Transition from EOR to PT PMA: Moving Your Team Across
Transition from EOR to PT PMA: how MAM plans the move of your team so contracts, work permits, BPJS and payroll carry across without a gap.
- UU No. 13 Tahun 2003 (Manpower Law), Article 42(3)(a), as amended by UU No. 6 Tahun 2023 — a director or commissioner holding shares need not have an RPTKA
- PP No. 34 Tahun 2021, Articles 6(1), 22(1) and 32(3) — the approval to employ a foreign worker (RPTKA) belongs to the employer that holds it; the end of a foreign worker's employment is reported
- PP No. 34 Tahun 2021, Article 19(1)(a) — a director or commissioner with a qualifying shareholding is exempt from the RPTKA
- PP No. 46 Tahun 2015, Article 9 — a new employer continues an employee's BPJS Ketenagakerjaan old-age savings (JHT) membership from the first day
A transition from EOR to PT PMA happens when a company that has been hiring in Indonesia through MAM as its employer of record (EOR) sets up its own PT PMA, a foreign-investment limited liability company, and becomes the direct employer.
MAM plans the move with you and takes care of both sides: the new company, your staff and, for expatriates, the work permits. Because the move is planned, the new employment agreement recognises the time each employee has already worked for you through MAM.
When a transition from EOR to PT PMA makes sense
Two signals usually start the conversation. The first is commercial: the business is ready to sign contracts with Indonesian customers and bill them from an Indonesian company. The second is cost: once a team reaches a certain size, employing it directly is cheaper than an EOR arrangement, and we flag it when yours gets there.
Neither is urgent. Your team keeps working through MAM while the company is prepared, so the move can wait until the timing suits you.
How the move runs, step by step
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Agree the date
We plan the move backwards from the date you want your company to take over.
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Set up your PT PMA
From the business-activity classification to the licences your company needs.
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Prepare the new agreements and permits
Each agreement recognises the employee's previous service, and you review it. For expatriates, your PT PMA obtains its own approval to employ them, and we prepare the new work permits.
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Agree the move with each employee
Each employee resigns from MAM and signs with your PT PMA, knowing it is a move between employers. For expatriates, MAM cancels the KITAS it sponsors and the new one is issued with your company as sponsor.
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Run payroll for your company
BPJS continues under your PT PMA, and payroll runs as before.
MAM sets up the PT PMA. The capital and investment figures, and how the two routes compare, are in EOR vs PT PMA.
Your team’s new employment agreement
Your PT PMA becomes the legal employer under a new employment agreement, made under the Manpower Law. In practice each employee resigns from MAM and signs the new agreement with your PT PMA. We agree this with you and with each employee beforehand, so everyone understands it is a move from one employer to another, not the end of their job.
What matters to your staff is that their role, their team and their service continue. MAM writes recognition of each employee’s previous service into the new agreement, and plans the timing of each move with you.
Moving expatriate staff
The approval to employ a foreign worker (RPTKA, Rencana Penggunaan Tenaga Kerja Asing) belongs to the employer that holds it, so your PT PMA needs its own (PP No. 34 Tahun 2021, Articles 6(1) and 22(1)). For the stay permit, MAM, as the current sponsor, cancels the existing KITAS, and your PT PMA applies for a new work permit and KITAS as the new sponsor. MAM processes that application for your company. When the employee’s employment with MAM ends, MAM reports it to the Ministry of Manpower (Article 32(3)).
A director or commissioner with a qualifying shareholding in the company needs no RPTKA (Manpower Law, Article 42(3)(a); PP No. 34 Tahun 2021, Article 19(1)(a)), and can hold an investor KITAS instead. KITAS is the Kartu Izin Tinggal Terbatas, the limited stay permit.
BPJS and payroll carry on
BPJS Ketenagakerjaan (Badan Penyelenggara Jaminan Sosial Ketenagakerjaan) is the state employment social security scheme. Your PT PMA continues each employee’s membership from their first day, so their old-age savings (JHT, Jaminan Hari Tua) carry on rather than restarting (PP No. 46 Tahun 2015, Article 9).
Once the move is complete, MAM can keep running payroll for your PT PMA: the same monthly work, with BPJS and PPh 21 (the income tax withheld from employees’ pay) taken care of, at a lower cost because your own company is now the employer.