Introduction: The Vietnamese Opportunity for Tech Companies
Vietnam has become a major technology hub in Southeast Asia, attracting international companies seeking skilled talent and agile expansion solutions. For a French web agency like Knok Studios, established in Vietnam since 2018, this reality is part of everyday business.
Are you looking to hire a Vietnamese developer remotely, test the local market, or simply reduce your operating costs? Faced with the administrative complexity and expense of setting up a local entity, the solution of Payroll Outsourcing (or Employer of Record – EOR) stands out as the fastest and most cost-effective option.
This article provides a comprehensive overview of payroll outsourcing in Vietnam, answers the key questions foreign employers ask (How do you hire a Vietnamese employee? How much does an IT talent cost in Vietnam vs France? What are the alternatives to setting up a local company, particularly payroll outsourcing?), and explains why this solution is ideal for startups and SMEs with limited budgets.
How to Hire a Vietnamese Employee? The Obstacles of Traditional Expansion
For a foreign employer, accessing the Vietnamese labor market involves several major challenges: company incorporation, the legal framework for freelancers, and upfront costs.
1. The Costly Alternative: Setting Up a Company in Vietnam
Creating a local subsidiary can be a long, costly, and complex process.
- Initial registration fees: Expect a minimum of EUR 2,000.
- Recurring annual costs:
- Registered address (minimum virtual office): Around EUR 400/year.
- Mandatory annual legal audit: Minimum EUR 600/year.
- Accounting and tax services: From EUR 2,000/year.
- Indirect costs and time: The process may require one or more trips by company directors to sign official documents (travel, accommodation, lost working time). The entire process can take several months.
This means total first-year expenses ranging between EUR 5,000 and EUR 10,000—an amount that is significant when hiring a single employee, for short-term missions, or simply to test the Vietnamese market. This does not even account for the difficulty of navigating an unfamiliar legal and tax environment, which often requires a learning curve and careful communication with Vietnamese authorities.
2. The Absence of an “Auto-Entrepreneur” Status
It is crucial to understand that, unlike in France, there is no equivalent to the auto-entrepreneur (micro-entrepreneur) status in Vietnam. Independent work is heavily regulated. To be paid legally through a lightweight structure, a Vietnamese worker would need to set up their own company, which—given the setup and annual management costs mentioned above—is out of reach for most individuals, especially those earning only around EUR 9,000 gross per year (approximately) for a junior developer.
Attempting to pay a freelancer directly from abroad without a local entity or without using a PEO exposes you to major non-compliance risks with Vietnamese tax and social security regulations.
In addition, sending money to Vietnam involves practical challenges:
- Complexity of international transfers: While it is possible to send funds to Vietnam, international transfers to local bank accounts are often more complex and slower than to most other countries. Based on Knok Studios’ experience, clients frequently need to contact their bank directly to initiate the transfer, making the process less autonomous and more expensive.
- Alternative solution (Knok Studios): To overcome this issue, alternative payment solutions—such as accepting payments in Hong Kong in multiple currencies—can speed up transactions and reduce fees, ensuring fast and efficient payroll.
The Solution: Payroll Outsourcing (Employer of Record)
Payroll outsourcing (EOR) allows you to develop your operations in Vietnam without creating a subsidiary. A payroll outsourcing company acts as your Employer of Record for your employees.
The benefits of Payroll Outsourcing (EOR):
| Benefit | Description |
| Fast Market Access | Hire and onboard professionals within a few days (often less than 48 hours). |
| Cost Reduction | Save up to 85% of expansion costs compared to setting up a subsidiary. |
| Full Legal Compliance | The partner handles payroll, social contributions, taxes, and compliance with local labor laws. |
| Complete HR Management | Support with contracts, renewals, termination procedures, and leave management. |
You retain full control over day-to-day management, supervision, and employee assignments.
How Much to Pay a Remote Vietnamese Worker: IT Cost Comparison
One of Vietnam’s main attractions is the ability to recruit highly skilled IT talent at significantly lower costs than in Europe—an advantage that is decisive for startups and companies with limited resources or financial constraints.
Below is a comparison of gross annual salaries and total employer costs (including social charges) for key IT roles in France and Vietnam.
Comparison of Annual Employer Costs (in EUR)
| Key IT Role | Level | Gross Annual Salary (France) | Total Employer Cost (France) (Base 1.45x Gross) | Gross Annual Salary (Vietnam) | Total Employer Cost (Vietnam)** (Base 1.215x Gross + 10% EOR) | Average Annual Savings |
| UI/UX Designer | Junior | €35,000 | €50,750 | €9,000 | €12,029 | ~€38,721 |
| UI/UX Designer | Senior | €55,000 | €79,750 | €20,000 | €26,730 | ~€53,020 |
| Web / App Developer | Junior | €38,000 | €55,100 | €11,000 | €14,702 | ~€40,398 |
| Web / App Developer | Senior | €65,000 | €94,250 | €23,000 | €30,740 | ~€63,510 |
| QA Tester | Junior | €35,000 | €50,750 | €9,000 | €12,029 | ~€38,721 |
| QA Tester | Senior | €50,000 | €72,500 | €18,000 | €24,057 | ~€48,443 |
Calculation notes:
- Estimates based on 2024 market salary ranges.
