Expanding your business internationally can be complex, especially when navigating local hiring laws and regulations.
An Employer of Record (EOR) helps by hiring and managing employees on your behalf while ensuring full compliance with local requirements.
With an EOR, companies can hire full-time staff, provide benefits, and expand globally, without the need to set up a local entity.
What is an Employer of Record (EOR)?
An Employer of Record (EOR) lets companies hire employees abroad while managing payroll, taxes, benefits, and compliance.
EORs allow full-time hiring with benefits, reduce misclassification risks, and simplify international expansion.
The global EOR market, valued at USD 4.3 billion in 2021, is expected to reach USD 8 billion by 2031, highlighting its growing importance for businesses expanding globally, according to Business Research Insights.
To leverage this growing trend, companies can turn to providers like Abhitech, whose EOR services enable businesses to employ staff in Indonesia without creating a local entity, ensuring full compliance with labor laws.
Learn more: Employer of Record (EOR) services from Abhitech
Top 6 Benefits of Using an Employer of Record (EOR) Services
Here are top benefits of using Employer of Record services:
1. Quick Market Entry
Quick Market Entry is a top benefit of an Employer of Record (EOR).
An EOR allows you to accelerate your business expansion and local hiring in Indonesia instantly, bypassing the months-long process of establishing a local entity.
Find out: Business Registration in Indonesia.
Find out: Business Registration in Indonesia
2. Reduced Overhead Costs
Employer of Record (EOR) helps businesses to avoid unexpected expenses from Indonesian business registration, such as office space and visa fees, allowing you to prioritize marketing and product development.
3. Pain-free Compliance Monitoring
Navigating compliance in a foreign country can be confusing and time-consuming.
Learning local regulations from scratch wastes valuable time, and even after your business is running, continuous compliance monitoring can distract you from growth and expansion.
With an Employer of Record (EOR), compliance is handled for you, so you can focus on scaling your business while staying fully aligned with local laws.
4. Simplified Multi-Currency Payroll
Managing payroll in multiple currencies can be challenging and risky. According to Forbes, multi-currency accounts come with at least three main risks:
- Transaction Risk: Paying foreign suppliers in their local currency can cost more if exchange rates change.
- Translation Risk: Currency fluctuations can affect financial statements when consolidating subsidiaries’ reports into the parent company’s currency.
- Economic Risk: Unexpected exchange rate changes can impact cash flow, market value, and overall earnings for multinational companies.
An Employer of Record (EOR) helps mitigate these risks:
- Local Transactions: EORs handle payments in the local currency, eliminating exchange rate worries.
- Financial Reporting: EORs translate and manage financial statements across countries, reducing errors from currency volatility.
- Operational Stability: EORs provide guidance to manage currency risks and maintain smooth international operations.
- Administrative Efficiency: EORs take care of all legal and administrative requirements, ensuring compliance while protecting your costs from exchange rate fluctuations.
If you’re interested in Employer of Record (EOR) services, contact Abhitech to learn more.
5. Access to Talent Pool
An Employer of Record (EOR) in Indonesia helps your company hire qualified local talent quickly and efficiently.
With deep knowledge of the Indonesian job market, EORs streamline recruitment, filter candidates, and ensure you hire employees who match your business needs.
Read more: Effective Strategies for Hiring Local Talent
6. Flexibility
Employer of Record (EOR) services in Indonesia provide flexible solutions for businesses of all sizes and industries.
Whether you’re a startup entering the Indonesian market or a multinational expanding locally, EORs can scale with your needs and adapt to changes in your workforce.
Learn how you can maintain full control of your employees in our detailed article.
How Can an Employer of Record Help Expand Your Business to Indonesia?
If you already understand what Employer of Record (EOR) service is, of course, you can already imagine how Employer of Record (EOR) can help you enter Indonesia.
Additionally, quoting from People Managing People Employer of Record (EOR) services include:
- Employee onboarding
- Background checks
- Payroll processing
- Employment contracts
- Compensation benchmarking
- Payroll taxes
- Employee benefits
- Termination of employees and offboarding.
An EOR simplifies local hiring in Indonesia, from recruitment and contracts to onboarding and payroll.
If I simplify it, if your company collaborates with an Employer of Record (EOR) agency like Abhitech, it will work like this:
1. Initial Consultation and Planning
The first step involves identifying your business needs for expansion to Indonesia. Define your expectations, the talent you require, and other relevant details. This will help the Employer of Record (EOR) service tailor their support to your specific needs.
2. Legal and Compliance Assistance
Abhitech will provide navigation of complex Indonesian employment laws such as
- Law Create a Job or Law Number 11 of 2020 concerning Job Creation (abbreviated UU Ciptaker or UU CK)
- Law No. 13 of 2003 on Manpower: Governs employment contracts, wages, working hours, and termination.
Abhitech will ensure your company remains compliant with local regulations.
3. Recruitment and Onboarding
Abhitech will recruit local employees through Employer of Record (EOR) according to your needs and applicable regulations.
In Indonesia, there are several types of work contracts:
- Permanent Employment Contracts (PKWTT)
- Fixed-Term Employment Contracts (PKWT)
- Freelance or Outsourced Contracts
- Many more
Explore Abhitech Knowledge Base on PKWTT and PKWT for detailed information.
4. Payroll and Benefits Management
Once you find suitable talent and they start working for you, an additional benefit that Employer of Record (EOR) service can offer is doing Management of salaries and allowances in accordance with Indonesian standards.
The job of Employer of Record (EOR) service is not only to ensure employees are paid on time but also to take care of several other benefits such as:
- Health Insurance (BPJS Health): Employers must register employees with the national health insurance program.
- Social Security (BPJS of Employment): Covers work-related accidents, old age benefits, pensions, and life insurance.
- Holiday Allowance (THR): Employees are entitled to a religious holiday allowance, usually one month’s salary, paid before the major religious holiday.
5. Ongoing HR Support and Employee Management
You’ll get help with ongoing HR, this includes performance management and training to assist in handling employment issues and conflict mediation if necessary.
6. Risk Mitigation
Points 1-5 above make you avoid risk protection from potential legal issues and employment disputes.
Conclusion
There are many benefits if you use Employer of Service (EOR). Basically the Employer of Record (EOR) service helps with all things HR for your business.
However, you must pay attention to Employer of Record (EOR) partners in Indonesia.
Whether you aim to manage HR operations, ensure compliance, or simplify local hiring in Indonesia, partnering with an experienced EOR like Abhitech provides a seamless expansion process.
By utilizing an EoR’s expertise and infrastructure, businesses can concentrate on their core activities while ensuring legal compliance and operational efficiency.
With over 30 years of experience assisting companies in Indonesia, Abhitech is your trusted partner for Employer of Record (EOR) services. Contact us to find out how Abhitech can help.
