TL;DR — An employer of record (EOR) is a company that legally employs your team in a country where you have no entity. Across the nine Asian markets covered here, employer statutory contributions range from about 5% of salary in Thailand and Hong Kong to roughly 31% in China. Two markets mandate a 13th month payment. Severance ranges from nothing statutory in Singapore to formulas exceeding a year of pay in Indonesia. An entity takes 3–6 months to stand up; an EOR takes 5–10 business days. The right choice depends on headcount, time horizon, and how many countries you are entering at once.
Expanding a team into Asia raises a question that has nothing to do with recruiting: once you find the person, who actually employs them? Hiring someone in Jakarta or Ho Chi Minh City means someone must issue a compliant employment contract, run local payroll, withhold income tax, enrol the employee in statutory benefit schemes, and carry the liability if any of that goes wrong.
What an EOR is, and what it is not
An employer of record is the legal employer of a worker who works for you. The EOR’s name appears on the employment contract. It runs payroll, files taxes, remits social contributions, administers leave, and handles termination in line with local law. You direct the work: what the person does, who they report to, which tools they use, how their performance is managed.
It is worth being precise about what this is not. An EOR is not a staffing agency and not a recruiter, though many providers offer those services alongside. It is not a contractor platform — the defining feature is that the worker is a full employee with statutory entitlements. And it is not a way to avoid local labour law; it is a way to comply with it without registering a company.
EOR is also function-agnostic. Because it is an employment arrangement rather than a service tied to a job type, the same structure covers a finance analyst, a marketing manager, a customer support lead, an operations manager or a software engineer. The only real exceptions are roles that national law reserves for licensed or directly employed staff — certain regulated financial, legal and medical positions.
The cost that surprises people: employer contributions
Salary is the number most budgets start with. Statutory employer contributions are the number that moves them. These are amounts the employer owes on top of gross pay — pension, medical insurance, unemployment insurance, housing funds and their local equivalents — and they vary by more than sixfold across the region.
China sits at the top at roughly 31%, driven by pension at 16%, medical at around 10%, and a housing fund that varies by city. Vietnam follows at 21.5% and Taiwan at about 22%. At the other end, Thailand caps social security contributions at a low monthly ceiling, and Hong Kong’s Mandatory Provident Fund is 5% capped at HKD 1,500 per month, which makes both markets unusually cheap on the employer side.
Caps matter more than headline percentages for senior salaries. A 5% uncapped contribution costs more on a high salary than a 17% contribution that stops at a modest ceiling. In Hong Kong and Thailand, the effective employer burden on a senior hire is close to a rounding error; in China and Vietnam, it is a real line item.
| Market | Employer | Employee | 13th month |
|---|---|---|---|
| China | ~31% | ~23% | Customary |
| Taiwan | ~22% | ~4% | Customary |
| Vietnam | 21.5% | 10.5% | Customary (Tet) |
| Singapore | Up to 17.25% | Up to 20% | Customary (AWS) |
| Malaysia | ~14.5% | ~11.7% | Customary |
| Philippines | ~12% | ~6% | Mandatory |
| Indonesia | ~11% | ~3% | Mandatory (THR) |
| Hong Kong | 5% (capped) | 5% (capped) | Customary |
| Thailand | 5% (capped) | 5% (capped) | Customary |
Who carries the burden
Splitting contributions between employer and employee reveals how differently these systems are designed. Singapore is the only market in the group where the employee side exceeds the employer side — CPF can reach 20% from the employee against 17% from the employer, which reflects a system built around individual savings accounts rather than pooled insurance.
The practical consequence is that gross-to-net differs sharply by market. An offer that looks generous in gross terms can land poorly once local deductions apply, and candidates in high-deduction markets tend to negotiate on net pay. Budgeting on gross alone will misprice offers in both directions.
Leave entitlements start lower than most teams expect
Statutory minimum annual leave across the region is modest. Taiwan starts at three days in the first year of eligibility. The Philippines provides five days of Service Incentive Leave. Indonesia and Vietnam are the most generous floors at twelve days.
These are floors, not norms. Competitive employers in every one of these markets offer well above the statutory minimum, and in the Philippines 15 to 20 days is common practice despite a five-day legal requirement. The statutory number matters for compliance; the market number matters for retention.
Public holidays swing the total further. The Philippines observes 18 or more regular and special non-working days. Several markets fall between 11 and 17. Two teams with identical leave policies can end up with materially different working days per year purely because of where they sit.