- Total Employer Cost France: Gross annual salary plus an estimated 45% employer social charges.
- Total Employer Cost Vietnam: Gross annual salary plus 21.5% mandatory social charges, then increased by a 10% payroll outsourcing fee (on the “super-gross”).
The numbers speak for themselves: recruiting via payroll outsourcing in Vietnam can save around EUR 50,000 per year for a senior profile, making it a major economic opportunity.
The Advantages of a Vietnamese Employment Contract for Foreign Employers
Vietnamese labor law offers foreign employers a more flexible framework and more favorable contract conditions than those in Western countries, particularly France.
- Employment Contracts: Must be concise, clear, and written in Vietnamese and English. Salary and benefits must be expressed in Vietnamese Dong (VND), not in foreign currencies.
- Working Hours: Generally 8 hours per day, 5 days per week (40 hours), with one mandatory weekly rest day (often Sunday). The legal maximum is 48 hours per week.
- Taxation and Social Security: Mandatory social insurance covers maternity leave, sick leave, workplace accidents, and retirement.
- Employer contributions (local): 21.5% of gross payroll (plus 2% for the trade union fund).
- Employee contributions (local): 10.5% of gross salary.
- Specific Leave: Employees are entitled to six months of paid maternity leave (funded by social insurance) and 5 to 14 days of paternity leave. They also receive paid personal leave for marriage or the death of a close relative.
1. Working Time, Leave, and Public Holidays
Vietnamese labor law stands out for a higher legal working time and fewer statutory annual leave days than France:
| Criterion | France (Legal Basis) | Vietnam (Legal Basis) |
| Legal Working Time | 35 hours per week | Maximum 48 hours per week (40h/week is common practice) |
| Annual Paid Leave | 25 working days | 12 working days per year |
| Annual Public Holidays | 11 days | 10 days (including 5 days for Tet) |
Paid Leave Details:
- Annual Leave: 12 days per year after 12 months of service. Employees gain one additional day for every five years of service.
- Carryover: Unused leave can generally be carried over until March 31 of the following year or compensated financially.
- Paid Personal Leave: Employees are entitled to paid leave for their own marriage, their child’s marriage, or the death of a parent, spouse, or child.
2. Taxation and Social Contributions (Mandatory Insurance)
The Employer of Record (EOR) handles mandatory contributions to Social Insurance (health, maternity, retirement, workplace accidents) and Unemployment Insurance.
| Type of Contribution (Based on Gross Salary) | Employer Rate (Local) | Employee Rate (Local) |
| Social Insurance (SI) | 17.5% | 8.0% |
| Health Insurance (HI) | 3.0% | 1.5% |
| Unemployment Insurance (UI) | 1.0% | 1.0% |
| Trade Union Fund (Mandatory) | 2.0% | 1.0% (if membership) |
| Total | 23.5% | 10.5% |
Note: Unemployment Insurance applies only to companies with 10 or more employees.
3. Personal Income Tax (PIT)
Vietnamese employees are subject to Progressive Personal Income Tax (PIT), withheld at source by the employer (or EOR).
| Annual Taxable Income (VND) | Tax Rate |
| Up to 60 million VND | 5% |
| From 60 to 120 million VND | 10% |
| From 120 to 216 million VND | 15% |
| From 216 to 384 million VND | 20% |
| From 384 to 624 million VND | 25% |
| From 624 to 960 million VND | 30% |
| Above 960 million VND | 35% |
PIT is calculated after deducting the personal allowance (11 million VND/month) and dependent allowances (4.4 million VND/month per dependent).
4. Specific Leave and Termination: Key Details
- Maternity/Paternity Leave: Six months of paid maternity leave for mothers (funded by social insurance) and 5 to 14 days of paternity leave. Pregnant employees or those on maternity leave are highly protected against dismissal (except in cases of company closure).
- Sick Leave: Employees are entitled to an allowance (paid by the social insurance fund) for 30 to 60 days per year, depending on contribution seniority.
- Probation Period: Maximum 60 days for highly technical positions and 30 days for other roles.
- Notice Period for Termination:
- Fixed-term contract: 30 working days.
- Indefinite-term contract: 45 working days.
- Termination requires valid legal grounds (performance issues, prolonged illness, force majeure). Unfair dismissal can cost the employer two months’ salary as a penalty, in addition to reinstatement or compensation.
