Employer of Record & PEO in Indonesia | INS Global
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PEO in Indonesia

Hire Globally, Pay Locally, Expand Effortlessly

A PEO (Professional Employer Organization), similar to an EOR (Employer of Record), is a local partner for companies seeking to expand globally. A PEO can offer HR outsourcing services on behalf of the client company to allow them to hire or transfer employees without going through the complex process of company incorporation. 

INS Global is a professional HR outsourcing services provider with over 15 years of experience providing PEO services in 80+ countries. If you are looking to expand into the Indonesian market, INS Global can provide you with the services necessary to cut through red tape while saving time and money. 

Want to have a Team in Indonesia TODAY?

Show me how to grow my business now!

We prefer to let others grow their business.

Want to have a Team in Indonesia TODAY?

Show me how to grow my business now!

We prefer to let others grow their business.

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PEO in Indonesia - Summary

What Can a PEO do for You?

Ensure Full Legal Compliance

A PEO provides expert legal advice on all matters concerning regulatory compliance, meaning you are fully covered at every step 

Reduce Costs and Setup Time

A PEO helps you avoid arduous processes required for company incorporation and provides a more efficient alternative 

Focus on What Matter for Your Company

Why spend months on regulatory tasks when you can have a PEO take care of every HR matter for you?  

Enter a New Market Quickly

Instead of the months estimated to set up a new company in a foreign market, work with a PEO to get started in a matter of days 

Streamline Your Company Structure

Work with one point of contact to take care of the matters that would otherwise require an entire department or team 

Why Choose A PEO Over Company Incorporation?

Establishing a separate legal entity in a foreign county is an often confusing and complicated process. For many companies, the advantages afforded by company incorporation aren’t worth the time and effort it takes to do successfully. Instead, a Global PEO offers a hassle-free way to outsource a company’s HR services and get started in a new market. The services provider’s knowledge and expertise give companies bonus advantages in their new endeavor. 

A PEO can: 

  • Save time  
  • Save money 
  • Prevent costly legal errors 
  • Make the most of local resources and established networks
Hiring an Overseas Employee

Testimonial

Manuel Ramos

TERAO ASIA

Managing Director

We think INS Global is a good solution about starting business in new and complex markets. Understanding the market doesn’t mean you need to set up a company immediately.

5/5

How Would a PEO in Indonesia Function for You?

INS Global provides an all-in-one PEO solution that allows you to get started in Indonesia in 4 simple steps: 

  1. Discuss your PEO needs with an INS Global HR expert 
  2. Allow INS Global to take care of hiring and legally establishing your employees in Indonesia 
  3. Let us take organize payroll and other HR operations for your staff 
  4. Watch your employees perform their jobs as normal while we manage the rest 

How Different are PEOs and EORs?

When you want to learn more about how a PEO can benefit your company, it’s likely you’ll see them often compared to Employer Of Records. While both operate in largely the same way, there are some differences between the services.  

  • A PEO typically provides HR services like payroll, tax calculation, and compliance checks to employees of another company  
  • A PEO makes an agreement with the employee’s original country to provide these services 
  • An EOR typically hires the staff member in a fully legal and official way while providing the services of a PEO 
  • An EOR makes a contract directly with the employee on behalf of their company 

INS Global’s PEO service in Indonesia can legally hire and pay staff on your behalf, therefore combining the functions of a PEO and an EOR as it suits your requirements.  

Labor Law in Indonesia

Employment Contracts in Indonesia

Indonesian law allows for contracts to be made for either a definite or indefinite term, based on requirements and consent by both parties. 

Fixed-term contracts are often more highly scrutinized and are required to be written. They can last for up to 2 years; however, if renewed and extended can be made to last for as many as 5 years.  

A probation period for an indefinite contract in Indonesia can include a probation period of up to 3 months.  

Indonesia has a minimum wage that is set at a provincial level.  

Working Hours and Overtime in Indonesia

Employees in Indonesia can typically choose between a 5- or 6-day working week, with either 7 or 8 hours of work per day respectively, for 40 hours allowed per week in both cases. 

All extra work hours, to a maximum of 14 per week, are considered overtime. Overtime pay is complex, being based on the number of hours and when the overtime occurs. Typically, overtime pay starts at 1.5x the standard salary rate. Additional rates also apply if an employee is asked to work on a holiday or rest day.  

Holidays and Annual leave in Indonesia

Employees in Indonesia are entitled to 15 days of public holidays per year due to the multi-ethnic and multi-religious nature of the country. Many of these holidays are based on a lunar calendar, and employers are expected to arrange additional days off if these holidays fall on a weekend.  

Employees of an Indonesian company for over 1 year are entitled to a minimum of 12 days of annual leave, at least 6 days of which must be taken in one continuous block.  

Sick Leave in Indonesia

Employees in Indonesia have a very generous amount of sick leave. The first four months that they are unable to work will be paid at 100% normal salary rate by their employer. After 4 months, this rate begins to drop, and an employer may terminate an employee’s contract after 12 months. 

Maternity and Paternity Leave in Indonesia

Mothers in Indonesia are entitled to 1.5 months paid maternity leave before birth and 1.5 months of paid leave after delivery.  

Fathers are entitled to 2 days of paid paternity leave.

Tax Law in Indonesia

Indonesia reformed its tax regulations in 2021 with the HPP (Harmonization of Tax Regulations Law), yet further changes may occur in the near future.  

Corporate tax in Indonesia is typically around 22%, with some exceptions for the company’s size.  

Individual tax on all salary earned in Indonesia is applied to anyone who lives in Indonesia for over 183 days during a fiscal year. 

Employers are expected to withhold wages for employees and arrange for their taxes to be paid.  

Currently, individual tax rates are based on a progressive scale of:

  • 5% for up to IDR 50 million      
  • 15% for IDR 50 million to IDR 250 million      
  • 25% for IDR 250 million to IDR 500 million    
  • 30% for IDR 500 million to IDR 5 billion 
  • 35% for over IDR 5 billion 

 

Social security and insurance contributions are governed by a complex system of rules, and employers are expected to contribute around 12% of an employee’s salary towards their contributions.  

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FAQs

No, it is necessary to use a local entity abroad to comply with each country labor law.

Foreign companies can either set up a local entity in each country or use the services a local PEO (Professional Employment Organization) to hire the staff on-site directly.

The employer of record is the legal entity liable for the staff employed in a specific country. In practice, a foreign company can either open a subsidiary to become the employer of record of its abroad employees or use a PEO to act as the employer of record.

Liabilities may vary from country to country and include all the staff management responsibilities: labor contract issues, payroll management, and tax compliance, social security management, expenses claim declaration, hiring and termination
procedures, etc.

In general, 1-month is necessary to have an employee based out abroad using an existing PEO as the employe of record. When incorporating a new subsidiary to be the employer of record, the delay varies from 4-12 months.

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