Hiring an independent contractor in Vietnam can give your company access to leading professionals in the region. If you’re considering hiring a contractor, ensure you understand the laws, worker classifications, and responsibilities you’ll need to address during the process.
Hiring contractors in Vietnam
Your company should clearly understand how working with a contractor differs from bringing an employee onto a team. Ensure you know the legal differentiators between the two.
Independent contractors vs. full-time employees
An employee is defined in Vietnam as an individual who works under a contract with an employer, receives a regular salary, and is subject to the employer’s supervision and control. Independent contractors provide services to another company and generally determine their own schedule, methods for completing the services, and work without direction or supervision. Independent contractors are not entitled to any statutory employment rights or benefits such as leave, insurance, or severance upon termination.
Penalties for misclassification
Proper classification of each worker in your company is critical. If you incorrectly identify an employee as a contractor, your company could face legal action, including penalties and fees. Additionally, you may need to retroactively pay all benefits the employee was entitled to since their hiring.
How to hire independent contractors in Vietnam
As you begin the contractor hiring process, keep in mind that it will look somewhat different than hiring an employee. Follow these 3 key steps to navigate your relationships with independent contractors successfully.
1. Carefully conduct interviews.
Contractors typically offer CVs that outline project-specific skills and capabilities. You’ll want to focus on their specializations in interviews rather than discussing more employee-based concerns, such as their personality or culture fit with the company. Prioritize how they can address the specific project your company needs them to handle.
2. Create a service agreement.
Both parties should discuss conditions of service and agree to their responsibilities. Include these details in a written service agreement:
- Pay rates and arrangements
- Services the contractor will provide
- Length of the contract
- Termination conditions
3. Introduce necessities.
After deciding which contractor to hire, you’ll want to ensure they are equipped to perform according to expectations. Introduce them to a point of contact for project questions and ensure they’re familiar with company-specific tools and workflows. It’s best to avoid in-depth training and onboarding, which might imply more oversight than necessary for an independent contractor.
How to pay independent contractors in Vietnam
Contractors are not on employee payroll, so you might consider using a money transfer provider or other services to compensate them. Keep in mind that some restrictions may apply when transferring money internationally. You can negotiate with your company’s contractor as to whether you will use your company’s local currency for payments or the Vietnamese dong.
While you will not usually need to cover benefits or withhold taxes from contractor payments, you are obligated as a company to meet any payment terms in your service agreement.
Terminating independent contractors
In most cases, independent contractors offer services for a set period of time or on a project-by-project basis. Your company and the contractor are free to set your own terms for termination or extension of the contract.
It’s best practice to lay out the procedures for termination in your service agreement. If you have a problem with contractor negligence or a contractual breach and need to terminate services early, you’ll have a straightforward process to follow.
Turn to G-P when hiring independent contractors in Vietnam.
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Contact us to learn more.