Recruiting before licensing sounds like racing the clock, but a labour contract exists only when the employer exists: every salary, probation and start-date commitment signed while there is no legal person hangs suspended over an entity not yet born. Investors planning their entry often underestimate Hiring Before Licensing, because the cost of fixing things later is always a multiple of the cost of doing them right from the start.
Short answer
In short: before the enterprise registration certificate is issued, the investor may interview, agree intentions and sign conditional job offers with an effective date tied to the company formation; but formal labour contracts, social insurance registration and foreign labour procedures can only be performed once the company has legal status, a tax code and accounts to fulfil the duties.
With Hiring Before Licensing, two layers must not be conflated: the law sets the framework of rights and obligations, while actual application depends on how banks, tax authorities and registration authorities examine each specific document.
Detailed analysis
The legal boundary sits at the employer party: under Labour Code 45/2019, a labour contract is an agreement between an employee and an employer — a party that must validly exist at conclusion time and be capable of performing wage, compulsory social insurance under Social Insurance Law 41/2024 and personal income tax duties. A ‘contract’ signed in the name of an unformed company creates no law-protected labour relation for either side: the employee gets no insurance for those working days, and the company has no valid basis to pay salary. A strong early hire deserves a clear conditional offer letter rather than a party-invalid contract.
For foreign staff, the condition chain is even longer: the company must obtain foreign labour demand approval and the employee a work permit under Decree 219/2025/ND-CP (replacing Decree 152/2020/ND-CP) before work starts; both procedures require the company to already exist. A correct hiring calendar is therefore built backwards from the ERC date: interviews and conditional offers run parallel to the licensing phase, while contract signing, labour use declarations and registrations concentrate in the first days after formation.
Framework: labour contracts and concluding parties under Labour Code 45/2019/QH14; compulsory social insurance under Social Insurance Law 41/2024/QH15 (effective 1 July 2025) and guiding Decree 158/2025/ND-CP; foreign workers under Decree 219/2025/ND-CP (replacing Decree 152/2020/ND-CP) — demand approval and work permits both attach to an already formed employer. A conditional job offer is a civil intention document, not a labour contract.
Risks and practical notes
At the Hiring Before Licensing step, beyond administrative fines, the company may also face the bank refusing transactions, being classified as high-risk by the tax authority, and partners demanding an explanation of its legal status.
The specific risk: an early-promised but unprotected employee carries that experience into the relationship with the company from day one; and when disputes over probation pay or uninsured working days arise, the company has almost no valid document to protect itself because every paper was signed when the party did not exist.
Action checklist
- Sign only conditional job offers before the ERC, stating an effective date tied to the company formation date
- Never let staff actually start work, attendance or salary payment before a valid labour contract exists
- Build the hiring calendar backwards from the ERC date: contracts, labour declarations, insurance registration in the first days after formation
- For foreign staff, start demand approval and work permit files the moment the company exists
- Keep conditional hiring files transparent so employees understand the legal status of the commitment
Frequently asked questions
What are the risks of recruiting staff before the company is licensed?
Three main risks: labour commitments invalid as to party, so neither side is protected in a dispute; employees working in reality without social insurance and without a valid labour relation; and the company having no valid basis to pay salary for the pre-formation period. Additionally, foreign staff working before holding a work permit is an independently prohibited act separate from the formation issue.
What hiring promises can be made before the ERC?
Can be promised: the position, the intended salary, an intended start date conditioned on company formation, and working conditions to be recorded in the formal labour contract — expressed through a conditional job offer. Should not be promised: a signed labour contract form, a certain start date before the formation date, or commitments only an existing employer can perform.
Which labour procedures must wait for legal status?
Procedures that must wait include signing formal labour contracts and registering social — health — unemployment insurance for employees, labour use declarations, personal income tax withholding as an income-paying organisation, and the whole foreign labour chain from demand approval to work permit.
Can staff be hired right after licensing?
Yes, and that is the correct rhythm: right after legal status exists, the company signs labour contracts and performs the corresponding registrations and declarations; an employee holding a conditional offer moves to a formal contract without renegotiating from scratch, provided the offer recorded the core terms and conversion conditions.
FLAT Law Firm accompanies investors
On Hiring Before Licensing, for advice tailored to your company’s specific situation, please contact the FLAT Law Firm for a case assessment; we will propose a workable filing path based on your project structure and timeline. If your company has just received its licences or is about to carry out its first transaction, a dossier review with the FLAT Law Firm team can surface inconsistencies early, before they become penalties or rejected filings.
This article has been quality-reviewed by the FLAW AI Legal Council