Article
9 min read
How to Hire Using an Employer of Record in Indonesia (2025 Edition)
Employer of record
Author
Ellie Merryweather
Last Update
June 30, 2025
Table of Contents
What Is an Indonesian Employer of Record (EOR Service)?
How to hire employees in Indonesia with an EOR: Step-by-step guide
Employment Compliance Tasks an Employer of Record Manages in Indonesia
How much does it cost to hire through an EOR in Indonesia?
How to choose an EOR in Indonesia
Is Deel EOR a strong choice for hiring in Indonesia?
Hire employees in Indonesia confidently with Deel EOR
Key takeaways
- Setting up an Indonesian entity to hire local talent can take months and could cost up to IDR 10,400,000,000 in legal, tax, and payroll setup.
- An Indonesian Employer of Record covers social security, taxes, contracts, and data protection under Indonesian labor laws, ensuring full compliance without the headache.
- Deel EOR owns its entity in Indonesia for full control, supports hiring in 150+ countries, delivers transparent pricing, real-time compliance monitoring, and has top G2 ratings.
Indonesia, the world’s fourth-largest population and fastest-growing digital economy in ASEAN, is a magnet for foreign companies hunting top developers, designers, and customer success talent. Yet the same market that dazzles executives with its scale also daunts HR teams with a maze of Indonesian labor laws, mandatory social-security schemes (BPJS), province-specific minimum wage requirements, and the THR religious bonus.
Setting up a local entity (or Perseroan Terbatas) can take 10–12 weeks, require two resident directors, and expose headquarters to ongoing regulatory audits. Payroll mistakes trigger penalties, and misclassification disputes make headlines.
An Employer of Record (EOR service) removes that friction. The EOR becomes the legal employer of your Indonesian workforce, shouldering statutory obligations while you keep day-to-day control of tasks and deliverables. Platforms such as Deel EOR add real-time compliance monitoring, AI-powered workforce planning, and global payroll rails so you can hire in Indonesia with confidence and ensure compliance with local regulations.
What Is an Indonesian Employer of Record (EOR Service)?
An Indonesian Employer of Record is a licensed local entity that becomes the legal employer for your employees in Indonesia. The EOR signs all employment contracts, enrolls the worker in BPJS Ketenagakerjaan (social security contributions) and BPJS Kesehatan (national health insurance), withholds and remits income tax (PPh 21), and files mandatory labor reports.
You direct the employee’s projects, performance goals, and daily priorities—without carrying the compliance burden. But liability for late BPJS remittances, contract defects, or wrongful termination sits with the EOR, not your headquarters.
Deel operates a wholly owned entity in Jakarta, letting you create compliant contracts in minutes, automate payroll in IDR, and protect intellectual property. Real-time alerts in the Deel Compliance Hub flag legislative changes, essential in a country where minimum wage rates and payroll taxes are updated annually.
Top reasons to use an EOR Service in Indonesia
Indonesia rewards first movers, but only if they avoid compliance pitfalls. An EOR helps you with:
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Entity-free entry: Skip the fees and time required to set up a local PT PMA as a foreign company
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Instant BPJS and National Health Insurance Enrollment: EORs auto-register staff in social security and health schemes from day one
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Province-Specific Payroll and Minimum Wage Accuracy: Minimum wages in Indonesia vary by region, and are subject to change. An EOR's system ensures the right wage for each location.
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No THR Surprises: The mandatory Religious Holiday Allowance equals one month’s salary and must be paid seven days before Lebaran or Christmas. EOR platforms schedule this automatically
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Probation & Contract Compliance: Written employment contracts are obligatory for fixed-term roles, and probation can’t exceed three months for permanents. EOR templates embed these requirements, ensuring compliance with Indonesian law
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Reduced Misclassification Risk: Indonesia’s Supreme Court Decision forced a tech firm to convert 200 “contractors” to employees retroactively, paying BPJS arrears plus severance. An EOR eliminates that exposure for foreign companies
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Speed to First Hire: Deel’s average onboarding time for Indonesian employees is three business days versus 10–12 weeks for setting up a local entity
Deel Employer of Record
How to hire employees in Indonesia with an EOR: Step-by-step guide
Use this eight-step checklist to turn your interest in Indonesia into compliant employment.
