Labor and tax regulations when using EOR services

One of the common challenges businesses face when entering a new market is the problem of recruiting and managing employees and ensuring compliance in that country. To solve this problem, many businesses have turned to companies that provide Enterprise Resource Planning (EOR) services. This article will explore how Enterprise Resource Planning (EOR) services work, labor and tax regulations when using EOR services, and how foreign businesses can simplify and streamline their recruitment process through this service.

1. How does Enterprise Resource Planning (EOR) work?

According to regulations in many countries today, in order to officially hire workers, employers must have a legal presence in the host country, such as a subsidiary or a representative office. However, establishing a legal presence costs a lot of time, effort and resources. Understanding that need, Enterprise Resource Planning (EOR) was born.

Human Resource Management Service, also known as EOR (Employer of Record) is a form in which the service provider will act on behalf of the business as the legal employer of the employee. Human Resource Management Service will help the business avoid risks or challenges when completely building a new human resource system so that it can focus on developing core business activities.

Companies that provide Human Resource Management (EOR) services are highly knowledgeable and familiar with local labor regulations and policies. They can help businesses comply with laws and support businesses with many tasks related to recruitment and labor management, including:

  • Recruitment
  • Labor contracts
  • Preparing procedures for employees to start work (including support for applying for work visas, work permits and residence cards)
  • Calculating salaries
  • Paying health insurance; social insurance
  • Ensuring personal income tax obligations
  • Managing labor relations

What Is an Employer of Record (EOR)?

>>>Read more: Top Employer Of Record (EOR) service

2. What types of Labor and tax regulations when using EOR services

When using Human Resource Management (EOR) services, there are 2 important types of things that businesses need to know.

2.1. Service contract with the service provider

Your business will sign a Service Contract with the Human Resource Management (EOR) service provider. This contract specifically defines the scope and terms of the human resource management service, such as service fees, duration, and termination. The service contract also clearly states the business’s relationship with the employee and with the human resource management service provider.

Since the terms of the service contract can sometimes be quite complicated, businesses should ask their EOR service provider to clarify any concerns before signing.

2.2. Legal Relationship with Employees

Your business will not need to directly sign an Employment Contract with the Employee. The Employment Contract, as prescribed by law, will be signed between the Human Resources Management service provider and the employee.

This contract will clearly state the terms and conditions of the employee’s employment, such as salary, bonuses/allowances, and responsibilities. By signing this employment contract, the Human Resources Management (EOR) service provider will also be the party legally responsible for the employee.

 

Understanding Employer of Record Service

3. Who will be responsible for managing the employee?

Legally, the employee will be an official employee of this unit because he/she has signed a labor contract with the human resource management service provider. The human resource management service provider (EOR) will be in charge of all payroll & salary payment activities, insurance payment, and other activities related to the employee’s labor relations.

In addition, this employee is a member of the enterprise participating in operational activities. The enterprise will have full control over the daily tasks, scope of work, projects, meetings, KPIs, etc. of that employee just like other employees recruited by the enterprise itself.

4. Benefits of Enterprise Resource Planning (EOR) services

Current regulations of Vietnamese law on labor leasing activities, including Human Resource Management (EOR) services, are still quite strict. This is considered a conditional business line that can only be carried out by enterprises with a Labor Leasing License and applies to certain jobs.

S4B Vietnam has extensive experience in providing Enterprise Resource Planning (EOR) services in the Vietnamese market, is knowledgeable about the law, and can help businesses connect the right people to the right jobs while still complying with legal regulations.

In addition to Enterprise Resource Planning (EOR) services, S4B Vietnam also provides a wide range of flexible services and solutions to suit your business needs such as executive recruitment, temporary and outsourced staffing, payroll services, recruitment process outsourcing (RPO), HR consulting and training, tax and accounting, and other services.

To learn more about Enterprise Resource Planning (EOR) services and to learn more about S4B Vietnam’s comprehensive HR solutions, please visit our Services page or enter your contact information in the form below, we will respond to you as soon as possible!

S4B Vietnam

  • Address: Unit 602A, Tower A, Handi Resco Office Building. 521 Kim Ma Street, Ba Dinh District, Hanoi
  • Tel: + 84 24 3974 4181
  • Email: service@s4b.com.vn

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