Hire Employees in Indonesia without a Local Entity
Legally hire top talent in Indonesia without setting a business entity in Indonesia.
What is an Employer of Record?
An Employer of Record (EOR) is a third-party organization that legally employs staff in Indonesia on your behalf. The EOR assumes full responsibility for all formal employer-related tasks such as payroll processing, tax filing, benefits administration, and employment contracts in compliance with local labor laws. This allows you to hire employees in Indonesia without establishing a legal entity.
Key Functions of an EOR
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
Manage employee salaries, pension contributions, social security contributions, and other benefits, ensuring that all legal obligations are met.
Work Permit & Visa Assistance
For foreign employees, the EOR usually handles the application process for work permits (IMTA) and stay permits (KITAS), simplifying immigration procedures.
Employment Compliance
Includes drafting employment contracts, administering mandatory benefits like BPJS health and employment insurance, 13th-month salary, leave entitlements, and statutory holidays.
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
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.
Legal & Contracts
- Drafting legally compliant employment contracts (PKWT & PKWTT) in Bahasa Indonesia.
- Strict adherence to regulations on probation periods, working hours, and overtime.
- Compliant management of termination processes, including notice periods and severance calculations.
Payroll & Tax
- Management and payment of the mandatory annual holiday bonus (THR).
- Accurate monthly payroll calculation and disbursement in Indonesian Rupiah (IDR).
- Withholding and remittance of employee income tax (PPh 21) to the tax authorities.
Benefits & HR
- Registration and management of mandatory BPJS Ketenagakerjaan and BPJS Kesehatan contributions.
- Administration of statutory leave entitlements (annual, maternity, paternity, etc.).
- Seamless onboarding, offboarding, and maintenance of confidential employee records.
- Local HR advisory and support for your employees.
Employee Relocation
- Assistance with RPTKA (Foreign Worker Utilization Plan) and KITAS (Work/Stay Permit) applications.
- Expert guidance on foreign worker quotas and knowledge transfer requirements.
- Ensuring legal residency and work authorization for your international team members.
FAQs about EOR Service in Indonesia
An Employer of Record (EOR) in Indonesia is a 3rd party that allows foreign companies to legally hire employees without setting up a local entity. The EOR becomes the official employer in Indonesia for remote workers, managing payroll, taxes, benefits, and labor law compliance. Meanwhile, you will retain control of the employee’s daily work-related tasks.
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.
Schedule a Call with an Emerhub Consultant
We’ll discuss your needs and how we can help you expand your business in Indonesia.
Email Us
indonesia@emerhub.com
Call Us
+62 21 2205 7930
Visit Us
Satrio Tower Floor 6, Unit 5, RT.7/RW.2,
Kuningan, Jakarta 12950, Indonesia