PEO/Employer Of record in Indonesia
Hire staff in Indonesia while we manage all employment and HR operations. No local company needed!
PEO/Employer of Record in Indonesia - Hire Employees Compliantly
We are a Professional Employer Organization (PEO) that provides Employer of Record services in Indonesia, also known as “employment solutions” or “PEO solutions”.
Many companies opt to outsource their employment to minimize costs and legal risk when expanding their business operations in Indonesia.
We can help foreign companies navigate through Indonesian employment laws and requirements, saving you time so you can focus on core business activities.
While all employment, HR, administrative and legal matters are outsourced to us, you are able to have a physical presence in Indonesia without the need to set-up a legal entity.
Entity Not Required
Foreign clients do not need to register a legal entity in Indonesia when using PEO services.
100% compliant
We strictly follow official compliance guidelines to ensure a safe legal environment for all clients.
Fast Market Entry
We will help you to hire and onboard employees within one week.
Complete PEO package for efficient and compliant employment
- Local Contract Signature
- Monthly payroll calculation and delivery
- Individual Income Tax compliance with Indonesian authorities
- Statutory benefits administration
- Medical Insurance
- Visa application (foreign employees)
- Expenses claim management
- Allowances, bonus, and commissions
On-board staff in Indonesia without any risks
Operate in the Indonesian Market
Procedure to Use a PEO
Operate in the Indonesian Market
There are different situations in which foreign companies tend to outsource employment and use a PEO solution for expansion in Indonesia, including:
- Companies requiring to on-board local staff to manage operations like client meetings, sales, quality control, marketing activities, etc) but the company strategy does not require the setup of local company in Indonesia.
- Foreign SME testing the Indonesian market before opening a company and that want to conduct market research and exploration activities.
- Companies with an independent contractor that they want to base in Indonesia.
- Companies that need to hire staff while waiting for the successful registration of the company in Indonesia.
- Companies that intend to maintain a small business in Indonesia after they successfully deregistered their company.
Procedure to Use a PEO
We support you in every step of the staff onboarding. All payment and payroll details are accurately recorded and shared with you in a secure manner.
About the procedure:
- Your company drafts the employee’s labor conditions including salary, benefits, leaves, bonus, etc.
- After confirmation, we prepare a compliant and bilingual employment contract.
- After the contract is signed, we issue an invoice with all the payroll cost for the employees.
- After the payment, we take care of all the on-boarding process and completes the mandatory and administrative procedures, while you focus only on the communication with your staff in Indonesia.
- On a monthly basis, after your payment, we deliver the salaries to your employees and pay all the required contributions and taxes to the local authorities.
Employment and payroll regulations in Indonesia
Table of Contents
Employment in Indonesia is regulated mainly by one comprehensive law – Law No. 13 of 2003 on Manpower, also known as the Labour Law.
Employment contracts
Employees can be hired either on one of two types of a contract under Labour Law. Both of these carry similar treatment and rights for employees.
- Definite term employees
- Indefinite term employees
Contracts must be written in the Indonesian language using the Latin alphabet. They must include:
- Employee details
- Position, type of work, place of work, salary
- Starting date and contract period.
Working Hours
Full-time work is defined as seven hours per day, 40 hours per week, and six days per week. Many employees though work eight hours per day for five days, and this can be agreed with employees.
Indonesian law does not recognize part-time work, and such employees would receive the same treatment and benefits as full-time employees.
Annual Leave
Employees are entitled to a maximum of 12 vacation days per year.
Sick Leave
Employees are entitled to generous paid sick leave. This is paid by the employer and cannot be in any part recovered from the government.
Sick leave is fully paid for up to four months.
Maternity And Family Leave
Maternity leave for mothers is three months, on full salary. This should be taken half before birth and half after birth.
Limited paternity leave is also offered.
Public Holidays
Employees do not have to work on defined public holidays. If required, the Labour Law states that the overtime rate should be paid.
Probationary Period
There is no allowance under the Labour Law for a probationary period.
Termination and Severance Pay
Labor law in Indonesia does not define a notice period for employers to terminate a contract. In practice, though, many employers will offer a 30 day notice period to terminate a contract.
Severance pay must be given to dismissed employees.
There are two types of severance pay:
- Standard severance pay – One month’s salary per year of service, up to 9 months in total.
- Appreciation pay – 2 months salary for the first 3 years of employment, plus 1-month salary every three years after. Up to a maximum of 10 months salary.
Social security
There are two main mandatory social security related to deductions in Indonesia:
- Health-related social security, or BPJS Kesehatan. (BJPS stands for badan penyelenggara jaminan sosial) This gives employees, and their families, access to the state health system and hospital care.
- Workers social security, or BPJS Ketenagakerjaan. This provides cover includes work accidents, old-age pension, and death cover.
The total contribution for heath related social security is 5% of the employee’s monthly salary. This is split between employer and employee.
The total employee contribution to workers’ social security is 3% of the employee’s monthly salary.
Individual income tax
All employees, both local and foreign, pay the same income tax in Indonesia. This should be deducted by the employer, with further information or taxation handled by additional self-assessment by the employee.
Taxation is on a progressive scale, with higher income bands subject to higher tax rates.
Minimum Wage
There is no national minimum wage in Indonesia. Instead, each of the 33 provinces set its own minimum wage.