Is Employer of Record legal in Asia? A country-by-country answer

Yes in most of Asia, with conditions in the countries that matter most. Several of the region’s largest economies regulate a third party employing staff who work under someone else’s direction as labour dispatch or labour outsourcing, with licences and limits. This guide sets out the position in twelve markets and the questions to ask a provider in each.

The open markets: Hong Kong, Singapore, Malaysia, Thailand

In these jurisdictions an Employer of Record is simply an employer. The provider’s local company signs an ordinary employment contract with your hire, registers them for the relevant provident fund or social security, runs payroll and files the returns; a commercial agreement between you and the provider governs the provision of the employee’s services. There is no dispatch licence, no cap on numbers and no limit on the kinds of role.

Two things still apply. Recruitment is licensed — Singapore’s Employment Agencies Act, Hong Kong’s Employment Agency Regulations, Malaysia’s Private Employment Agencies Act — so a provider that also sources candidates needs the relevant licence. And the employment law of the country applies in full to the EOR’s contract: Singapore’s Employment Act and CPF rules, Hong Kong’s Employment Ordinance and MPF, Malaysia’s Employment Act and EPF/SOCSO, Thailand’s Labour Protection Act and Social Security Fund.

Mainland China

In practice, EOR in China takes one of three forms. A provider with its own licensed Chinese entity employs the worker directly and manages the dispatch constraints openly, sometimes with formal recognition from the local authorities. A provider without a Chinese entity subcontracts to a licensed local firm — often a FESCO-type state-linked agency — and the worker’s legal employer is a company you have never heard of. Or the arrangement is structured as a service contract that avoids the word “dispatch” altogether, which is the riskiest of the three. Ask which applies.

The ten-per-cent cap is measured against the client’s Chinese workforce. If you have no Chinese entity, you have no Chinese workforce, and the cap is not the practical constraint it appears; the temporary-auxiliary-substitute rule and local enforcement practice are what a good provider manages around.

Japan

Japan regulates the practice under the Worker Dispatching Act (労働者派遣法). A dispatching business must be licensed by the Ministry of Health, Labour and Welfare, and the 2015 amendments limit an individual dispatched worker to three years in the same organisational unit of a client, with a parallel three-year limit per unit unless the client consults its employee representatives. Dispatch into certain roles — port transport, construction, security, some medical work — is prohibited. Equal-treatment rules introduced in 2020 require dispatched workers’ pay to be aligned with comparable client employees or set under a labour-management agreement.

A credible Japanese EOR therefore holds a dispatch licence, or employs the worker under an arrangement that genuinely does not amount to dispatch — typically where the provider directs the work, which is rarely true of EOR. GoGlobal, headquartered in Tokyo, and the global platforms with Japanese entities operate within this framework; ask to see the licence number.

South Korea

The Act on the Protection of Temporary Agency Workers permits dispatch only in 32 designated job categories (largely professional, technical and clerical), for a maximum of two years, after which the client is deemed to have hired the worker directly. Manufacturing production roles are excluded except in narrow circumstances. Dispatching businesses must be licensed. Korean courts have been active in re-characterising outsourcing and subcontracting arrangements as illegal dispatch when the client directs the work, with direct-hire orders as the remedy.

EOR in Korea therefore works well for the professional roles it is usually used for, within the two-year horizon, and badly for anything that looks like a permanent operational team. Providers should be able to say which job category your hire falls into.

Vietnam

Vietnam’s Labour Code 2019 and Decree 145/2020 regulate labour outsourcing (cho thuê lại lao động). Only licensed enterprises may supply workers, the list of permitted jobs runs to twenty categories (again mostly professional, technical and support roles), and the maximum period for any position is twelve months. The licence requires a deposit with a Vietnamese bank. Many providers operate in Vietnam through a licensed local partner; MSA Asia and the larger platforms hold or have arranged local capacity.

India, Indonesia, the Philippines, Taiwan

India has no EOR-specific law. The Contract Labour (Regulation and Abolition) Act 1970 regulates contractors supplying workers to a principal employer above a headcount threshold, and the four labour codes passed in 2019–2020 are being brought into force in stages. In practice EOR is widely used for white-collar hires, with the provider registered under the shops-and-establishments and EPF/ESI regimes in the relevant state.

Indonesia regulates outsourcing under the Manpower Law as amended by the Job Creation Law and its implementing regulations. The old limit of outsourcing to non-core activities has been relaxed but workers’ rights transfer with the contract, and the provider must be a licensed Indonesian company. BPJS registration and the religious-holiday allowance apply in full.

The Philippines distinguishes legitimate job contracting from prohibited labour-only contracting under Department Order 174. A provider must have substantial capital, control the work and be registered with DOLE; if it merely supplies people who work under your control, the arrangement can be re-characterised and you deemed the employer. Most EORs structure around this carefully; ask how.

Taiwan regulates dispatched work under 2019 amendments to the Labor Standards Act: the dispatching agency is the employer, contracts must be indefinite, and the client is jointly liable for unpaid wages and occupational injuries. There is no headcount cap.

What to ask a provider, in any Asian country

1. Which entity employs my hire?Name, registration number, and whether it is the provider’s own company or a partner. Check it against the local registry.
2. Under which regime?Ordinary employment, licensed dispatch, licensed outsourcing, or a service contract. If the answer is vague, that is the answer.
3. What limits apply to my role?Job category, duration cap, headcount cap, prohibited roles. The provider should volunteer these.
4. What happens at the limit?Rotation, re-hire, conversion to your own entity. Vietnam’s twelve months and Korea’s two years arrive quickly.
5. Can you sponsor a work visa here?Open markets generally yes; China and Japan generally no, or with conditions.

Frequently asked questions

Is EOR illegal anywhere in Asia?

Not outright. Every jurisdiction covered here permits some form of third-party employment. The risk is a provider operating outside the applicable regime — unlicensed dispatch in Japan or Korea, or labour-only contracting in the Philippines — which can result in fines for the provider and, in some countries, the worker being deemed your employee.

Does the ten-per-cent cap in China apply to me if I have no Chinese company?

The cap is measured against the client’s workforce in China. With no Chinese entity the calculation is moot, and the practical constraints are the temporary-auxiliary-substitute rule and local enforcement practice. A provider with its own licensed entity manages these; a subcontracting provider passes the problem to its partner.

Is the EOR or my company liable if something goes wrong?

The EOR’s local entity is the employer and carries primary liability. Several jurisdictions — Taiwan, Korea, the Philippines — can attach joint or deemed liability to the client, particularly where the client directs the work. A well-drafted service agreement allocates these risks and requires the provider to indemnify you for its own failures.

Can I keep someone on EOR permanently?

In the open markets, yes. In Korea (two years), Vietnam (twelve months) and Japan (three years per unit) statutory limits apply; in China the role must remain temporary, auxiliary or substitute. Providers structure around these, but for a permanent core team in those countries an entity is usually the right long-term answer.