5 Myths about PEO in Indonesia You Must Not Believe

5 Myths about PEO in Indonesia You Must Not Believe

  • InCorp Editorial Team
  • 12 August 2020
  • 4 minute reading time

Starting a business in Indonesia is not difficult but it has its fair share of challenges due to its competitive business environment. Therefore, smart entrepreneurs understand the value of their precious time and money.

Instead of overloading their employees with mundane HR tasks and employee responsibilities that come with the growth of their business, these companies choose to use a PEO to retain talent, ensure compliance, and consistent performance.

PEO is known as the Professional Employer Organisation and another name for PEO is Employee Leasing Companies. PEO allows businesses to outsource their HR-related functions and employs the workers for different companies on their behalf. PEO comes with a lot of benefits but still, some myths persist. Here are some of them.

Do not Believe These 5 Myths about PEO in Indonesia

5 Myths about PEO in Indonesia

Myth #1: I Need to Let My HR Team Go

Having PEO support doesn’t mean that you need to fire your in-house HR team. Instead, with the help of a professional PEO in Indonesia, your HR team will have more time to focus on strategic activities.

It is because a PEO can handle all taxing administrative tasks such as payroll, benefits, employee compensations, and insurances, which most HR employees are overwhelmed when dealing with them.

Furthermore, these administrative responsibilities do require knowledge of the latest regulations to keep the organisation in compliance.

Myth #2: I Have No Control over My Business

Understandably, you fear losing control of your business if you delegate HR tasks to a PEO. This is untrue. With a PEO to handle employee taxes, wages, benefits, and other HR functions, you can put more focus on your core businesses.

You act as a co-employer with the PEO in Indonesia and are in charge of controlling the company direction and staff. The major benefit of working with a PEO is that you get to avoid all unnecessary employee risks and legal complications, as well as eliminating the employee duties.

Myth #3: I Don’t Have a Say of Who to Hire or Fire

A PEO doesn’t make you lose the power of deciding who you can hire or fire. It is just that with the assistance and advice from the PEO specialist, you will get more accurate, faster, and more sound decisions when it comes to employee hiring and firing.

The PEO will advise you on all related labour law and employment law which may affect your hiring and firing decisions significantly – this is how you make sure that you are not out of compliance.

Myth #4: My Employees Are Only Temporary

Companies often believe the myth that employees hired through PEO are considered temporary due to the reason that PEO is a temporary HR and staffing service provider.

But, this is not the case. The PEO is not the sole employer of your employees. Rather, they also act as a co-employer like you and manage your employees.

Myth #5: Employees Won’t Like the Change

There is no such thing as employees leaving the company as the company partner with a PEO.

Your employees will probably be more thrilled as they will have access to benefits that are only available to large corporate or multinational companies. These benefits include competitive health insurance and retirement packages, and other benefit plans.

How Cekindo can Assist

Cekindo is a professional consulting firm that provides PEO services in Indonesia. We simplify the process that foreign businesses around the world need to strategically expand to Indonesia.

Thanks to its first-class reputation as one of the fastest-growing economies in the world, Indonesia is one of the most popular places for foreigners to expand business in Southeast Asia.

The PEO experts at Cekindo are here to offer our international clients the necessary assistance to prosper in this rapidly expanding region. With Cekindo, global companies can now leverage their value and move more quickly in this competitive market while looking to centralise their support under one roof.

It is exactly what Cekindo offers as a one-stop PEO provider in Indonesia. Fill in the form below to discuss your needs.

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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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

As a leading recruitment outsourcing provider in Indonesia, InCorp offers comprehensive services. We will conduct an in-depth background check on candidates to verify references and qualifications.

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