Mandatory bonuses are not optional budget
Two markets in this group require a 13th month payment by statute. In the Philippines it must be paid by 24 December and equals one twelfth of total basic salary. In Indonesia, THR must be paid seven days before Eid al-Fitr. Both are legal obligations, not discretionary bonuses, and both should be accrued monthly rather than absorbed as a year-end shock.
Termination is where the real variance sits
Contribution rates differ by a factor of six. Severance exposure differs by far more than that.
Singapore has no statutory severance requirement at all, though retrenchment benefits of two weeks to a month per year of service are common practice. At the other extreme, Thailand applies a tenure-based schedule reaching 400 days of pay for employees with 20 or more years of service, and Indonesia applies a compound formula of severance plus long-service pay that can exceed a year of compensation depending on the reason for termination.
Notice periods follow the same pattern. Vietnam requires 45 days for indefinite contracts. Malaysia scales from four to eight weeks with tenure. China requires 30 days written notice or a month’s salary in lieu. These are the rules that determine what a restructuring actually costs, and they are the ones most often discovered late.
Entity or EOR
Standing up a local entity typically takes three to six months across incorporation, tax registration and social security enrolment. Several markets add requirements that slow this further: a locally resident director, minimum registered capital, or a company secretary. Ongoing obligations include local accounting and annual filings, and winding an entity down can take another six to twelve months.
| Factor | Own legal entity | Employer of record |
|---|---|---|
| Time to first employee | 3–6 months | 5–10 business days |
| Upfront cost | Registration, legal, registered capital | None; monthly fee per employee |
| Ongoing admin | Local accountant, payroll vendor, annual filings | Included in the fee |
| Compliance liability | Your company and its local directors | The EOR, as legal employer |
| Exit | Deregistration, 6–12 months | End the contract; settle notice and severance |
| Best suited to | 20+ employees in one country, long horizon | Market testing, small teams, multi-country entry |
The crossover point is a question of scale and duration rather than principle. An entity amortises its fixed costs across headcount, so a team of thirty in one market will usually be cheaper on its own entity. A team of three, or a team spread across four countries, generally will not. Our EOR vs entity cost calculator models the break-even for a specific headcount, and the EOR cost calculator estimates all-in monthly employment cost by market.
The contractor question
Engaging someone as an independent contractor is the common workaround for not having an entity. It is also the most frequent source of retroactive liability in the region. Where a contractor works fixed hours, uses company systems and reports to a manager, authorities in most of these markets will look past the contract label and treat the relationship as employment — with back-dated social contributions, leave entitlements and severance attached. The exposure usually builds quietly over years before anything triggers a review.
Choosing a market
No single market wins on every axis, and the right answer depends on which constraint binds hardest.
- Lowest employer overhead: Thailand and Hong Kong, both with capped contributions that keep senior-salary costs low.
- Predictable exit costs: Singapore, where no statutory severance applies and terms are set by contract.
- Deepest talent pools at moderate cost: Vietnam, the Philippines and Indonesia, with the trade-off of mandatory bonuses in two of the three.
- Highest compliance load: China and Indonesia, where contribution rates, city-level variation and severance formulas all compound.
If you are weighing this against other engagement models rather than only entity-versus-EOR, our guide to staff augmentation services covers where each model fits.
Key takeaways
- Employer statutory contributions span roughly 5% to 31% of salary across the nine markets; contribution caps matter more than headline rates for senior salaries.
- The Philippines and Indonesia mandate a 13th month payment on fixed statutory deadlines. Accrue it monthly.
- Severance is the widest variance in the region — nothing statutory in Singapore, up to 400 days of pay in Thailand.
- Statutory leave floors are low; market practice is materially higher and drives retention.
- Entity setup runs 3–6 months and suits concentrated, long-horizon headcount. An EOR suits market testing, small teams and multi-country entry.
Country detail
Per-market pages covering working hours, overtime rates, probation limits, leave entitlements, payroll contributions, income tax bands, notice periods and severance rules are available for each of the nine markets on our EOR country hub. Figures reflect regulations current at publication; statutory rates, minimum wages and contribution ceilings are revised periodically by national authorities, and none of this constitutes legal advice.
If you are working through where to place a role and what it would cost to employ compliantly, talk to our EOR team for an all-in per-employee quote by market.
