Insights

Labor Supply in 2026: Choosing the Right Provider and Avoiding Legal Risk

By Nguyễn Quốc Trung — Deputy General Director · Updated 2026-09-02

Labor supply and labor sub-leasing differ on one core point: who stands as the employer to sign the employment contract and pay social insurance. Labor sub-leasing is a conditional business line — it requires a license and a deposit of 2 billion VND, and applies only to the 20 jobs in Appendix II of Nghị định 145/2020/NĐ-CP. Labor supply is not confined to that list. Choose the wrong model and it is the hirer — not just the provider — who is penalized.

When a business is short of workers, there are three lawful ways to add labor from outside: labor supply, labor sub-leasing, and piecework contracting (outsourcing). The three models differ on three questions: who signs the employment contract, who directs the day-to-day work, and who bears legal responsibility. Understanding the three correctly avoids falling into "disguised labor sub-leasing" — the most common legal trap when hiring people through a third party.

Why do higher pay and more overtime still fail to fill the ranks?

Labor shortages in industrial parks are mostly a supply–demand mismatch rather than simply a matter of money. Orders bunch up by quarter, a factory needs several hundred more people within 2–3 weeks and then scales back after the peak — while formal recruitment takes months and cannot be cut quickly when orders cool.

Overtime also has a hard ceiling. The Labor Code 2019 limits overtime to no more than 40 hours/month and 200 hours/year, with certain specific sectors (textiles, footwear, electronics, seafood processing, and the like) allowed up to 300 hours/year. A line that has hit the overtime cap cannot lawfully be pushed for more output no matter how much it pays. That is why the flexible-labor model through a third party has become a structural choice, not a stopgap.

How do labor supply and labor sub-leasing differ?

The section below summarizes the differences at the level needed to choose a model; a full concept-by-concept comparison of labor supply versus labor sub-leasing is a larger topic in its own right.

Labor supply is where a service provider finds, screens, and places workers for a business that needs them. Labor sub-leasing is where a worker who has signed a contract with a licensed enterprise is assigned to work under the direction of another business for a fixed term. The core distinction is who plays the role of the employer.

• Labor supply (pure form): the provider finds and screens candidates; your business signs the employment contract directly, pays the wages, and pays social insurance itself. You have full authority to direct, and bear full responsibility toward the worker.
• Labor sub-leasing: the worker signs the employment contract with the sub-leasing enterprise; that enterprise pays the wages and social insurance; the worker works under the direction of the hirer. This is a conditional business line and requires a license.
• Piecework contracting (outsourcing): you buy the result of a work item (for example, cleaning a workshop, or packing by output); the contractor organizes and directs its own staff. You do not give orders directly to each worker.

In practice, most services for production workers are delivered under the licensed model, in which the service provider is the one that signs the employment contract and pays social insurance. This is also how Nhân Kiệt's labor supply service operates: Nhân Kiệt signs the employment contract directly with each worker and pays social insurance directly as the employer; the business only takes people onto shift and confirms the hours worked. For positions within the labor sub-leasing list specifically, Nhân Kiệt operates under labor sub-leasing license number 15/2019/SHCM. The "pure supply" model — where the client signs the contracts and pays the insurance itself — is simply another variant on the market, suited to businesses that want to stand as the employer themselves.

A fourth direction is increasingly chosen when a business already has its team but wants to standardize the paperwork: the labor formalization service — workers move onto contracts with the service provider, which pays social insurance, files taxes, and handles labor reporting.

What conditions, license, and deposit does labor sub-leasing require?

Under the Labor Code 2019 and Nghị định 145/2020/NĐ-CP, a business wishing to sub-lease labor must meet all of the following at once:

• A deposit of 2 billion VND at a Vietnamese commercial bank or a foreign bank branch.
• A labor sub-leasing license issued by the provincial People's Committee where the head office is located; valid for up to 60 months, renewable multiple times, each renewal for no more than 60 months.
• The legal representative must be a manager of the business, with no criminal record, and with at least 36 months of experience working directly in the field or managing labor sub-leasing or labor supply within the 5 years immediately before the license application.

So, when vetting a provider, the first thing to do is inspect the original, still-valid license — not just rely on an introduction. Nhân Kiệt operates under labor sub-leasing license number 15/2019/SHCM and maintains a management system to ISO 9001:2015, ISO 45001, and ISO 14001.

Which jobs are permitted for labor sub-leasing under Nghị định 145/2020?

