employer of record indonesia

3 Most Important Benefits of Using Employer of Record in Indonesia

  • InCorp Editorial Team
  • 8 May 2020
  • 4 minute reading time

For many businesses, the reason for expanding internationally is pretty obvious – business owners want to access a wider talent pool and customer base. However, the expansion sometimes comes with some challenges as they don’t know how to do so especially when it comes to dealing with employment tasks and legal compliance. These challenges can be easily ironed out – thanks to the existence of the Indonesian employer of record services.

The Employer of Record, or EOR, is a third-party contractor who is responsible for a company’s formal employment tasks and carries out regulatory and legal requirements of employment and payroll, immigration, and taxes.

However, an employer of record does not participate in the employee’s daily work activity. An employer of record is beneficial for companies expanding into another country or a different location and chooses not to hire and manage the employees directly.

Difference between Employer of Record (EOR) and Professional Employer Organisation (PEO)

Business owners sometimes mistake EOR with PEO or Professional Employer Organisation. But there’s a significant difference between them: the provider of EOR serves as a full legal employer for employees regarding the payroll and other employment tasks. An EOR doesn’t require foreign companies to have a legal entity in the region they expand their business to.

As for PEO providers, they are not the full legal employer and will not hold any legal liabilities as they don’t appear in an employment contract. PEO is only suitable for companies requiring third-party help on certain HR functions; whereas EOR is a total solution for businesses that would like to expand more rapidly without going through the complex steps of setting up a business structure in Indonesia.

Benefits of Partnering with an Employer of Record

1. Improving Efficiency

Starting a business in a new country means you have first had a steep learning curve especially the local laws and legislations and employment issues.

Thus, if business owners try to figure all of them out by themselves, they have to encounter constant defeats and may even bring the team spirit down.

An EOR can be a good idea for foreign investors. An Indonesian EOR provider is already competent in the country’s employment rules, they can help you streamline the entire employment process effectively. An effective employment and HR processes create happier employees.

2. Comprehensive One-Stop HR Solution

An EOR can assist your business in Indonesia with so many things, from recruiting suitable talent to designing a health insurance program, managing tax and payroll to navigating business and legal complexities.

Since EOR is the expert in payroll and tax management, they ensure that all payroll and compensation are correctly calculated and legally compliant. Furthermore, they can offer personal development opportunities and necessary training for your employees.

3. Professional Advice

As mentioned, an EOR goes beyond just handling an employee’s payroll. They can serve as your advisor and give you ideas and insights on how your business can succeed in the dynamic market.

How Cekindo Can Help

Cekindo provides a full employer of record service in Indonesia. Companies expanding into Indonesia can contract with Cekindo to make your employment in the country simple regardless of the company size.

Our employer of record service is equally effective for both foreign and local investors as we make sure full compliance with Indonesian laws and regulations.

Our specialists will take care of the tax and payroll processing, be legally responsible for the employees, comply with local regulations, and sponsor employees on work permits.

With us, you will have no risk of violating tax, labor, and employment regulations in Indonesia.

Discuss your needs by filling in the form below.

Pandu Biasramadhan

Senior Consulting Manager at InCorp Indonesia

An expert for more than 10 years, Pandu Biasramadhan, has an extensive background in providing top-quality and comprehensive business solutions for enterprises in Indonesia and managing regional partnership channels across Southeast Asia.

Get in touch with us.

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Disclaimer: The information is provided by PT. Cekindo Business International (“InCorp Indonesia/ we”) for general purpose only and we make no representations or warranties of any kind.

We do not act as an authorized government or non-government provider for official documents and services, which is issued by the Government of the Republic of Indonesia or its appointed officials.

We do not promote any official government document or services of the Government of the Republic of Indonesia, including but not limited to, business identifiers, health and welfare assistance programs and benefits, unclaimed tax rebate, electronic travel visa and authorization, passports in this website.

Frequent Asked Questions

Before entering into any agreement with our clients, we sign a data protection agreement to ensure that all data are kept confidential across all involved activities.

According to the Indonesia’s Manpower Law employers can hire the Indonesian talents either under a temporary or a permanent contract.

  • Prohibit any form of discrimination and provide equal opportunity for Indonesians and expatriates
  • Increase the competence of the workers by giving or encouraging job training
  • Follow the procedures of termination (Terminating an employee in Indonesia can be a long, tedious, and expensive process.)
  • Observe the working hours, holidays, and overtime regulations
  • Give mandatory employee benefits including social security and health insurance
  • Withhold only the right amount of income tax on behalf of the employees
  • Follow the wages and other benefits outlined by the law
  • Process the work permits for foreign employees

Cost reduction, hiring time reduction, hire quality are among the most noteworthy benefits your company can enjoy.

Even though building an internal recruitment team sounds appeal, later on you will learn how overwhelming the recruitment and human resources tasks really are. Interview, payroll, tax and these are just some. Not to mention, an internal recruitment team needs to keep up with the latest changes in regulations that may happen regularly.