VietnamIf you’re looking to simplify the process of managing your team in Vietnam, a Professional Employer Organization (PEO) can help. With a PEO, you can outsource much of the heavy lifting in your HR processes and get help with your payroll processing, benefits administration, and compliance management.
However, it’s important to be aware that you can’t manage HR in locations without an established entity. For this, you need an Employer of Record (EOR) service.
This guide will help you understand PEO services in more depth, learn the differences between a Professional Employer Organization and EOR Provider, and find the right solution for your needs.
What is a PEO (Professional Employer Organization)?
A PEO enters a co-employment relationship with you where you share legal and administrative responsibility for your employees. In other words, the PEO becomes the employer for tax and insurance purposes, but you retain control over day-to-day operations and strategic decisions.
These are some of the services that a PEO to take time-consuming tasks off your plate:
- Payroll processing
- International payments
- Tax filings
- Employee benefits administration
- Unemployment insurance
- Compliance management
- Workers’ compensation
Benefits of using a PEO in Vietnam
Here are some of the ways a PEO can support you in managing your workforce in Vietnam:
HR compliance
PEOs help you meet the requirements of Vietnamese law, supporting you to manage
HR admin
PEOs take over your payroll, benefits administration, onboarding, and compliance, freeing you from repetitive, administrative hassles.
Employee onboarding
You can get help onboarding your employees as PEOs support orientation and introduce new hires to workplace policies and procedures.
Benefits
PEOs pool together multiple clients to negotiate health insurance, retirement plans, and other employee benefits.
With core tasks managed, you can concentrate on your core business activities and growth strategies.
Challenges and limitations of PEOs in Vietnam
While a PEO can help you with critical HR functions, you should consider several challenges and limitations before choosing to work with one.
Compliance and legal complexities
PEOs can manage compliance, but your company still has some liability for employment-related issues. Misunderstandings over shared legal responsibilities can potentially lead to legal complications.
If a PEO isn’t compliant with mandatory labor laws or regulations or doesn’t meet necessary tax obligations, your company will be liable and you could face financial and legal penalties that could affect your company’s reputation.
Management and control issues
Your company shares operational decisions concerning HR matters with the PEO, which could potentially slow down the decision-making process. For example, if you decide to roll out a new performance review system, you would need to coordinate with the PEO to ensure it aligns with their existing processes.
Cost considerations
PEOs can charge a steep fee for their services as a percentage of your total employee payroll or a flat fee per employee. Some PEOs also come with hidden costs such as charges for benefits plan management.
Alternatives to PEO: Introduction to Employer of Record (EOR)
If you don’t want to set up a local entity in Vietnam, an EOR is a great solution. Here we take a closer look at how the solution works.
What is an EOR?
An Employer of Record (EOR) becomes the official employer for your workforce in a foreign country. This means they manage all legal and compliance duties on your behalf as well as HR tasks such as payroll, tax withholding, and benefits administration.
In an EOR relationship, your company maintains control over your employees’ day-to-day activities and your company’s strategic direction. This structure allows your business to enter new global markets without the risk of dealing with complex regulatory landscapes.
Why consider an EOR in Vietnam
A PEO might serve some businesses well, but many companies prefer to partner with an Employer of Record (EOR) when they expand their operations in Vietnam. Here we look at why.
Advantages over PEO
Complete responsibility for compliance
An EOR manages all the responsibilities of serving as your employees’ legal employer for tax and compliance purposes. It manages all employment-related legal obligations and compliance with local labor and tax laws. The EOR is also often responsible for obtaining work permits.
Simplified and clear management structure
Your company controls and supervises your employees’ day-to-day activities and supervision, including job roles, tasks, and performance evaluations. Meanwhile, the EOR handles the legal and administrative aspects of employment. This clear division makes it easier for you to avoid becoming entangled in legal trouble.
Transparent cost structure and no hidden fees
EORs generally charge a monthly flat fee per employee for payroll processing, benefits administration, compliance management, and other related services. There are no hidden or surprise fees — the costs are transparent and clear from the start.
Discover how Mindvalley, an edtech company, used Multiplier to hire workers in six countries, scaling without unexpected costs.
Deciding between PEO and EOR
Deciding whether a PEO or an EOR is best for you depends on your company’s specific needs. Here are several points to keep in mind.
When to choose a PEO
You should look to a PEO if you:
- Want full control over business operations. When you work with a PEO, you’re still partially responsible for your employees from a legal and administrative perspective.
- Are looking for extensive, local HR support. A PEO’s comprehensive ongoing HR support can help you manage your workload.
- Are already established in the countries where your employees are located. In the co-employment situation, you’ll still be the legal employer of your employees.
When to choose an EOR
An EOR is best if your company wants to expand and hire internationally without setting up a local entity in any new region or country.
Here are several other reasons you might prefer the services of an EOR over those of a PEO:
- Swift market entry. An EOR can handle all the legal and administrative tasks, allowing you to establish operations without setting up legal entities.
- Operational control with outsourced administration. If you want control over your operations but need to outsource administrative responsibilities like payroll, benefits, and HR compliance, an EOR works well.
- Complex labor laws. EORs specialize in understanding local employment laws, ensuring compliance, and mitigating the risk of penalties and legal disputes.
- Predictable costs. EORs offer clear pricing models for payroll, benefits administration, and compliance services to help with accurate cost projections.
- Flexible workforce management. If you plan to expand your workforce or your presence in multiple countries, EORs can scale operations quickly.
- Risk mitigation. EORs assume legal responsibility for employment-related risks, providing robust protection against potential liabilities and compliance issues.
How Multiplier can help
Multiplier offers a robust EOR solution to streamline the global employment process if you’re looking to expand to Vietnam without setting up a local entity.
Shouldering the legal and administrative responsibility, Multiplier can help with global payroll, taxes, benefits, and more — all in a single, user-friendly interface.
We’re adept at navigating the complexities and risks related to cross-border employment and stay on top of local regulations so you don’t have to.
PEO vs EOR in Vietnam
If you have a local entity and you’re looking to offload the bulk of your HR duties, a PEO might be the ideal solution. However, if you don’t want responsibility for compliance with Vietnamese laws, an EOR will be better suited to your needs.
Multiplier’s scalable and compliant EOR solution can empower your business to grow compliantly and confidently anywhere in the world. It also manages time-consuming HR tasks to free your team up to focus on strategic planning.
Book a demo with our experts to learn more.