Appendix II of Nghị định 145/2020/NĐ-CP lists 20 jobs permitted for sub-leasing. Common categories include: interpretation and translation; secretarial and administrative assistance; reception; tour guiding; sales support; programming of production-machine systems; operation, inspection, and repair of construction machinery and production electrical systems; building and factory cleaning; security and guarding; driving; telephone customer care; along with certain maritime, oil-and-gas, and aviation occupations.

Two points businesses often miss:

• A job not on this list may not be sub-leased, even by mutual agreement. Many direct production-worker positions are not on the list — for those, the correct model is labor supply or labor formalization, not sub-leasing.
• The list is a prerequisite: if the job you need is not in Appendix II, drop the sub-leasing option at the outset to avoid legal risk later.

What is the maximum term of labor sub-leasing, and can it be renewed?

The Labor Code 2019 sets a maximum sub-leasing term of 12 months per worker. After 12 months, the hirer may not continue using that person under a sub-leasing arrangement — even by renaming the position — and may not renew for the same person at the same hirer. If staff are still needed after 12 months, the business can hire that worker directly, or switch to a labor supply or labor formalization model in line with the rules.

What obligations must the hirer guarantee?

The Labor Code 2019 requires the hirer to notify and instruct on the labor rules, ensure occupational safety and hygiene, and not discriminate on working conditions between sub-leased workers and its own. The wage of a sub-leased worker may not be lower than that of a worker of the same qualification doing the same work or work of equal value at your business.

At the same time, the hirer may not:

• Use sub-leased labor to replace workers who are on strike or in the middle of resolving a labor dispute.
• Replace workers dismissed due to structural or technological change, economic reasons, or a split or merger.
• Use sub-leased labor without a specific agreement on liability for compensation for occupational accidents and occupational diseases with the sub-leasing enterprise.

If labor is hired from an unlicensed unit, is the hirer penalized too?

Yes. This is a point many businesses misunderstand: penalties target not just the provider but the hirer as well. The three most serious categories of hirer conduct are: using sub-leased labor for work outside the list in Appendix II; using sub-leased labor from an unlicensed unit; and using sub-leased labor without an agreement on occupational-accident and occupational-disease liability, or to replace workers on strike. Lighter breaches — failing to instruct on the labor rules, failing to ensure occupational safety and hygiene, discrimination — are also fined.

The framework of administrative penalties in the labor field is set by the Government and is amended or replaced over time; businesses must check the penalty levels and conduct against the instrument in force at the time of application. A sub-leasing enterprise that breaches the rules (sub-leasing beyond 12 months, paying below the required wage, operating without a license, and so on) also faces the additional sanction of license revocation. Note: the monetary figures in the decree are the levels for individuals; the penalty for an organization is determined under separate rules — check the correct clause for each act.

How do outsourcing (piecework) and labor sub-leasing differ?

Piecework contracting (outsourcing) is buying the result of a work item: you pay by output or by completed item, while the contractor recruits, organizes, and directs its own team. In labor sub-leasing, you are not buying a result but buying labor by time, and you direct each person directly. The line lies in the right to direct the day-to-day work.

Signs of disguised labor sub-leasing

If a contract is labeled "piecework" but in practice you still assign shifts, keep time, allocate positions, and discipline each worker, that relationship is treated as disguised labor sub-leasing. Once found to be disguised, the business loses the right to invoke the piecework contract and is dealt with under the sub-leasing framework — including the requirements on the license, the job list, and the 12-month term. The safe course is to choose the right model name from the outset and let the right to direct match the type of contract.

What does a labor supply unit price include?

A labor supply unit price typically includes the worker's net wage, the compulsory insurance the employer pays, trade union funding, the cost of recruitment, training, and health checks, and a management fee. The most-underestimated part is the insurance and trade union funding.

On the employer's side, beyond the 21.5% compulsory insurance (social insurance 17% + occupational accident and disease 0.5% + health insurance 3% + unemployment insurance 1%), there is also trade union funding of 2% under Luật Công đoàn 2024 (số 50/2024/QH15) — mandatory even where no grassroots trade union exists. The worker pays 10.5% (social insurance 8% + health insurance 1.5% + unemployment insurance 1%).

