Second Talent finds wide EOR cost gaps across Asia

Second Talent says employer costs and termination rules differ sharply across nine major Asian markets, complicating expansion for companies that rely on a single regional hiring playbook. The review highlights payroll contributions, bonuses, severance and compliance timelines, and points to employer of record structures as a faster alternative to local entity setup.

Why it matters: - Companies hiring across Asia face statutory employer costs that can differ by more than sixfold between neighboring markets. - Those gaps affect payroll budgets, contract terms, severance exposure and how fast a company can hire. - The review also shows why an employer of record model can reduce setup time compared with forming a local entity.

What happened: - Second Talent published a country-by-country review of employment rules across Vietnam, the Philippines, Indonesia, Malaysia, Thailand, Singapore, Hong Kong, Taiwan and China. - The review covers mandatory employer contributions, leave entitlements, notice periods, severance formulas and bonus obligations. - Second Talent operates as an employer of record provider in nine Asian markets. - CEO Elton Chan said regional employment policy does not converge across Asia and that a Singapore-written policy will not work under Indonesian labour law.

The details: - Employer-side social contributions range from about 5% of payroll in Thailand, where social security contributions are capped, to roughly 31% in China when pension, medical and housing fund obligations are combined. - In the Philippines, 13th month pay is a statutory entitlement that must be paid by 24 December each year. - In Indonesia, the equivalent religious holiday allowance, known as THR, must be paid seven days before Eid al-Fitr. - In Vietnam, Malaysia, Singapore, Hong Kong and Taiwan, year-end bonuses are customary but not required by statute. - Thailand uses a tenure-based severance schedule that can reach 400 days of pay for employees with 20 or more years of service. - Indonesia uses a severance formula that combines severance pay and long-service pay and can exceed a year of compensation depending on the reason for termination. - Singapore has no statutory severance requirement, although retrenchment benefits are common in practice. - Local entity setup typically takes three to six months for incorporation, tax registration and social security enrolment. - Some jurisdictions require a locally resident director or minimum registered capital for entity formation. - Ongoing entity obligations can include local accounting, annual filings and, in some markets, a company secretary. - Winding down an entity can take another six to twelve months. - Under an EOR arrangement, the provider is the legal employer, issues the employment contract, runs payroll, withholds and files income tax, enrols workers in statutory benefit schemes and carries compliance liability. - The client company still directs day-to-day work, reporting lines and performance management. - Second Talent said onboarding through its EOR service usually takes five to ten business days after documentation is complete. - The company said EOR arrangements can cover finance, marketing, operations, customer support, human resources, design, engineering and management roles. - National law can restrict certain licensed activities to directly employed staff.

Between the lines: - The biggest risk for multinationals is not just higher payroll expense; it is that labor rules, benefit obligations and termination costs change by market. - Misclassification is a recurring compliance problem because contractors who work fixed hours under a client's direction may be reclassified as employees by local authorities. - That reclassification can trigger retroactive liability for social contributions, leave and severance. - Elton Chan said misclassification often starts as a valid contractor arrangement and becomes a compliance issue over time. - Second Talent said contractor-to-employee conversion is one of the most common reasons companies use its EOR service.

What's next: - Second Talent's country guides are available here. - The guides cover working hours, overtime, probation, leave, payroll contributions, income tax, notice periods and severance across the nine markets. - Second Talent said the figures reflect regulations current as of publication and that statutory rates and contribution ceilings can change. - The company said the guides are for general reference and are not legal advice.

The bottom line: - Asia hiring is not a one-policy market, and the compliance gap between countries can be large enough to change expansion strategy.