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Indonesia Employer of Record (EOR)

Key Takeaways

  • Indonesia EORs assist foreign companies to hire staff in Indonesia quickly, and at low cost. 
  • An Indonesia EOR takes over payroll and the compliance aspects of employment, enabling your company to focus on core business
  • The best Indonesia EOR companies are Horizons, Double M, MAM Corporate Solutions, Multiplier and Deel

The Indonesian business landscape is fertile ground for global companies looking to hire and onboard an offshore team. Indonesia has one of the fastest growing economies in the world, set for 5 percent growth p.a. through 2023 and 2024, in spite of a complicated international economic picture. 

To ease expansion and hiring in Indonesia, many companies opt to choose a local hiring partner, such as an Employer of Record. Here we explain what Indonesian EOR companies do, and who the Top 5 Indonesia EORs in 2024 are. 

What Is an Indonesia Employer of Record?

An Employer of Record (EOR) in Indonesia is a service provided by a third-party organization that legally employs people on behalf of another company. This arrangement is particularly useful for companies that do not have a registered entity in Indonesia but wish to hire local employees. The EOR takes on the legal responsibilities of employment, including compliance with local labor laws, payroll, taxes, and employee benefits. This enables the foreign company to operate in Indonesia without the need to establish a legal entity, which can be a complex and time-consuming process.

The EOR model in Indonesia is beneficial for companies looking to quickly and efficiently expand their operations into the Indonesian market. It offers a hassle-free solution to managing human resources, allowing the foreign company to focus on its core business activities while the EOR handles all aspects of employment administration.

An Indonesia EOR company is similar to an Indonesia Professional Employer Organization (PEO) who becomes the local co-employer of your Indonesia team. Often, providers in Indonesia use the terms ‘PEO’ and ‘EOR’ interchangeably. 

Top 5 Indonesia EOR Companies

  1. Horizons is a leading international EOR with a strong reputation as a local Indonesia hiring partner. As well as its EOR solution, Horizons can support your company with payroll, recruitment and Indonesia work visas. With a comprehensive set of Indonesia hiring solutions, Horizons is our pick for No. 1. Indonesia EOR

  2. Double M are Indonesia market entry experts that offer a full range of expansion solutions, such as market advisory, export advice, company establishment and immigration support as well as EOR. Double M is the ideal hiring partner for international companies that seek full business expansion support in Indonesia. 

  3. MAM Corporate Solutions. MAM are Indonesia hiring and expansion experts offering EOR, payroll, company registration, shelf company support and tax filing solutions. MAM offer the best Indonesia business solutions for companies considering scaling their Indonesia business operations

  4. Multiplier is an international EOR provider, renowned for its expertise in tech hiring in Indonesia and throughout South-East Asia. Read more about their global EOR platform in our 2024 Multiplier Review.

  5. Remote offers a range of global employment solutions, including a direct EOR solution in Indonesia. The Remote EOR platform enables global businesses to hire and pay employees in Indonesia and in most other countries of expansion. Remote offers a Remote Talent service which gives your company access to top Indonesia talent. 

A Top Indonesia EOR Talks Indonesia Expansion

What Does an Indonesia EOR Do?

An Employer of Record (EOR) in Indonesia is a specialized service provider that legally employs individuals on behalf of another company, typically a foreign company that doesn’t have a legal presence in Indonesia. The EOR assumes all legal and HR responsibilities associated with employment, including compliance with Indonesian labor laws, payroll processing, tax withholdings, and administration of employee benefits. 

This service is particularly beneficial for companies wanting to hire local talent or assign expatriates to Indonesia without establishing a legal entity in the country. The EOR ensures that employment practices adhere to local regulations, thereby mitigating legal risks and administrative burdens for the foreign company.

Indonesia Tax administration
Indonesia EORs handle employee taxes with the tax office

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What Are the Benefits of an Indonesia EOR?

Benefits of an Indonesia Employer of Record (EOR) solution include:

  1. Compliance with Local Laws: An EOR ensures full compliance with Indonesian labor laws, regulations, and employment standards. This includes adherence to local practices in contracts, payroll, taxes, and employee benefits, thereby reducing the risk of legal issues for foreign companies.

