Hire Employees in Indonesia without a Local Entity

Hire employees in Indonesia without setting up a PT PMA. Emerhub as your Employer of Record handles employment contracts, payroll, tax withholding, and benefits administration so you can build a team in Indonesia while your company remains the day-to-day manager.

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What is an Employer of Record?

An Employer of Record (EOR) is a licensed Indonesian company such as Emerhub that becomes the legal employer of your staff. The EOR handles all formal employment obligations: drafting compliant contracts, processing payroll, withholding and remitting income tax (PPh 21), and managing mandatory social security contributions (BPJS).

This structure allows foreign companies to hire in Indonesia without incorporating a PT PMA, which requires a minimum capital investment of IDR 10 billion and typically takes 8 to 12 weeks to become fully operational.

What an EOR handles in Indonesia

An EOR in Indonesia acts as an HR and administrative partner in Indonesia. This allows you to employ local or foreign talent legally and efficiently.

Legal Employer

The EOR acts as the legal employer for your staff in Indonesia, handling all employment-related matters such as payroll, benefits, and compliance with Indonesian labor laws.

Payroll & Benefits Management

The EOR calculates monthly salaries, applies the correct income tax withholding (PPh 21) based on each employee’s tax status, and remits taxes to the Indonesian tax authority. Furthermore, we ensure compliance with Indonesian labor laws.

Work Permit & Visa Assistance

If you need to employ a foreign national in Indonesia, the EOR can sponsor their work permit (IMTA) and stay permit (KITAS). The EOR acts as the sponsoring employer, which means the foreign worker’s legal right to work in Indonesia is tied to the EOR relationship.

Employment Compliance

Indonesian labor law requires employment contracts in Bahasa Indonesia. The EOR drafts compliant contracts for both fixed-term (PKWT) and permanent (PKWTT) employees, including provisions for probation, working hours, overtime, and termination.

Benefits of Using an Employer of Record (EOR) in Indonesia

An EOR is suitable for newly established companies, startups, small and medium enterprises, and global entities who want to hire remote workers in Indonesia. You speed up the hiring process and establish your operations quickly with an EOR.

Test the Market

Enables you to gauge market potential without significant upfront costs.

Access to Local Talent

Helps you find and hire suitable local talent with knowledge of the Indonesian market and labor conditions.

Quick Market Entry

Enables rapid hiring to quickly establish a presence in Indonesia and capitalize on market opportunities.

Scale According to your Business

Allows you to scale your workforce in Indonesia or adjust workforce size according to your business needs.

Simplified Compliance

Manage complex compliance with Indonesian labor laws, social security, payroll taxes, employee benefits, and contract management, reducing legal risks.

Minimize Cost

Reduce cost in setting an inhouse team or establishing a legal entity.

EOR vs Setting Up a Legal Entity in Indonesia

Instead of incorporating a legal entity in Indonesia, you can engage with an EOR like Emerhub to enter the market quickly. Many business owners often engage with an EOR either to test the market or hire remote workers, then set up a legal presence if needed later on.

Employer of Record

Pros

Quick market entry; hiring can start immediately without a legal entity
Lower upfront and operational cost.
EOR handles compliance with Indonesian labor laws.
Easy to scale workforce up or down as needed
EOR manages all HR administration for your company

Cons

Pay a monthly fee to the EOR for managing HR functions.
May have less control over HR concerns, requiring more communication with the EOR
Sharing data with an EOR increases the risk of data breaches.

Setting up a Legal Entity

Pros

Provides full control over business operations and HR decisions.
Offers legal clarity and avoids potential risks associated with third-party providers.
Enhances visibility and presence in the market, which can be beneficial for long-term business strategies.

Cons

The registration process is lengthy and requires significant time and resources.
Involves a complicated incorporation process with extensive paperwork and regulatory compliance.
Requires substantial upfront expenses, including licensing fees and facility investments.

Employer of Record Service in Indonesia

The Easiest Way to Hire Employees in Indonesia

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Emerhub’s Employer of Record (EOR) Services in Indonesia

We ensure your employees are onboarded smoothly, paid accurately, and receive the benefits they’re entitled to, all while staying compliant with local labor laws.

Onboarding

We draft the employment contract, register the employee for BPJS, and set up payroll. Typical onboarding takes 3 to 5 business days for Indonesian nationals, longer for foreign workers requiring permits.

Monthly payroll

We calculate gross-to-net, withhold PPh 21, process BPJS contributions, and transfer salaries to employee bank accounts. You receive a payroll report showing all deductions.

Ongoing compliance

We handle annual tax reporting, THR payments, leave administration, and any changes to employment terms.

Offboarding

If an employee resigns or is terminated, we manage the exit process including final pay calculation, severance (if applicable under Indonesian law), and BPJS deregistration.

FAQs about EOR Service in Indonesia

The EOR (Emerhub’s Indonesian entity) is the legal employer on record. This means the EOR is responsible for compliance with Indonesian labor law. You remain the day-to-day manager and direct the employee’s work.

Setting up a company in Indonesia requires significant time, capital, and regulatory approvals. An EOR lets you hire employees quickly, ensuring full compliance with Indonesian labor laws, BPJS social security, and local tax regulations, without the complexity of incorporating a business.

The EOR serves as the official, legal employer of your employees in Indonesia. However, you maintain full control over work assignments, job responsibilities, and performance management, just as you would with direct employees.

The EOR ensures all employees are paid accurately and on time while handling:

Salary disbursement in Indonesian Rupiah (IDR)
Tax withholdings & BPJS social security contributions
Compliance with minimum wage & overtime pay laws
Expense reimbursements & bonus calculations

An EOR in Indonesia ensures employees receive all legally required benefits, including:

BPJS Kesehatan (National Health Insurance)
BPJS Ketenagakerjaan (Social Security & Pension Contributions)
Annual leave, sick leave, and parental leave
Severance pay (as per Indonesia’s labor law regulations)

Optional benefits such as meal allowances, transport benefits, and flexible work arrangements can also be included.

Yes, an Employer of Record in Indonesia can assist with visa and work permit applications. EORs handle the complex process of obtaining necessary documents such as the Expatriate Placement Plan (RPTKA), Work Permit (IMTA), and Limited Stay Permit (KITAS) for foreign employees. They manage the administrative tasks involved in sponsoring foreign workers, ensuring compliance with Indonesian immigration laws and regulations. This service simplifies the often-complicated immigration procedures, making it easier for companies to hire expatriates or individuals of other nationalities in Indonesia.

Yes, you can terminate an employee through an Employer of Record (EOR) in Indonesia. The EOR will handle the termination process in compliance with local labor laws, ensuring that all legal requirements are followed, including notice periods and severance payments. This includes providing written notice to the employee, adhering to the stipulated notice period (usually 30 days), and making necessary severance payments based on the employee’s length of service and the reason for termination.

Yes, an Employer of Record (EOR) in Indonesia can assist with remote work arrangements. EORs enable companies to hire employees who can work remotely, providing them with formal employment status and access to traditional employment benefits such as health insurance and pension plans. This setup is particularly beneficial for freelancers, remote workers, and digital nomads, as it offers flexibility while ensuring compliance with Indonesian labor laws.