Payroll calculation and payment are the most important task of every organization, not only in Vietnam but also around the world.

However, most CEOs or HR Managers are still not aware of its importance, perceiving it be simply an administration task. They do not yet understand its impact on the business if not done the right way.

Labor law compliance must be paid great attention, such as what income is taxable and how much should be deducted for compulsory insurance. Organizations need to stay up-to-date on the Labor Law, especially in Vietnam, where change can happen frequently. Furthermore, applying those changes to the payroll also requires expertise. If organisations fail to stay updated on the Labour Law or lack expertise, they may easily become non-compliant.

Timely payments are the second matter of importance, expressing the commitment of the organisation to its employees and strengthening the company’s reputation. However, there have been cases where payroll very much relies on one person, making company’s struggle when this person is absent.

Accuracy is the third matter in need of focus. In order to make sure the calculation and salary payments are always accurate, organizations need to invest in a team where entry, checking and approval are performed by different people, and in the infrastructure (server, back-up and restore system) for testing accuracy, but most organisations can’t afford to or prefer not to invest in these. A lot of time can be wasted on reviewing the process to uncover errors.

Confidentiality is the fourth matter. Most organizations are highly aware of this and always try to minimize the risk of unauthorised persons accessing confidential information. Last but not least, for multinational companies with high audit standards, the local office must invest in the system and infrastructure needed to satisfy the parent offices’ requirements.
Some organizations find it difficult to maintain consistency in the delivery of results in these matters, especially those of large size or with complicated payment processes or many transactions.

Most new market entries therefore prefer to outsource their payroll to a professional and reliable local agency. The outsourcing vendor, as a payroll expert, will keep organizations informed about updates to the Labor Law and provide useful advice on how to apply those changes efficiently. Furthermore, the outsourcing vendor is a professional team that is always available to the organization, rather than one individual in-house. The best outsourcing vendor is one that has an entire system, with full quality control processes and back up plans to ensure confidentiality and accuracy, so there is no need for an organisation to make huge investments. They can also easily customise software to deliver various reports for organizations, thanks to their IT team having strong knowledge in human resources issues.

(*) This column was prepared in co-operation with Talentnet Corporation. To obtain more advice on Vietnam’s labor market, email