How to Convert Contractors to Employees in Indonesia: Step-by-Step Guide
Table of Contents
Key Takeaways:
- Indonesian labor laws: Key legal distinctions between contractors and employees.
- Steps to convert contractors: Detailed process for transitioning contractors to employees.
- Using an Employer of Record (EoR): How an EoR can simplify the transition for businesses without a local entity in Indonesia.
We’re here to help you on your journey to hire, manage and pay.
Without a Local Entity: Employer of Record (EoR) Solution
For businesses that don’t have a legal entity in Indonesia, managing the process of converting contractors to employees can be complicated. Setting up an entity is often costly and time-consuming, especially for companies looking to expand quickly or test the market. This is where an Employer of Record (EoR) solution can be invaluable.
How an EoR Works
An Employer of Record allows businesses to hire employees in Indonesia without setting up a local entity. The EoR becomes the legal employer on paper, handling all compliance-related tasks such as payroll, BPJS registration, and employment contracts. Meanwhile, your business retains full control over the employee’s day-to-day work and responsibilities.
Benefits of Using an EoR
- Faster Market Entry: An EoR allows businesses to quickly hire and convert contractors to employees without the delays associated with establishing a local entity.
- Compliance Guarantee: The EoR takes care of all legal and regulatory requirements, ensuring that your business stays compliant with Indonesian labor laws.
- Reduced Administrative Burden: By outsourcing employment management to an EoR, businesses can focus on their core operations, leaving HR and payroll responsibilities to the EoR.
For companies seeking flexibility, speed, and risk reduction, an EoR is a highly effective solution.
How AYP Can Help
At AYP, we offer a comprehensive range of Employer of Record services in Indonesia to help businesses transition contractors into full-time employees smoothly and in full compliance with local labor laws. Our EoR services are designed to simplify the hiring process, reduce administrative burdens, and ensure compliance with BPJS contributions, employment contracts, and payroll regulations.
Whether your business already has a local entity in Indonesia or is exploring expansion opportunities, AYP’s EoR services can help streamline the process of converting contractors to employees.
