Employer of Record Services for Hiring Expats in Indonesia

Employer of Record services (EOR) are commonly used by foreign companies that need expatriate staff in Indonesia without establishing a local employment infrastructure.  

Indonesian regulations require foreign nationals working in the country to be employed and sponsored by a locally registered entity, which creates practical challenges during market entry, project deployment, or early operations. 

An Employer of Record (EOR) allows expatriates to be legally employed and sponsored in Indonesia for a foreign company’s operations. This article explains the expatriate hiring process under an EOR arrangement and the responsibilities managed by the EOR for the foreign company. 

Can a Foreign Company Hire an Expat Without a PT PMA? 

A foreign company cannot directly employ or sponsor an expatriate in Indonesia unless it has a locally registered entity authorized to hire foreign workers. Indonesian workforce and immigration rules require expatriates to be employed by an Indonesian employer that holds the necessary approvals and sponsorship responsibilities. 

Without such an entity, the foreign company has no mechanism to obtain the foreign worker approval and KITAS (temporary stay permit) required for legal employment. 

The Employer of Record serves as the necessary local employment layer. It becomes the formal employer and sponsor in Indonesia, enabling expatriates to work for the foreign company’s operations while ensuring compliance with Indonesian regulations.

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Can an Employer of Record Employ Foreign Nationals in Indonesia? 

An Indonesian Employer of Record can hire foreign nationals if authorized and with the necessary approvals in place. Regulations allow locally registered companies to employ foreign workers in approved roles, whether for their own operations or for a foreign company’s activities. 

Conditions for Employing Expatriates 

To employ a foreign national, the Employer of Record must: 

• Hold eligibility to employ expatriates 
• Obtain RPTKA approval for the role 
• Sponsor the work authorization and KITAS 
• Employ the expatriate under Indonesian law 

Within this arrangement, the expatriate is employed and sponsored by the Employer of Record while performing duties for the foreign company.

Who Sponsors KITAS Under EOR? 

When an expatriate is hired through an Employer of Record in Indonesia, the Employer of Record acts as the official sponsor for foreign worker approvals and the KITAS process. A foreign company cannot sponsor these permits directly unless it operates a licensed employing entity in Indonesia. 

Role of the Employer of Record 

The Employer of Record acts as the legal employer and sponsor in Indonesia: 

• Obtains the RPTKA approval 
• Applies to the work permit and KITAS 
• Employs the expatriate locally 
• Maintains immigration compliance 

As a result, the expatriate’s work authorization is legally linked to the Employer of Record. 

Role of the Foreign Company 

Operationally, the expatriate works for the foreign company: 

• Duties and direction come from the company 
• The reporting line remains overseas 
• Work supports Indonesia activities or projects 

This separation allows compliant sponsorship without the foreign company acting as an employer in Indonesia. 

Legal Structure of Expat Employment Under Employer of Record in Indonesia 

Under the arrangement, the expatriate is legally employed and sponsored in Indonesia by the Employer of Record while working operationally for the foreign company. 

Legal Employment 

From a regulatory standpoint, the Employer of Record is considered the official employer, such as: 

• The employment contract 
• Payroll and tax reporting 
• KITAS and sponsorship 
• Workforce and immigration duties 

Operational Role 

In practice, the expatriate works within the foreign company’s structure: 

• Duties and direction come from the foreign company 
• Reporting line remains overseas 
• Work supports Indonesia activities or projects 

What Employer of Record Handles for Expat Hiring in Indonesia 

Employer of Record services allow foreign companies to deploy expatriates in Indonesia without managing local employment, payroll, immigration, and compliance requirements. EOR handles the necessary local employment and administration. 

Employment Contracts and Onboarding 

Prepare compliant Indonesian employment documentation and manage onboarding: 

• Local employment contracts 
• Employment setup aligned with permits 
• Onboarding under Indonesian labor rules 

Payroll and Tax Administration 

Handle all local compensation compliance: 

• Payroll processing in Indonesia 
• Income tax withholding and reporting 
• Statutory deductions and filings

Employee Benefits and Insurance 

Provide employment-linked benefits: 

• Health insurance coverage 
• Pension or social security components, where applicable 
• Benefits administration 

Compliance and Risk Management 

Maintain employment compliance in Indonesia: 

• Labor law adherence 
• Employment documentation compliance 
• Regulatory reporting 
• Employment risk mitigation 

Visa and Work Permit Processing 

Manage expatriate authorization: 

• RPTKA approval 
• Work permit and KITAS processing 
• Immigration compliance maintenance 

This allows expatriates to work legally in Indonesia while the foreign company focuses on operations rather than local employment administration. 

Simplify Expat Hiring with InCorp 

Hiring expatriates in Indonesia requires a locally compliant employer to handle sponsorship, employment, and regulatory obligations. InCorp Indonesia (an Ascentium company) provides the local employment structure that allows expatriates to work for the company’s operations in Indonesia. 

Employer of Record services for expatriate hiring in Indonesia include: 

• Compliant employment contracts and onboarding 
• Payroll and tax administration 
• Employee benefits and insurance 
• Visa and work permit processing 
• Ongoing employment compliance 

To streamline the expatriate hiring process and ensure a smooth, efficient recruitment experience in Indonesia, fill out the form below.

Frequently Asked Questions