Payroll outsourcing providers are third-party legal teams responsible for simplifying payroll management. Providers will manage all pay-related administrative duties, ensuring that all practices are compliant with Vietnamese legislation. Owing to their strong understanding of Vietnamese culture and experience in navigating Vietnam’s complex legal environment, providers can help companies secure their professional reputations and achieve their organizational goals.

As Vietnam has no strict policies regarding salary management other than minimum pay entitlements, ensuring that all employment arrangements are appropriate and compliant can be a difficult process. Fortunately, providers can relieve these administrative burdens through streamlined processing and skillful payroll management.

What is Payroll Outsourcing in Vietnam?

Payroll outsourcing companies offer services such as managing multi-currency payments, filing tax returns, salary calculations, and proper tax reporting. By relieving companies of their administrative duties, payroll providers enable companies to better focus their attention and energy towards core business activities.

Providers are responsible for ensuring all legal obligations are fulfilled. Failing to file tax returns on time can now cost businesses heavy fines of up to VND 25 million, so companies must prove their compliance commitment. Payroll outsourcing providers can ensure that companies are kept well informed regarding both existing legislation and changes to legislation.

This expert support will enable companies to pre-emptively amend their practices, ensuring they remain compliant with future legislative requirements. 

How Does Payroll Outsourcing Work in Vietnam?

By outsourcing their payroll, companies can improve employee satisfaction and employee retention rates. Owing to their skillful management of multi-currency payments, payroll providers can ensure that all employees are paid accurately, on time and in the correct currency. Providers will also account for any deductions, withholdings and social security obligations, ensuring that their practices reflect a professional commitment to compliance. Providers will also manage bonuses relating to employee productivity and performance.

Vietnam Labor Law and Payroll Compliance

Vietnam’s Labor Code, which was amended in 2024, defines the legal obligations and rights of both employers and employees.

In Vietnam, average working hours total 8 hours per day and 48 hours per week. Overtime can be provided through specific employment agreements, but it must not exceed 12 hours per day and 40 hours per month. The amount of sick days an employee is entitled to take increases proportional to the duration of their employment. Workers who have been employed for less than 15 years are entitled to 30 days of sick leave per year, whilst employees who have worked for 30 years may take 60 days of sick leave. Employees are additionally entitled to a minimum of 12 days of paid annual leave. This amount again increases and decreases proportionally to how long they have been employed.

The duration of maternity leave for female employees was increased from four months to six months in 2013. Female employees who have worked in a certain organization for longer will be entitled to take more days of leave. Vietnam’s social security scheme provides compensation and funding for workplace injuries and accidents, maternity leave, pensions, healthcare, and unemployment benefits. Employers are required to pay the following in contributions to social security: 17.5% to social insurance, three percent to healthcare, and one percent to unemployment insurance. Conversely, employees are required to contribute eight percent to social insurance, 1.5% to healthcare, and one percent to unemployment insurance. Contributions must be withheld from employee salaries and remitted to the Vietnamese tax authorities.

Vietnam uses a progressive tax system. Businesses are required to pay a 20% corporate income tax and 10% VAT. Special tax rates of 25% to 50% apply to businesses working in the oil and gas industry. As failing to file tax returns will cost businesses between VND 20,000 and VND 20 Million, it is crucial that they remain compliant with Vietnamese legislation.

What are the Benefits of Payroll Outsourcing in Vietnam?

Payroll outsourcing providers streamline company payroll processes, ensuring they are efficient and accurate. By implementing automated processes, payroll providers remove the need for employees to manually input their data, in turn decreasing the likelihood of data inaccuracies caused by human error. Providers can also ensure that all data is securely processed. Many services will implement safeguarding measures such as robust access controls and data encryption software to help protect sensitive company information from being breached or leaked.