1. Choose an EOR with a wholly-owned Indonesian entity
Start by shortlisting EORs that own—and don’t just partner with—an Indonesian PT. Entity ownership gives tighter control over statutory filings and faster escalation with regulators. With Deel, you can view the local trade registry certificate inside the Compliance Hub.
Tip: Ask to see proof of BPJS employer registration numbers before you sign to ensure compliance with social security contributions.
2. Book a demo and verify social proof
Request a demo to see payroll runs, contract templates, and compliance dashboards in action. Check case studies and client testimonials for EOR services in Germany. Scan reviews on G2 and Trustpilot, where Deel EOR holds a 4.8/5 average.
Tip: Request a customer reference in your industry to confirm German payroll accuracy and compliance.
3. Request a transparent quote
Obtain a detailed quote including gross salary, statutory costs, income tax withholding, and the EOR’s flat fee. Deel’s transparent pricing avoids hidden markups on benefits or filings.
Tip: Compare costs before you expand—read our article EOR vs. Entity Costs: What’s More Affordable?
4. Submit a 12–24-month hiring plan
Provide your projected headcount and locations so the EOR can optimize payroll taxes, social contributions, and deadlines. This helps budget for statutory paid leave, sick pay, and parental leave entitlements.
Tip: Update your plan quarterly to reflect hiring or regulatory changes.
5. Create employment contracts in the platform
Use the contract builder to select contract type (PKWT fixed-term or PKWTT permanent) and insert a probation clause no longer than three months. Mandatory clauses include job title, wage, place of work, and BPJS enrollment statement. Deel auto-generates bilingual contracts (Indonesian–English), reviewed by local counsel.
6. Confirm the candidate's right to work
For Indonesian nationals, capture their KTP ID number. For foreign workers, the EOR must sponsor a RPTKA and KITAS work permit. Deel Immigration handles the visa petition, cutting average processing time to 20 working days.
7. Run the onboarding workflow
Once the offer is signed, the EOR registers the worker with BPJS, sets up payroll tax codes, and collects bank details. Deel’s checklist includes optional background checks and device procurement via Deel IT.
Tip: Encourage employees to download the BPJS mobile app—proof of active coverage helps reassure candidates of their employee benefits.
8. Maintain ongoing employment compliance
The EOR files monthly BPJS and tax reports, updates HR on legal changes, and manages leave balances under Indonesia’s 12-day annual leave minimum. Deel’s Compliance Hub sends alerts if provincial wage updates or new public-holiday decrees impact payroll.
Tip: Schedule quarterly reviews with your dedicated EOR manager to flag any potential risk areas before they become a problem.
Continuous Compliance™
Employment Compliance Tasks an Employer of Record Manages in Indonesia
Below is an overview of the core obligations your EOR shoulders so you can focus on business growth.
| Category | Key Requirements (2025) |
|---|---|
| Statutory Employer Costs | Employers contribute 2.24–5.74% for BPJS Ketenagakerjaan (Old-Age, Work Accident, Death, Job Loss), 4% for BPJS Kesehatan (national health insurance), and 2% to the mandatory Pension Program—putting the overall estimate at 10.48% of employees’ salary. |
| Employment Contracts & Probation Rules | Written contracts compulsory for fixed-term roles; maximum two years plus one-year extension. Probation may only apply to permanent contracts and is capped at three months. Notice during probation is seven days; post-probation, minimum 30 days. |
| Pay and Working Hours | Minimum wage varies by province. Remote workers’ wages are determined by the province where the employer is located - for Deel EOR employees this means the DKI Jakarta province (IDR 5,396,761 per month). Standard 40-hour week: either five 8-hour days or six 7-hour days. Overtime payable after those thresholds. |
| Payroll & PAYE Compliance | PPh 21 income tax is withheld monthly and remitted by the 10th of the following month. Employers file e-SPT returns via DJP Online. Payslips must display BPJS deductions |
| Vacation and Public Holiday Allowances | Employees earn 12 paid annual leave days after 12 months’ service. Government-declared public holidays average 15 days per year; 2025 includes an extra collective leave for Bali’s Nyepi Day. Untaken leave may be forfeited after six months, unless company policy is more generous |
