Hiring Employees in Bali Without Setting Up a Company

Can You Hire in Bali Without a Company?

Yes, foreign companies can hire employees in Bali before formal incorporation by using an Employer of Record (EOR) service. This allows you to build your team legally while you complete the company registration process, test the Indonesian market, or simply avoid the complexity of setting up a local entity.

What is an Employer of Record (EOR)?

An Employer of Record is a third-party organization that becomes the legal employer of your staff in Indonesia. While the EOR handles all legal and administrative employment responsibilities, you maintain day-to-day management of your team members.

The EOR handles:

• Employment contracts compliant with Indonesian labor law

• Monthly payroll processing and salary payments

• Tax withholding and filing (PPh 21)

• BPJS registration and contributions (health and social security)

• Statutory benefits administration

• HR compliance and documentation

• Termination procedures if needed

Benefits of Using an EOR

Speed to Hire

You can have employees onboarded within days, compared to weeks or months for company incorporation.

Market Testing

Test the Bali talent market and validate your business model before committing to full incorporation costs.

Formalize Existing Relationships

Convert freelancers or contractors to full employees with proper benefits and protections.

Full Compliance

Stay compliant with Indonesian labor law while focusing on your core business operations.

Flexibility

Scale your team up or down without the fixed costs of maintaining a legal entity.

The Freelance/Contractor Alternative

Some companies consider using freelancers or contractors instead. However, this approach has significant limitations:

• Only suitable for short-term, project-based work

• Not sustainable for building a full-time team

• Indonesian professionals increasingly prefer formal employment with benefits

• Risk of misclassification and associated penalties

• No employer control over work schedules and methods

For ongoing roles, the EOR model or company incorporation is strongly recommended.

Mandatory Employee Benefits in Indonesia

Indonesian labor law requires employers to provide specific benefits. Any EOR will manage these on your behalf:

BPJS Kesehatan (Health Insurance)

Mandatory national health insurance covering outpatient care, hospitalization, and medical procedures. Employer contributes 4% of salary, employee contributes 1%.

BPJS Ketenagakerjaan (Social Security)

Covers work accidents, death benefits, old age savings, and pension. Total contributions around 10-11% of salary split between employer and employee.

Tunjangan Hari Raya (THR)

Annual religious holiday bonus equal to one month salary. Must be paid at least 7 days before the employee's religious holiday (Eid, Christmas, Nyepi, etc.).

Paid Leave

Minimum 12 days annual leave after 12 months of employment, plus Indonesian public holidays (approximately 15-16 days per year).

Long-Service Awards

Mandatory payouts for employees with 3+ years tenure, ranging from 2-10 times monthly salary depending on length of service.

Total Cost Impact:

Expect mandatory benefits to add 20-25% on top of base salaries when budgeting for Indonesian employees.

Salary Benchmarks in Bali

Here are typical monthly salary ranges for common roles in Bali:

Tech Roles:

• Junior Developer: IDR 8-12 million (USD 500-750)

• Senior Developer: IDR 20-30 million (USD 1,250-1,875)

• UI/UX Designer: IDR 10-18 million (USD 625-1,125)

Marketing & Creative:

• Social Media Manager: IDR 8-15 million (USD 500-937)

• Video Editor: IDR 10-18 million (USD 625-1,125)

• Content Writer: IDR 6-12 million (USD 375-750)

Administrative:

• Virtual Assistant: IDR 6-10 million (USD 375-625)

• Customer Service: IDR 5-8 million (USD 312-500)

• Office Manager: IDR 10-15 million (USD 625-937)

Minimum Wage by Region (2023)

Minimum wages in Bali vary by regency:

• Badung (Canggu, Seminyak, Nusa Dua): IDR 3.5 million (~USD 227)

• Denpasar: IDR 3.3 million (~USD 211)

• Gianyar (Ubud): IDR 3.2 million (~USD 205)

• Tabanan: IDR 3.1 million (~USD 199)

Note: These minimums apply to entry-level, unskilled positions. Skilled professionals command significantly higher rates as shown in the salary benchmarks above.

Risks of Informal Hiring

Some companies attempt to hire directly without a local entity or EOR. This creates serious risks:

Legal Non-Recognition

Employment contracts with overseas companies have no legal standing in Indonesia. Employees have no enforceable rights, and you have no legal recourse for disputes.

Permanent Establishment Liability

Having employees in Indonesia may create a "Permanent Establishment" (PE) for tax purposes, exposing your company to Indonesian corporate tax (22%) on locally-sourced income.

Payroll Violations

Bypassing mandatory tax withholding (PPh 21) and BPJS contributions violates Indonesian law.

Severe Penalties

Backdated tax audits can result in penalties up to 200% of unpaid taxes, plus interest and potential criminal liability.

Cultural Considerations When Hiring

Understanding local work culture helps you build a successful team:

Communication Style

Updates often come via WhatsApp rather than email. Feedback is typically delivered carefully to avoid direct confrontation - read between the lines and create safe spaces for honest communication.

Common Allowances

Beyond salary, many employers provide:

• Internet/data stipend: IDR 200,000-500,000/month

• Transport allowance: IDR 300,000-800,000/month

• Work-from-home equipment subsidies

• Meal allowances for office-based staff

Religious Observances

Be flexible around traditional Balinese ceremonies (Ngaben, Galungan, Nyepi) and religious holidays. Employees may need time off for family ceremonies with short notice.

Work Readiness

Many Balinese professionals are fluent in English and experienced with remote work, international clients, and Western business practices - especially in tourist and tech hubs.

EOR vs Setting Up a Company

When to use an EOR:

• Testing the market before full commitment

• Hiring 1-5 employees

• Need to onboard quickly

• Temporary project-based teams

• During company incorporation process

When to set up a PT PMA:

• Building a large local team (5+ employees)

• Long-term commitment to Indonesia

• Need to invoice Indonesian clients

• Want to sponsor your own work visa

• Lower per-employee costs at scale

How MyBali.biz Can Help

Whether you need EOR services or want to establish your own company, we can help:

• EOR service introductions and setup

• PT PMA company incorporation

• Payroll and HR administration

• BPJS registration and management

• Ongoing compliance support

• Transition from EOR to your own entity

Contact us to discuss the best approach for building your team in Bali.