Business expansion in Bali is appealing because of its financial incentives, affordable operational costs, and business-friendly culture. As a popular holiday destination, Bali attracts millions of visitors annually, and tourism is a major economic driver. English is widely spoken among Indonesians and Balinese, with most skilled workers in service sectors, such as tourism, hospitality, transport, and communication. 

When hiring employees in Bali, businesses must understand the labor laws to protect their rights and those of their employees. This includes awareness of administrative measures and Bali’s business culture. 

To effectively place skilled employees, discover the nine steps to recruitment in Bali, from defining your hiring needs to developing a successful recruitment strategy. 

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Why Expand Your Business to Bali

Strategic Advantages of the Bali Market

Bali’s economic strength lies in tourism, which is responsible for job creation. The government is currently focused on economic diversification, including expansion into agriculture. The property market has experienced immense growth owing to the influx of global visitors and foreign direct investment. 

International investors choose Bali for its fairly good infrastructure, particularly in cities like Kuta and Denpasar. Urban areas offer businesses high-speed internet connectivity for efficient communication. To improve the transport system, the Ngurah Rai International Airport is under expansion, and a subway system is being developed. 

Bali presents several strategic advantages for businesses looking to expand in the market. These include its stable economy and growing tourism and property sectors, offering ample investment opportunities. Furthermore, companies can benefit from low property taxes and more affordable operational costs compared to Western countries. 

If you’re ready to hire in Bali, we will manage compliance, hiring, and payroll allowing you to establish your business presence in Southeast Asia. 

Importance of Complying with Bali Labor Laws

Bali is regulated by Indonesia’s Employment Law of 2003 on Manpower. The laws focus on working hours, employee benefits, worker classifications, wages, and safe working conditions. Trade unions in Bali are governed by Law No.21 of 2000 on Labor Unions. Trade unions engage in collective bargaining and advocate for workers’ rights, but are subject to government restrictions. To comply with manpower law, Bali employers must register employees with the BPJS Ketenagakerjaan (social security) and BPJS Kesehatan (medical insurance). 

Along with labor law compliance, Bali businesses must be considerate of local culture and professional etiquette. Bali’s business climate is founded on Indonesian customs of hierarchy, building rapport, and indirect communication. Businesses respect the phrase “gotong royong,” which means community spirit, by fostering collaboration. 

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Step 1: Define Your Hiring Needs

The first part of an effective recruitment strategy is being clear about your hiring needs. Ask yourself what job roles the company requires to attain its objectives. Define the experience, skills, and languages the job candidates need to excel. In Bali, you can find job candidates in hospitality, tourism, real estate, and the food and beverage industries. 

Well-defined job descriptions should accompany your business objectives, in which the responsibilities and job tasks of employees are outlined. Include requirements like qualifications, and be mindful of the local business culture and traditions. A transparent and inviting job description instils confidence in interested candidates and increases the appeal of your business. 

Step 2: Understand Compliance Requirements

The Indonesian Manpower Law stipulates the conditions for employment, whereas the Limited Liability Company Law, or Perseroan Terbatas, describes the requirements for starting and operating different entities in Bali. For businesses to maintain compliance, the following regulations must be adhered to: 

Social Security

The mandatory insurance program, BPJS Ketenagakerjaan, is responsible for governing social security benefits in Bali and Indonesia. Benefits consist of death cover, workplace accident protection, pension, and retirement savings. 

Collective Bargaining Agreements 

Collective bargaining agreements are regulated by Indonesian Labor Law and must be registered with the Ministry of Labor. Negotiations are facilitated between employers and trade unions whereby the rights and obligations of employees are described beyond the standard requirements of labor law. 

Step 3: Choose Your Hiring Method

To expand your workforce in Bali, you can register a business entity, such as an LLC, or you can partner with an Employer of Record (EOR) for quick market entry. If you are interested in temporary workers, then independent contractors are flexible and affordable. These options are discussed in more detail below: 

Establishing a Legal Entity

Registering your business provides direct control over your workforce and supports business credibility when entering a new market. To incorporate in Bali, these steps are implemented: 

  • A company in Bali must be registered with the Ministry of Law and Human Rights. 
  • Once you have chosen a unique business name, prepare formal documents, such as Articles of Association and the Company Deed. 
  • Upon submission of the required documents, registration approval is granted by the Ministry of Law and Human Rights. 
  • Obtain the necessary business licenses from the Investment Coordinating Board (BKPM). 
  • Register for tax and social security. 

Be sure to consider possible bureaucratic challenges when setting up a business that could lead to delays and additional costs. 

Using an Employer of Record (EOR)

A Bali EOR can help you hire a skilled workforce efficiently by sourcing and onboarding employees. Because an EOR serves as the legal employer of your workforce, it will manage payroll, tax withholding, and administer employee benefits on your behalf. You remain in control of your employees’ performance, and you can skip the registration processes involved in setting up an entity. 

The role of an EOR in Bali is to keep your business compliant with local labor laws. The EOR will not get involved in collective bargaining agreements with trade unions. Instead, they can advise on the legality of negotiated terms and conditions in an employment contract. 

Learn more about EOR in Bali

If you need help selecting the right EOR partner visit How to Choose an Employer of Record (EOR). 

Hiring Independent Contractors

Independent contractors in Bali assist employers with short-term projects or busy periods to relieve the workload. Hiring independent contractors is a straightforward process, but it involves specific legal and tax requirements to remain compliant. In Bali, you must correctly classify employees to avoid penalties, such as back pay for benefits and harsh fines. Independent contractors are more cost-effective than full-time employees and provide access to specialized skills. 

Learn more about hiring contractors in Bali

Is contractor compliance a concern? Take a look at our guide on Misclassification. 