  2. Ease of Market Entry: For companies looking to enter the Indonesian market without establishing a legal entity, an EOR provides a quick and efficient solution. It allows businesses to hire local employees or expatriates while the EOR handles all legal employment responsibilities.

  3. Cost-Effectiveness: Setting up a legal entity in a foreign country can be costly and time-consuming. An EOR eliminates these expenses and the need for a physical presence, allowing businesses to allocate resources more efficiently.

  4. Focus on Core Business: By outsourcing employment responsibilities to an EOR, companies can focus on their core business activities and strategy, rather than getting bogged down in administrative HR tasks and compliance issues.

  5. Flexibility and Scalability: An EOR solution offers flexibility to scale up or down quickly as business needs change, without the complexities and legal ramifications involved in hiring or laying off employees directly.

  6. Local Expertise: EORs have in-depth knowledge of the local job market, cultural nuances, and employment practices. This local expertise is invaluable for foreign companies navigating the Indonesian business landscape.

Indonesia Labor Law

Indonesia’s labor law is comprehensive, designed to regulate the relationship between employers and employees while protecting the rights of workers. Perhaps the most important role of an Indonesia EOR is to ensure full compliance with local employment law. Key elements include:

  1. Employment Contracts: Indonesian labor law recognizes two types of employment contracts: fixed-term (contractual) and permanent (indefinite-term). Fixed-term contracts are strictly regulated in terms of duration and conditions for renewal. Permanent contracts are more common and offer greater job security.

  2. Working Hours and Overtime: The standard working week is 40 hours, typically divided over five days. Overtime is permitted but regulated, with specific rates of pay prescribed for extra hours worked. There are also provisions for rest periods and days off.

  3. Minimum Wage: The minimum wage in Indonesia was last change in 2023 and is set at 4.9 million IDR per month.

  4. Employee Benefits: Employers must provide certain mandatory benefits, including religious holiday allowance (THR), annual leave, maternity leave, and social security contributions covering healthcare, accident, death, old age, and pension benefits.

  5. Termination and Severance Pay: Termination of employment is subject to strict regulations in Indonesia. Employers must have valid reasons for termination and are generally required to pay severance and long-service pay, depending on the duration of employment and the circumstances of the termination.

  6. Health and Safety: Employers are responsible for ensuring a safe and healthy work environment. This includes compliance with safety standards and providing necessary training and equipment to protect employees from workplace hazards.

  7. Dispute Resolution: The law provides mechanisms for the resolution of labor disputes, including mediation, arbitration, and adjudication through the industrial relations court.

  8. Foreign Workers: Special provisions apply to foreign workers, including requirements for work permits and restrictions on the types of jobs they can hold. Employers hiring foreign workers must also comply with certain ratios of local to foreign employees.

Hire in Indonesia through an EOR Solution

An Indonesia EOR saves international companies significantly on the cost of hiring and paying employees in Indonesia. With a range of different EOR solutions, we recommend that you choose the EOR provider that best suits your specific needs. In 2024, our picks for the best Indonesia EOR companies are Horizons, Double M, Skuad, Multiplier and Remote

Indonesia and South-East Asia Business Guides

Frequently Asked Questions

An Employer of Record (EOR) in Indonesia is a service provided by a third-party organization that legally employs people on behalf of a foreign company that doesn't have a legal entity in Indonesia. The EOR handles all legal and HR responsibilities, including compliance with Indonesian labor laws, payroll processing, tax withholdings, and administration of employee benefits. This enables the foreign company to operate in Indonesia and hire local talent or expatriates without the complexities of setting up a legal entity in the country.

Yes, some EORs in Indonesia can assist with obtaining the necessary work permits and visas for foreign employees. These EORs have expertise in the local immigration processes and can manage the administrative and legal requirements for securing work authorization. 

While the EOR becomes the legal employer of the staff on paper, the client company retains full control over the day-to-day activities, roles, and responsibilities of the employees. The EOR handles only administrative and legal aspects of employment, such as payroll and compliance. The client company directs the employees' tasks, workloads, and overall management, ensuring that the business operations align with the company's goals and culture.

Milly is an international lawyer and tech entrepreneur who has advised companies on expanding globally for over 5 years. She is an advocate of remote hiring and regularly consults on future of work matters. Milly founded RemotePad to help employers learn more about building and growing international teams.