Labor Outsourcing in Vietnam

What labor outsourcing is and its governing legal framework

Article 52 of the 2019 Labor Code defines labor outsourcing in Vietnam as an arrangement in which a worker signs a labor contract with an employer that is a labor outsourcing enterprise, and is then assigned to work under the direction and management of another employer (the client enterprise) while maintaining the labor relationship with the outsourcing enterprise. This tripartite relationship is fundamentally different from an ordinary bilateral employment relationship: the party paying salaries and social insurance contributions is the outsourcing enterprise, but the party directly managing day-to-day work is the client enterprise.

The legal framework comprises the 2019 Labor Code (Articles 52–57), Decree 145/2020/ND-CP detailing licensing conditions, deposit requirements, and the list of jobs eligible for outsourcing, and Decree 283/2026/ND-CP on administrative sanctions. Labor outsourcing is a conditional business activity — operating without a license is a violation of law, and a client enterprise that uses workers supplied by an unlicensed provider also bears joint liability.

Conditions for labor outsourcing enterprises

To obtain a labor outsourcing license, an enterprise must satisfy the conditions set out in Decree 145/2020/ND-CP, including: placing a deposit of VND 2 billion at a commercial bank to secure the ability to pay salaries, insurance, and other obligations owed to outsourced workers; the legal representative must have appropriate qualifications and experience — at least 03 years of experience in labor outsourcing or labor supply within the most recent 05 years; and must meet the prescribed conditions on facilities and capital.

A labor outsourcing license is valid for a maximum of 60 months and may be renewed multiple times, each renewal for a maximum of 60 months. The enterprise must complete the renewal procedure before the license expires; operating during a period when the license has expired without renewal is a violation. When selecting a staffing partner, the client enterprise should verify the validity of the provider’s license at the outset and periodically during the cooperation — a simple due-diligence step that many companies overlook.

Only certain jobs may be outsourced

Article 52 provides that labor outsourcing may only be performed for certain jobs prescribed by the Government. The list of jobs eligible for labor outsourcing, issued together with Decree 145/2020/ND-CP, covers 20 jobs, mainly support, seasonal, or specialized positions such as interpreters, administrative secretaries, receptionists, drivers, security guards, cleaners, and other technical and professional jobs on the list.

This principle is designed to prevent the abuse of labor outsourcing as a substitute for direct hiring on a large scale. The client enterprise may only use outsourced workers for jobs on the list; using outsourced workers outside the list — for example for key management positions or main production lines not covered by the list — is a violation. Before signing an outsourcing contract, the client enterprise should check each intended position against the permitted list rather than relying entirely on the provider’s assurances.

Rights and obligations of the outsourcing enterprise

Article 54 of the 2019 Labor Code requires the labor outsourcing enterprise to sign labor contracts with workers, pay salaries, contribute to social insurance, health insurance, and unemployment insurance, and perform the obligations of an employer as prescribed. The outsourcing enterprise must also inform workers of the contents of the labor outsourcing contract, as well as the rights and obligations of workers when working at the client enterprise.

Operationally, the outsourcing enterprise signs a labor outsourcing contract with the client enterprise, clearly agreeing on the number of workers, job positions, outsourcing term, service fees, and the responsibilities of each party. One point staffing companies should note: the law strictly prohibits collecting money from workers in any form in order to participate in outsourcing activities — all costs of recruitment, training, and bringing workers to the client enterprise are borne by the outsourcing enterprise and may not be passed on to workers.

Rights and obligations of the client enterprise

Article 55 provides that the client enterprise has the right to direct outsourced workers to perform work under the outsourcing contract, but must at the same time ensure working conditions and occupational safety and hygiene for outsourced workers as for its own direct employees. The client enterprise may not transfer outsourced workers to another employer, may not use outsourced workers outside the permitted job list, and may not discriminate against them in working conditions compared with direct employees.

Another important obligation: when an outsourced worker suffers an occupational accident, the client enterprise must promptly provide first aid and emergency treatment and notify the outsourcing enterprise so they can coordinate on benefit settlement. In practice, disputes between the client enterprise and the provider often arise around the question of “who is responsible” when an incident occurs — the outsourcing contract should clearly allocate responsibility for occupational safety, accident compensation, and the coordination procedure, rather than leaving these matters vague.

Protection of outsourced workers and the 12-month cap

Article 56 protects outsourced workers through the principle that their salary may not be lower than that of the client enterprise’s direct employees of the same qualifications performing the same work or work of equal value. Outsourced workers are also guaranteed rights regarding working hours, rest, occupational safety, and the right to complain when their rights are infringed — complaints may be sent to both the outsourcing enterprise and the client enterprise.

Article 53 sets an important limit: the maximum outsourcing term for a worker is 12 months. This cap is designed to prevent “permanent outsourcing” — the use of outsourced workers as a standing substitute for direct hiring. When the 12-month term expires, if the client enterprise still needs the worker, the lawful solution is direct recruitment rather than continuing to extend the outsourcing arrangement. Companies should track the term of each outsourced worker so as not to inadvertently exceed the cap.

Prohibited acts in labor outsourcing

Article 57 lists prohibited acts, including: the outsourcing enterprise collecting money from workers or conducting outsourcing without a license; the client enterprise using outsourced workers outside the permitted job list or transferring outsourced workers to another employer; and the outsourcing of foreign workers — Decree 219/2025/ND-CP provides that employers may not outsource foreign workers. See also cases exempt from work permits on the legal framework for foreign workers.

Violations of labor outsourcing regulations are subject to administrative sanctions under Decree 283/2026/ND-CP, with penalties escalating according to the number of workers involved in the violation. In addition to fines, a violating enterprise may have its outsourcing operations suspended or its license revoked in serious cases. For FDI client enterprises, labor violations also affect the group’s compliance assessment and may lead international clients and partners to place them under scrutiny.

Practical notes for FDI enterprises using outsourced workers

For FDI enterprises newly entering Vietnam, labor outsourcing is a flexible solution in the early stage before the HR apparatus is complete. Four practical notes: verify that the provider’s labor outsourcing license is still valid and check the positions to be used against the list of 20 permitted jobs; clearly agree in the outsourcing contract on responsibility for salary payment, insurance contributions, occupational safety, and occupational accident handling; track the 12-month term of each outsourced worker so as to switch to direct recruitment in time when long-term need arises; and never use outsourced workers who are foreign nationals in any form.

Over the long term, companies should treat labor outsourcing as a stopgap solution rather than a core HR strategy — service fees plus compliance risks often exceed the cost of direct hiring once staffing needs stabilize. When headcount is large enough, building an in-house HR function and hiring directly gives the company more control over workforce quality and compliance. An overview of the labor compliance framework is available at the labor law advisory practice page.

Frequently asked questions

Useful links

• Labor law advisory – the labor law practice page for companies.
• Work permit exemption cases – notes on foreign workers in outsourcing.
• Social insurance and salary compliance for FDI enterprises – insurance obligations for outsourced workers.