adds Vietnam employment compliance on top. The real decision is whether the provider can prove the process before your hire starts: contract, payroll setup, SHUI, PIT, employee data handling, and offboarding.
Sunbytes supports EU and foreign companies through Accelerate Workforce Solutions, with EOR as the employment layer for Vietnam hiring. Your team keeps direction of the work. Sunbytes handles the local employment structure through Vietnamese labor contracts, payroll, SHUI, PIT coordination, onboarding, and compliant offboarding.That employment layer works better when the operating system around the hire is also controlled. Our Digital Transformation Solutions also support the delivery side: role scope, team workflow, and the technical environment your Vietnam hire will work inside. Cybersecurity Solutions supports the people-risk and data side: secure document handling, access control, GDPR-aware workflows, and audit-ready employee records.
FAQs
Not as a direct equivalent to Dutch payrolling. Vietnam has direct employment, EOR arrangements, and regulated labor leasing. For most EU companies hiring a knowledge worker in Vietnam, EOR is the closest practical model.
In the Netherlands, a payroll worker has an employment contract with the payroll company but works for another company. In Vietnam, EOR is the closest practical equivalent for most foreign hiring scenarios because the EOR handles the local employment structure while your company directs the work. Labor leasing is separate and restricted to approved job titles.
Only when the role is permitted under Decree 145 Appendix II and the engagement fits the labor leasing model. Most software, product, analyst, and general operations roles should not be assumed to qualify. Get legal review for borderline job titles.
The EOR handles SHUI registration and payroll administration as the local employer. Vietnam Social Security states that the combined social, health, and unemployment insurance contribution package is 32% of the monthly salary base for Vietnamese employees, with 21.5% paid by the employer and 10.5% paid by the employee.
For Vietnamese nationals, EOR onboarding is usually planned in 2–4 weeks once documents are ready. For foreign nationals, work permit processing is separate. Under Decree 219/2025/ND-CP guidance, the authority decision period is 10 working days from receiving a valid dossier, but document preparation can add time before submission.
For first hires or small teams, EOR is usually faster and easier to justify because you do not need to build the full employment infrastructure before hiring. Once your Vietnam team reaches a larger long-term headcount, direct employment through a local entity may become worth comparing.
Yes, where the EOR processes employee data on behalf of an EU client, the arrangement should include a data processing agreement or equivalent processor terms. This should cover payroll data, identity documents, contracts, tax information, and employee records.
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