| Income Taxes | Progressive tax brackets: 0–5% up to IDR 60 million; 15% to IDR 250 million; 25% to IDR 500 million; 30% above that; new 35% top rate over IDR 5 billion. Employers provide employees with Form 1721-A1, which they must use to file mandatory tax returns by March 31st each year. |
| Expenses, Allowances, and Bonuses | THR religious bonus equals one month’s salary, prorated for service under 12 months, and must be paid no later than D-7 before the main religious holiday. Employers pay 10.48% of employees’ salary to cover government-provided social security benefits. Meal and transport allowances are common market practice but not statutory; tax-exempt ceiling is IDR 10,000 per workday. |
| Statutory Benefits & Pension Requirements | Enrollment in BPJS Health and Pension on first workday. Employer pays 2% pension (covered in social security), employee 1%. Additional voluntary JHT top-ups allowed. |
| Maternity and Paternity Leave | Maternity leave: 1.5 months pre-birth + 3 months post, fully paid by employer. Paternity leave: 2 paid days. Adoption and foster leave mirror maternity rules when the employee is the primary caregiver, at the employer’s discretion. |
| Sick Leave, Bereavement Leave, and Carer’s Leave | Sick pay: 100% salary for the first four months with a doctor’s certificate, 75% months 5–8, 50% months 9–12. Bereavement: 2 paid days for immediate family. Carer’s leave: up to 2 days unpaid unless company policy says otherwise. |
| Terminations/Dismissals, Redundancy, Severance, and Resignations | Terminations in Indonesia are highly complex. Lawful grounds: business closure, efficiency, misconduct. Severance ranges 1–9 months’ salary based on tenure <1 to >8 years, plus service and compensation pay. Redundancy of ≥10 employees requires bipartite consultation |
| Health & Safety | Employers hiring in 2025 must be compliant with the National Occupational Safety and Health (OSH) Programme 2024-2029. Employers must conduct risk assessments, provide PPE, and report incidents to Disnaker. Remote-work policy must address ergonomic setup. |
| Misclassification Risk | Indonesian courts are increasingly vigilant against worker misclassification, since the introduction of the Job Creation Law in 2020. With an EOR, all workers are hired as employees, mitigating this risk and transferring it to the EOR provider. |
| Data & IP Protection | Employers must comply with Personal Data Protection Law 27/2022. Cross-border transfers require an “adequate level” or contractual clauses. With Deel, data protection is built-in as standard. |
How much does it cost to hire through an EOR in Indonesia?
There are three main costs to consider:
- Employee’s gross salary: Dictated by skills, experience, and province-specific minimum wage.
- Mandatory statutory employer costs: Covering social security and other statutory benefits.
- EOR management fee: Deel charges a flat monthly fee regardless of salary, making budgeting easy for foreign companies.
| Factor | Your own Indonesia entity | Deel EOR |
|---|---|---|
| One-off setup costs | IDR 10,421,357,658 | IDR 0 |
| Ongoing annual costs | IDR 368,421,000 | IDR 0 |
| EOR annual management fee | N/A | IDR 116,661,240 / Worker |
| Liability for fines & audits | Your company bears 100% | Shifted to Deel |
| Time to first hire | 1 month | < 5 days |
| Estimated total annual cost | IDR 10,789,778,658 | IDR 116,661,240 |
How to choose an EOR in Indonesia
Selecting the right EOR service is crucial for ensuring compliance and a smooth hiring process. Evaluate providers on four pillars:
- Entity ownership: Prefer EORs with a wholly owned Indonesian PT to ensure direct control over filings and legal employer status.
- Compliance expertise: Look for in-house local counsel, real-time legal updates, and a proven track record navigating BPJS and payroll tax audits.
- Platform breadth: The best EORs bundle onboarding, payroll, employee benefits, equity, background checks, and mobility so HR teams avoid juggling vendors.
- Global coverage: If Indonesia is only one stop on your roadmap, choose an EOR—like Deel—that can hire in 150+ countries under one agreement.
Deel scores high on all four, is highly ranked on G2, and layers AI insights, compensation benchmarking, and device logistics into a single platform.
Discover how Telin cut onboarding time and expanded globally with Deel
As Telin aimed to continue growing—with a goal of scaling in 15 new international markets—they needed a solution that would help them test new markets quickly without losing the time and money required to open a new entity in each market.