Step 4: Develop a Recruitment Strategy

Your professional recruitment strategy must describe the employee responsibilities, job roles, perks, and whether the company offers career growth. These factors must be included in job advertisements that you can post on popular Bali employment websites, including JobIndo, JobStreet, and LinkedIn. Alternatively, you can recruit job candidates by attending job fairs or contacting universities to connect with graduates. 

Partnering with a global recruitment agency can simplify this process. Recruiters understand the latest market trends, and they will advise on basic compliance standards. They ensure that recruitment and onboarding adhere to labor laws. 

Step 5: Conduct Interviews and Assessments

Once you have sourced your preferred candidates, the next step is conducting interviews. In Bali, respect and politeness are valued during interviews. Always communicate clearly to ensure that the candidate understands the questions and is provided a fair chance. Bali has a specific labor law that prohibits employment discrimination based on ethnicity, marital status, sexual orientation, and social group. 

If speaking an additional language is part of your requirements, candidates’ fluency should be assessed during the interview process. End the interview with a handshake and thank the candidate for their time. 

Step 6: Perform Background Checks

Bali employers conduct background checks on prospective and existing employees, but they must be related to the job and not involve investigations into an individual’s personal life. Background checks can help you find the right fit for an employee, but they must not violate Indonesian employment laws. Should you need personal information, you may have to ask for the employee’s consent.

Step 7: Draft Employment Contracts

In Bali, permanent employment contracts can be presented in written or verbal form and must be in Indonesian. However, fixed-term contracts must be written. Always incorporate the following information when drafting an employment contract: 

  • Position and Responsibilities: Define the individual job role and the tasks to be carried out by the employee. 
  • Compensation and Benefits: The employee’s wage, benefits, payment structure, and any bonuses must be included in the contract. 
  • Working Hours: 8 hours per day or 40 hours per week. Working hours can be adjusted through collective bargaining agreements. 
  • Leave: 12 days of paid annual leave for employees who have completed one year of service. Longer service periods are generally granted extended leave. Employers must include sick leave, at least 3 months of paid maternity leave, and 2 days of paternity leave. 
  • Termination: A written notice must be issued, and severance pay must be issued. 

To comply with standard employment conditions, a Bali EOR can guide you through drafting employment contracts. This includes adherence to the Indonesian Labor Law and overseeing collective bargaining agreements. 

Step 8: Register with Authorities and Set Up Payroll

When hiring employees in Bali, there are several authorities that businesses must register their workforce with. Firstly, employees must be registered with the BPJS (Badan Penyelenggara Jaminan Sosial) to receive social security benefits. To cover workers for healthcare, they must be registered with the BPJS Kesehatan. Where foreign workers are hired, they should be registered with the Directorate General of Taxes. 

You can hire an EOR in Bali to ensure employees receive negotiated wages (above minimum wage), administer benefits, and pay 13th bonuses, also called Tunjangan Hari Raya, which full-time employees receive before religious holidays. An EOR uses advanced software and complies with data privacy laws to store information. In Bali, payroll records and tax reports must be kept for five years. 

Step 9: Onboard Your New Employees

Candidates who are offered employment contracts can be onboarded following a structured plan. This not only provides new workers with a sense of confidence and security but also supports productivity, morale, and retention rates. When you onboard an employee, they are formally introduced to the workplace, including their colleagues, company protocol, and management. New hires receive training and must understand the company rules. Employee productivity and motivation are supported with scheduled performance appraisals, mentorship programs, and promotional opportunities. 

Understanding the Bali Employment Landscape

Understanding Bali labor laws simplifies the employer-employee relationship. It provides a legal framework you can follow to provide your workforce with a compliant employment contract while protecting the rights of all parties involved. Trade union membership is warranted in Bali, and employees can receive counsel or employment negotiations on their behalf through collective bargaining. Accepting the important role of trade unions can facilitate a healthy employment relationship. 

Key Employment Laws and Collective Agreements

General labor laws in Bali are covered by the Manpower Act of Indonesia. This law regulates all aspects of the employment relationship, from issuing written employment contracts and standard working hours to severance pay. 

Collective agreements are recognized as legally binding and are negotiated between trade unions and employers. These agreements cover wages, benefits, and working hours. 

Minimum Wage and Overtime

The Government Resolution No. 78/2015 oversees minimum wage law in Bali. Minimum wages are based on a standard 40-hour workweek. The nine regencies in Bali each set their own minimum wage. Companies that violate this law will face penalties, such as fines. 

Overtime is calculated at 150% of the standard hourly wage for the first hour of work and then increases to 200%. 

Learn more about minimum wages in Bali

Cultural Sensitivities

Bali is a business-friendly destination, but respecting the local customs is a necessary part of successful recruitment and expansion. This includes modest attire when visiting religious sites and ceremonies. Employers and business professionals must maintain a respectful and polite tone in daily communication. 

How to Hire Employees in Bali — Our Take

Expanding your business in beautiful Bali requires hiring a driven and skilled workforce. To recruit local top talent, follow the above-mentioned recruitment steps, from defining your hiring needs to developing a detailed recruitment strategy. Always align your hiring plans with the Manpower Law of Indonesia to remain compliant and work with trade unions during collective bargaining processes. 

Businesses that take the time to learn Bali’s business traditions and etiquette create positive impressions among job candidates and potential business partners. Understanding cultural differences ensures that you respect customs, supporting employee satisfaction and retention. To improve your compliance and employment efforts, partner with a Bali EOR to manage payroll, taxes, and benefits. This way, you can take advantage of the economic stability, financial incentives, and infrastructure of the popular Indonesian island quickly and seamlessly. 

Are you ready for quick and easy expansion into Bali? Contact Remote People Today!