To picture it in real figures, here is the total cost of one Region I worker with no dependents, for the period from 01/07/2026 (insurance and trade union funding included):

• Gross wage 10,000,000 VND → total employer cost 12,350,000 VND.
• Gross wage 20,000,000 VND → 24,700,000 VND.
• Gross wage 30,000,000 VND → 37,050,000 VND.
• Gross wage 50,000,000 VND → 61,750,000 VND.
• Gross wage 100,000,000 VND → 112,385,000 VND (only 12.4% is added, because the cap has been reached, instead of 23.5%).

The cap for social and health insurance contributions is 50,600,000 VND per month from 01/07/2026 (Nghị định 161/2026/NĐ-CP), so at very high gross wages the employer's added share tapers off proportionally. You can run the numbers for each wage level yourself and convert Gross ↔ Net with the labor cost calculator.

Do part-time workers generate insurance?

Yes, and this is the item most often forgotten in a quotation. The compulsory social insurance obligation for part-time workers took effect on 01/07/2025 (Luật BHXH số 41/2024/QH15, Nghị định 158/2025/NĐ-CP), applying once both conditions are met: an employment contract of at least 01 month and a monthly wage at or above the reference level. The reference level is 2,530,000 VND per month from 01/07/2026.

At the reference level, the insurance cost is 809,600 VND per person per month (employer 543,950 VND = 21.5%, worker 265,650 VND = 10.5%). Adding the 2% trade union funding (50,600 VND), the employer's share is 594,550 VND and the total is 860,200 VND per person per month. If this item is not in the initial quotation, it comes back as an added cost a few months later.

A checklist for vetting a provider before signing

• The original or certified copy of the labor sub-leasing license, valid on the exact date of signing.
• Confirmation of the 2-billion-VND deposit at a bank.
• Whether the work you need is on the list of 20 jobs in Appendix II of Nghị định 145/2020/NĐ-CP — if not, switch to the labor supply model.
• Documents proving the provider is currently paying social insurance for the very group of workers to be assigned (the most recent social insurance payment notice).
• Management-system certificates (ISO 9001, ISO 45001) and occupational-safety procedures.
• Geographic coverage: whether it has an office/team in the province where the factory is located, or dispatches people from afar.
• The process for handling staffing fluctuations when workers are absent unexpectedly.
• How attendance is kept, hours reconciled, and payroll made transparent.
• Health-check and safety-training records for the occupation before entering the workshop.
• References from clients in the same industry and of the same production-shift scale.

Clauses the contract should include

Beyond the mandatory content, the contract should spell out: the mechanism for adding/replacing people; a mechanism for reconciling hours and pay on a fixed cycle (an open-formula reconciliation book is recommended, so both sides can check); whose responsibility social insurance is; the agreement on compensation for occupational accidents and occupational diseases; and how to handle a worker's sudden departure. For businesses that want to separate the calculation entirely from operations, the outsourced payroll service keeps the reconciliation at zero discrepancy.

Frequently asked questions

What is labor supply?
Labor supply is where a service provider finds, screens, and places workers for a business that needs them. Depending on the model, the party that signs the employment contract and pays social insurance may be the using business (pure supply) or the provider holding a labor sub-leasing license.

Does a business hiring sub-leased labor have to pay social insurance for those workers?
No. In a labor sub-leasing relationship, the sub-leasing enterprise is the employer, signs the contract, and pays social insurance, health insurance, and unemployment insurance. The hirer pays the service fee under the contract but must still ensure occupational safety and hygiene and not discriminate against sub-leased workers.

If labor is hired from a company without a sub-leasing license, is the hirer penalized?
Yes. The hirer is penalized for using sub-leased labor from a business without a labor sub-leasing license. That is why a business must check the original and the validity of the license before signing, not rely only on the partner's introduction.

What is the maximum term of labor sub-leasing?
A maximum of 12 months per worker, with no renewal for the same person at the same hirer (Labor Code 2019). After 12 months, that worker can be hired directly, or the arrangement switched to a labor supply or labor formalization model.

When should labor supply be used instead of sub-leasing?
When the work is not among the 20 jobs in Appendix II of Nghị định 145/2020/NĐ-CP (most direct production workers), or when the need runs beyond 12 months. In those cases, labor supply or labor formalization is the fitting and lawful model.

If your business needs to add workers for the peak season and wants to review whether the model in use is lawful, call 0908 636 108 (Nguyễn Quốc Trung — Deputy General Director) or email [email protected]. With more than 40,000 workers operating across 34 provinces and labor sub-leasing license number 15/2019/SHCM, Nhân Kiệt will match your job positions against the Nghị định 145/2020/NĐ-CP list and recommend the fitting contract model before any discussion of unit price.

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