With prior experience in establishing foreign entities, the team at Telin knew the setup and fees would be extensive and require legal and HR diligence. They needed to avoid the months-long processing time for each new market.
The intangible value is using Deel to handle all the compliance aspects of hiring and operating payroll processes around the world. It has saved Telin considerable time compared to if we handled it ourselves.
– Wayan Damayant, Human Capital Specialist at Telin
Is Deel EOR a strong choice for hiring in Indonesia?
Deel is a top-rated EOR for Indonesia, making it easy for foreign companies to hire employees, pay, and manage teams without the pain of setting up a local entity. Deel owns its Indonesian entity, handles all BPJS (social security and health) compliance, and is rated the #1 EOR on G2 for user satisfaction and global reach.
- G2 leader: Highest satisfaction and largest market presence among EOR platforms
- Wholly-owned Indonesia entity: Direct filings, faster onboarding, and better local control
- 150+ countries coverage: Hire globally under one master agreement
- Transparent, flat pricing: Know your costs up front—no hidden markups or surprise fees
- Lightning-fast onboarding: Get Indonesian employees started in as little as 3 business days
- Full statutory compliance: Deel handles BPJS, payroll taxes, THR bonus, and local contracts for you
- Real-time compliance alerts: Stay ahead of minimum wage, tax, and labor law changes with Deel Compliance Monitor
- Data & IP protection: Deel IP Guard secures your inventions and payroll data domestically, ensuring compliance with Indonesian law
- AI-driven workforce planning: Optimize hiring with real-time data and compensation benchmarks
- Integrated payroll & employee benefits: Pay in IDR, offer local benefits, and manage equity—all in one platform
With Deel, you skip the headaches of entity setup and ongoing audits, making Indonesia a smooth launchpad for your APAC growth.
I particularly like that Deel is our HR one-stop shop for direct and EOR employees without differentiation. We also use Deel HR across the business, which means we do not need to use or maintain two different platforms or services while integrating our international employees.
—Dr. Magda Wang,
Co-Founder & Managing Partner at Responsible Cyber
Hire employees in Indonesia confidently with Deel EOR
Don’t let Indonesian labor laws, BPJS requirements, or THR bonus rules slow your expansion.
With Deel’s transparent, flat pricing and real-time compliance monitoring, you always know your costs and risks. Get started now to unlock Indonesia’s massive talent pool with zero entity setup and total peace of mind.
Book a demo with Deel to see how you can compliantly hire in Indonesia in just days—not months—while Deel’s experts handle every compliance detail for you.
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FAQs
How fast can I hire an employee in Indonesia through Deel?
Most employees are onboarded in 3–5 business days after contract signature and document collection.
Does my hire need a local bank account for payroll?
No—Deel can pay into any Indonesian bank account, and supports international accounts if needed.
What type of employment contract does Deel use in Indonesia?
Deel provides compliant fixed-term (PKWT) or permanent (PKWTT) employment contracts in Indonesian and English, including all statutory clauses.
Who handles BPJS and tax withholding for my employees?
Deel’s entity enrolls employees in BPJS (social security and national health insurance), withholds and remits taxes (PPh 21), and files all required labor and payroll tax reports.
When is payroll processed, and when do employees get paid?
Payroll is run monthly; employees are typically paid on or before the last working day of each month.
Are mandatory benefits like THR, BPJS, and paid annual leave included?
Yes—Deel ensures THR (13th month bonus), BPJS, vacation, sick, and parental leave are all provided and clearly itemized.
Is probation required, and how long can it last?
Probation is optional for permanent contracts and capped at 3 months by law; Deel’s contracts reflect this
What if I want to terminate an employee or end a contract early?
Deel manages terminations in line with Indonesian labor law, including notice, severance, and regulatory filings.
Can Deel help with visas or hiring foreign workers in Indonesia?
Yes—Deel Immigration supports visa sponsorship (RPTKA/KITAS) and onboarding for expatriate talent.
Is employee data and IP protected under Indonesian law using Deel?
Yes—payroll data is stored domestically, and Deel IP Guard ensures clear IP assignment per local rules.
About the author
Ellie Merryweather is a content marketing manager with a decade of experience in tech, leadership, startups, and the creative industries. A long-time remote worker, she's passionate about WFH productivity hacks and fostering company culture across globally distributed teams.
