Hire in Indonesia
Our quickstart guide to hiring in Indonesia
Learn everything you need to know about hiring an employee in Indonesia
Currency
Indonesian Rupiah (IDR)
Capital
Jakarta
Contract Languages
Bahasa Indonesia / English
Payroll Cycle
Monthly
Wage & Tax Obligations
Minimum Wage Requirements
Indonesia has a regional minimum wage system that varies by province and city.
As of 2024, the minimum monthly wage typically ranges from IDR 1,200,000 to IDR 5,000,000 (approximately $80 to $335), depending on the location. Major cities like Jakarta tend to have higher minimum wages.
Individual Income Tax
Indonesia employs a progressive individual income tax (IIT) system. The tax brackets for resident individuals as of 2024 are:
Up to IDR 60,000,000: 5%
IDR 60,000,001 to IDR 250,000,000: 15%
IDR 250,000,001 to IDR 500,000,000: 25%
Above IDR 500,000,000: 30%
Employers are responsible for withholding income tax from employees' salaries and remitting it to the tax authorities.
Payroll Cost
Payroll costs in Indonesia include gross salaries and mandatory contributions. Employers typically pay:
BPJS Kesehatan (Health Insurance): 4% of gross salary (Employer: 4%, Employee: 1%).
BPJS Ketenagakerjaan (Employment Insurance): Approximately 2% of gross salary (Employer: 2% for work accident insurance, 3.7% for old-age benefits, and 0.2% for death benefits).
Total payroll costs can significantly exceed the gross salary due to these contributions.
Overtime Pay & Maximum Hours
The standard working hours in Indonesia are 40 hours per week (typically 8 hours per day for 5 days). Overtime is regulated as follows:
Overtime pay is calculated at:
1.5 times the hourly rate for regular working days.
2 times the hourly rate for weekends or public holidays.
Employers must ensure compliance with regulations regarding maximum working hours and proper compensation for overtime.
Leave Policy
Maternity Leave
Expectant mothers are entitled to three months of paid maternity leave. Half of this leave is usually used before the child is born, and the remaining half is used after the child is born. Maternity leave is paid in full based on the mother's salary.
If there are health complications for the mother or child, an additional 3 months of leave can be taken with a doctor's certificate.
Payment:
100% salary for the first 4 months
75% salary for months 5 and 6 (if needed)
Paternity Leave
Fathers are entitled to 2 days of paid paternity leave.
Parental Leave
In Indonesia no law covers parental leave. However, employees may be entitled to maternity or paternity leave.
Sick Leave
Indonesian law does not require employers to provide a certain amount of sick leave. An employee's sick pay may be reduced based on the length of leave.
Employees are entitled to 100% of their wages for the first four months of their illness. If an employee is ill for more than four months, his salary will be reduced by 25%. If an employee is ill for more than 12 months, the employer has the legal right to terminate the employee's employment.
Termination
Termination Requirements
Termination must adhere to legal processes:
Valid reasons for dismissal include misconduct, redundancy, or performance issues.
Employers must provide a written notice of termination, detailing the reasons.
If an employer wants to terminate its employees, it has to obtain approval from the Industrial Relations Court (IRC) by filing a lawsuit, or if they signed a Mutual Termination Agreement, then the Mutual Termination Agreement should be registered with the IRC.
The Labor Law prohibits an employer from dismissing an employee for the following reasons:
The employee joins in matrimony;
The employee is absent due to illness for less than 12 months consecutively;
The employee performs a role in a trade union.
Notice Period
Probationary employees are given up to 30 days of the notice period. On the other hand, employees after probation are given up to 3 months.
Less than 1 year: 1 month
1 to 2 years: 2 months
2 to 3 years: 3 months
More than 3 years: 4 months
Severance for Employees
Depending on the reasons for employment termination, employers need to pay standard severance, long service pay, compensation pay, and/or separation pay.
Severance pay is mandated by law and is typically calculated based on the length of service:
1 month’s salary for employees with less than 1 year of service.
2 months’ salary for employees with 1 to 2 years of service.
3 months’ salary for employees with 2 to 3 years of service.
4 months’ salary for employees with 3 to 4 years of service.
5 months’ salary for employees with 4 to 5 years of service.
6 months’ salary for employees with 5 to 6 years of service.
7 months’ salary for employees with 6 to 7 years of service.
8 months’ salary for employees with 7 to 8 years of service.
9 months’ salary for employees with more than 8 years of service.
Statutory Time Off
Paid Time Off
Full-time employees are entitled to 12 days of paid time off (PTO) a year. PTO accrues with 1 day of PTO per month. Employees are eligible for annual leave after completing 1 year of employment.
Public Holidays
Indonesia celebrates 15 national holidays. National holidays include:
New Year’s Day
Lunar New Year
Ascension of the Prophet Muhammed
Silence Day
Good Friday
Eid al Fitr
Labor Day
Ascension of Jesus Christ
Pancasila Day
Vesak Day
Eid al Adha
Islamic New Year
Indonesia Independence Day
Prophet Muhammad’s Birthday
Christmas Day
Disclaimer
The information contained in this Country Guide is provided for informational purposes only and should not be construed as legal advice on any subject matter. The contents of this Country Guide contain general information and may not reflect current legal developments or address your situation. You should not act or refrain from acting on the basis of any content included in this Country Guide without seeking the advice or representation of a licensed attorney. Anemone HR disclaims all liability for actions you take or fail to take based on any content included in this Country Guide.
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