Independent Contractor vs. EOR in Vietnam: Which Is Right for Your Business?

Admin Team June 19, 2024

Thinking about hiring talent in Vietnam? There are two main paths you might consider: engaging independent contractors or hiring full-time through an Employer of Record (EOR). Each option has pros and cons. This guide will help you understand the key differences—and decide which is the better fit for your business model.

Classifying Talent: Laws and Risks in Vietnam

Under Vietnam’s Labor Code, someone must be classified as an employee if they work under a labor contract, operate under your supervision, and receive a regular salary. Even if you call them a “freelancer,” if those conditions are met, they are an employee. Misclassification can lead to fines, back pay for benefits, and reputational harm.

Independent Contractors: When It's a Fit (and When It’s Not)

This model is suitable for project-based, short-term work where the contractor has full control over how, when, and where they work. However, if you set their schedule or provide oversight, you risk misclassification. Contractors are also responsible for their own taxes and benefits, which can be a complex burden for them.

Employer of Record (EOR): The Compliant Solution

An EOR is a third-party service that legally hires your Vietnamese talent on your behalf. You control their daily work, but the EOR handles the entire employment framework—including contracts, payroll, benefits, taxes, and compliance. This eliminates your legal risk and administrative burden.

Contractor vs. EOR: Quick Comparison

Feature / Risk	Independent Contractor	Employer of Record (EOR)
Misclassification Risk	High if controlled like an employee	None—legal compliance managed
Benefits & Insurance	None—contractor handles	EOR manages per local law
Payroll & Tax	Contractor's responsibility	EOR handles all deductions & filings
IP Protection	Often weak or unenforceable locally	Strong—embedded in local contracts
Onboarding Time	Fast (contract prep)	Fast (1–2 weeks)

Final Thoughts: Choose What Fits Your Needs

For small, well-defined freelance projects with high autonomy, the Independent Contractor model may work if done carefully. However, for ongoing, long-term, or supervised roles, the EOR route is far safer and more legally sound. For U.S. employers wanting stability, compliance, and peace of mind, an EOR is almost always the smarter choice.

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