Moreover, by outsourcing their payroll processing, companies can save significant costs relating to the hiring of in-house staff, facilities, and processing software. With no required long-term financial commitment to an in-house payroll management team, companies can reallocate their resources and redirect their energies toward boosting employee productivity. Additional financial burdens, such as non-compliance penalties, can also be avoided, protecting the company’s financial state and professional reputation.

Vietnamese legislation is constantly evolving and adapting to support employee needs and reflect business trends. Moreover, keeping up with this legislation can be a difficult and time-consuming process. Fortunately, payroll providers can ensure that all legal standards are adhered to and that company practices are amended to meet the requirements of legislative reforms. As non-compliance can impact a company’s professional reputation, expert legal support can ensure that company’s maintain the professional standards needed to attract top-performing talent.

What are the Downsides of a Payroll Outsourcing Company?

A potential drawback of payroll outsourcing relates to a lack of control. As payroll processes will be conducted external to the company’s in-country location, employers will no longer be able to monitor their practices. Employers will then be obliged to trust that the external team has conducted the necessary background checks and hard skills tests needed to ensure that their employees are capable of handling sensitive employee information. Payroll outsourcing providers can help to relieve these concerns by communicating the safeguarding measures they have implemented and outlining clear insurance strategies.

Moreover, due to the distance and difference between in-house staff and the external provider, company employees may struggle to trust the provider’s proficiency. This mistrust may hinder collaborative efforts and increase the likelihood of miscommunication issues. Moreover, for businesses looking to scale their operations, a flexible provider may be more beneficial. With a more flexible arrangement, companies have more room to negotiate the scope of their operations, allowing them to adjust the provider’s processes to better suit their needs. This flexibility can help protect company finances as it ensures that all outsourced processes are within budget and to the employer’s satisfaction.

How to Choose a Payroll Outsourcing Provider in Vietnam

When choosing a payroll outsourcing provider, companies will need to consider service type, the cost of the provider, and the flexibility of their arrangement. Providers can offer many different services with some providing fully managed software and others facilitating self-service payroll software. Companies will need to ensure that the service they choose will be conducive to realizing their organizational goals.

Moreover, it is essential that the provider has a thorough understanding of Vietnamese legislation and is experienced in payroll outsourcing, specifically in Vietnam. Experience in global payroll outsourcing (not including Vietnam) will not be sufficient.

What Is the Cost of Payroll Outsourcing in Vietnam?

The cost of payroll outsourcing will depend on the type of service provided, the number of employees in the business and if there are any additional set-up fees. Businesses may pay between $30 and $100 per month for each employee. Companies can also choose to pay a licensing fee in order to acquire the software needed to manage the payroll themselves. 

Employer of Record as an Alternative to Vietnam Payroll Outsourcing

Companies can alternatively choose to contract an EOR (Employer of Record) in Vietnam. This third-party legal team acts similarly to a payroll outsourcing company but provides a more comprehensive solution to payroll management and compliance.

EORs are responsible for hiring talent, managing company payroll, and ensuring that the company adheres to legal standards. Owing to their knowledge of Vietnam’s skilled talent pool, EORs can support companies in making strategic decisions regarding talent acquisition and recruitment. As an EOR acts as a legal employer, companies are not required to have an established legal entity within Vietnam.

Conclusion

Companies looking to streamline their payroll process can do so with the help of either a payroll outsourcing provider or EOR. These services will play an important role in protecting companies from compliance failures and avoiding the accompanying heavy penalties. Using their legal expertise and advanced data protection software, payroll companies can ensure that all sensitive employee data is processed securely.

Choosing the right provider is an extremely important decision and one that can significantly impact the business’ future within Vietnam. Remote People’s Broker services provide employers with the essential tools they need to choose the right provider. Companies can compare services based on their flexibility, type, and budget, enabling them to make a strategic and financially responsible choice.

Ready to optimize payroll in Vietnam? Remote People’s payroll outsourcing services ensure compliance and efficiency. Contact us today to discuss your payroll needs in Vietnam.