Vietnam is one of Southeast Asia’s most attractive destinations for building regional teams—but many foreign employers are surprised by the true cost of hiring. While salaries remain competitive, the real financial burden lies in mandatory contributions, compliance obligations, and administrative risks that are often underestimated.
One of the highest hidden costs is social insurance, which requires employers to contribute approximately 21.5% of an employee’s salary, covering social, health, and unemployment insurance. For employees, an additional 10.5% is deducted. Combined, total contribution obligations can add 32% or more to base payroll.
Another source of unexpected expense is personal income tax (PIT) compliance, where late submissions incur penalties of up to 25 million VND, plus 0.03% daily interest on unpaid tax. Miscalculations, delayed filings, or incorrect declarations can quickly escalate into costly liabilities.
Contract management is another high-risk area. Companies unfamiliar with Vietnam’s labor laws often face termination disputes, which may require mandatory severance, back payments, and potential compensation if procedures are not followed precisely. These cases can consume weeks of management time and significant legal expenses.
For businesses hiring expatriates, work-permit processing also adds cost. Delays or errors can result in administrative penalties, contract interruptions, or, in worst—case scenarios, the forced termination of the employment relationship.
For many Singaporean and regional companies, these hidden costs and compliance risks make local hiring far more complex than expected.
This is why many companies now rely on Cake Vietnam’s Employer of Record (EOR) service, which manages payroll, tax filings, contracts, and full labor-law compliance on your behalf—eliminating risk while ensuring cost transparency.
Explore how Cake Vietnam’s EOR solution helps businesses hire confidently and avoid hidden compliance costs HERE.
