Manage Employment Compliance Easily Using Employer of Record – Complying with employment laws is a mandatory requirement for every company. This includes drafting employment contracts in accordance with applicable labor laws, managing payroll, taxation, and social security, all of which require a high level of compliance.

For companies seeking rapid expansion without the hassle of complex legal risks, Employer of Record (EOR) services can be a strategic solution. By relying on Employer of Record (EOR) services, you can delegate the entire administrative and employment compliance workload to a third party.

In this article, we will discuss how you can manage employment compliance more easily using Employer of Record services.

What is Employer of Record (EOR)?

Employer of Record (EOR) is a third-party company that carries out legal and administrative duties and responsibilities in terms of employing workers on behalf of another company. The EOR itself handles payroll, benefits, taxes, HR-related issues and compliance with applicable employment laws.

Legal Basis for Employer of Record Services in Indonesia

Employer of Record (EOR) services in Indonesia are not explicitly regulated by specific laws. Although not specifically regulated by law, the practice of Employer of Record (EOR) is legally recognized under the regulatory framework of Outsourcing Companies, Employment Agreements, and applicable labor regulations in Indonesia.

The following are details of the legal basis:

1. Law Number 13 of 2003 concerning Manpower.
2. Law Number 11 of 2020 concerning Job Creation (and Law Number 6 of 2023 concerning the Stipulation of Government Regulation in Lieu of Law No. 2 of 2022 concerning Job Creation as Law).
3. Government Regulation Number 35 of 2021 concerning Fixed-Term Employment Agreements, Outsourcing, Working Hours and Rest Periods, and Termination of Employment.
4. Government Regulation Number 36 of 2021 concerning Wages.
5. Law Number 27 of 2022 concerning Personal Data Protection.

How Does an Employer of Record Work?

Employer of Record Providers:

1. Conduct recruitment selection (onboarding)
2. Create employment contracts
3. Calculate, pay, and deduct: salary/wages, taxes (PPh 21), social security (BPJS), both employment and health insurance, and other benefits.
4. Manage Daily Operations.
5. Off boarding

Company (Client)

1. Retain full control over day-to-day performance management, task assignments, targets, and employee evaluations.

Benefits of Employer of Record (EOR) for Companies

1. Rapid Global Market Entry
   This solution allows you to quickly recruit talent in a matter of days, while saving costs and time by eliminating the need to establish a local entity or open a branch.
2. Legal Compliance
   Employer of Record (EOR) providers minimize the risk of labor and tax law violations by ensuring full compliance with applicable regulations.
3. Reduced Administrative Burden
   Employer of Record (EOR) services take over various time-consuming HR administrative tasks, from managing payroll and employee benefits (BPJS and insurance), to reporting and tax withholding.
4. Cost Efficiency
   Eliminates the costs of establishing or opening a branch office and the daily or monthly operations of the company in the country of destination. This results in greater savings, especially when testing new markets.

Conclusion

Employer of Record (EOR) services provide complete convenience in managing your workforce without the burden of administrative tasks. Strategic use of this service has been proven to accelerate business growth.

Need an Employer of Record Service Partner? Contact Indonesia EOR.

Indonesia EOR is part of Indoservice, a company experienced employee and payroll services company, and therefore we offer EOR services under our company. If you are ready to hire an employee but are not ready for the legal complexities that accompany them. Our professional staffing and payroll services can help you.

Contact our team today:
Email: admin@indoservice.co.id
WhatsApp: +62877-1449-8500