Summary: France vs Vietnam Comparison
| Criterion | France (Legal Basis) | Vietnam (Legal Basis) | Employer Advantage |
| Legal Working Time | 35 hours per week | Maximum 48 hours per week (40h/week common practice) | Vietnam (More hours worked for the same monthly cost) |
| Annual Paid Leave | 25 working days per year | 12 working days per year | Vietnam (Fewer statutory leave days) |
| Annual Public Holidays | 11 days | 10 days (including 5 days for Tet) | Vietnam (Slightly fewer paid holidays) |
| Severance and Termination | Strict and costly regulation | Depends on the contract; legal procedure required but often negotiable. | Vietnam (Shorter procedures and generally lower costs) |
As shown by these figures, local contract conditions are generally more favorable to employers, with higher legal working hours and significantly fewer statutory leave and public holidays than in France.
Conclusion: Start Your Growth in Vietnam with a Trusted Partner
Payroll outsourcing (EOR) in Vietnam stands out as the most intelligent, secure, and cost-effective expansion strategy for international companies. By freeing yourself from the fixed costs and complexities of company incorporation (estimated at EUR 5,000–10,000 in the first year), you can focus on what matters most: rapidly integrating high-value IT talent.
The savings generated on salaries (up to EUR 60,000 per year for a senior profile), combined with more flexible local working conditions (working hours, leave), make Vietnam an unparalleled market for optimizing your operational budget.
As a French web agency based in Ho Chi Minh City since 2018, Knok Studios has in-depth knowledge of local practices and the expectations of French employers.
📞 Contact Knok Studios Today!
While we do not directly provide payroll outsourcing services, we are your trusted partner to ensure the success and management of your on-site teams. We offer local, French-speaking, expert management—essential for daily follow-up, productivity, and retention of Vietnamese talent.
Ready to recruit in Vietnam and start your growth with optimized costs?
Knok Studios can support you on two essential fronts:
| Service | Main Objective | Your Benefit |
| 1. Payroll Outsourcing (EOR) | Secure Local Hiring. We act as Employer of Record for Vietnamese employees you have already identified. | Compliance & Controlled Costs. Save thousands of euros in setup costs and ensure legal payroll and contracts. |
| 2. Traditional Services | Guarantee Quality and Expertise. Our senior French experts complement your teams in specific areas. | Senior Quality & Complementarity. High-level expertise in UX/UI Design, Marketing, and Development to strengthen or lead your projects. |
➡️ Contact Knok Studios to discuss your needs in team management, remote project management, and cultural integration. Make sure you have the right partners for a smooth and stress-free expansion!
Go Further: FAQ
What is the minimum wage in Vietnam?
The minimum wage in Vietnam is determined by a geographic zoning system, adjusted according to the cost of living. There are four zones:
- Zone I (Major cities): Major cities such as Hanoi and Ho Chi Minh City. The minimum wage is approximately 4,960,000 VND per month (around €190).
- Zone II (Medium-sized cities): Less urbanized regions.
- Zone III (Cities and districts): Rural areas.
- Zone IV (Remaining regions): The lowest minimum wage, around 3,250,000 VND per month (around €125).
It is important to note that salaries for qualified IT professionals (such as developers) are generally well above this legal minimum (a junior developer earns on average €9,000 gross per year).
What is the “13th month” salary in Vietnam? Is it mandatory?
The 13th Month Bonus is an extremely common practice in Vietnam, but it is not legally mandatory. It is usually paid before the Lunar New Year (Tet) and is a strong expectation among employees.
- Practice: An annual bonus often equivalent to one additional month of salary.
- Importance: Offering a 13th month bonus is a key factor in talent retention and is considered a major competitive advantage by employers.
Does the Lunar New Year (Tet) affect work and payroll?
Yes, Tet is the most important holiday in Vietnam and has a major impact on work schedules.
- Holiday Duration: The law grants a minimum of 5 paid public holidays for Tet. In practice, however, the holiday period can extend to a full week (7 to 9 days), depending on government decisions and company practices.
- Payroll Impact: It is common to pay the 13th Month Bonus just before this period so employees can prepare for the festivities.
- Planning: Foreign companies must plan ahead, as productivity is significantly reduced during this week and the surrounding weeks.
What are the most common types of employment contracts in Vietnam?
Vietnamese law mainly recognizes two types of contracts for foreign employers hiring local talent:
- Indefinite-Term Contract: Used when the employee works on a stable basis with no predetermined end date. The required notice period for termination is 45 working days.
- Fixed-Term Contract: Used for specific assignments of limited duration, not exceeding 36 months (3 years). Once a fixed-term contract has been renewed once, the next contract must be an indefinite-term contract (with rare exceptions). The required notice period for termination is 30 working days.
Payroll outsourcing can use either type of contract to structure the employment relationship.
Can foreigners (expatriates) benefit from payroll outsourcing in Vietnam?
Yes, payroll outsourcing is also used to employ expatriates in Vietnam. Social contribution rules and obligations differ for foreign employees:
- Social Contributions: Expatriates are subject to different—and often lower—social insurance contribution rates than local employees.
- Work Permit: The EOR (or employer) must ensure that the expatriate holds a valid work permit and temporary residence card to comply with immigration and employment laws.
