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Indonesia EOR & PEO

SALARY PAYMENT IN Indonesian Rupiah (IDR, Rp)

CONTRACT LANGUAGES Bahasa Indonesia / English

PAYROLL TAX 10.24% – 11.74%


TIME TO HIRE 12 hours

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Hire in Indonesia

Horizons ensures day-to-day guidance to help your business navigate Indonesia labor laws and regulations. Horizons also ensures payroll is processed weekly or fortnightly (the standard periods in Indonesia ), and that taxes are withheld as required.

As the Indonesia Employer of Record, Horizons is responsible for employee income tax withholding, payment of payroll taxes to state authorities, and submission of tax returns to the Indonesia Tax Office. 

Partnering with our Indonesia EOR is the quickest and most cost-effective way to enter the Indonesia market.

Note, an Indonesia Employer of Record is also known as a Indonesia Professional Employer Organization (PEO).

Facts & Stats

EOR Platform

Hire in Indonesia, and pay employees through our platform or app.

EOR Cost

Our Indonesia EOR solution is the most affordable on the market.


Fast onboarding in Indonesia, hire in as little as 12 hours.


We draft labor contracts compliant with Indonesian labor law.

Local Benefits

We administer all mandatory benefits and contributions in Indonesia.

180+ Countries

It doesn’t stop with Indonesia — we are an international EOR

stay compliant with Indonesia labor laws

Employment Law

Employment contracts in Indonesia

Fixed-term employment agreements in Indonesia must be written in Bahasa, the official language of Indonesia. Whilst these contracts are limited to two years in length, they can be extended for another year if mutually agreed upon. Employment agreements of an unspecified duration are also permitted. 

Best practice in Indonesia is to draft a concise, strongly-worded written contract that details an employee’s compensation, benefits, job responsibilities, and rules around termination. Letters of offer and employment contracts should always state the salary and compensation in Indonesia Rupiah (Rp) rather than a foreign currency. 

By partnering with our Indonesia EOR, Horizons’ team of local experts can provide assistance for drafting strong employment contracts that are compliant with local regulations. 

Probationary periodNone
Termination notice period14 days (standard)

Severance pay: 1 month’s salary per year of service, up to 9 months’ salary maximum

Severance appreciation pay‘, a reward for service rendered: 
3 to 6 years employment: 2 months salary
6 to 9 years employment : 3 months salary
9 to 12 years employment : 4 months salary
12 to 15 years employment: 5 months salary
15 to 18 years employment: 6 months salary
18 to 21 years employment: 7 months salary
21 to 24 years employment: 8 months salary
Above 24 years employment: 10 months salary


Probationary period3 months (standard)
Termination notice period14 days (standard)

Working hours in Indonesia

The standard work week in Indonesia is 40 hours. A work week is typically broken down into eight hours per day for five days, or seven hours per day for six days.

If an employer requests an employee to work additional hours outside of this timeframe, employees are to be paid overtime. The rate of overtime is generally 1.5x an employee’s base rate for the first overtime hour and 2x an employee’s base rate for subsequent hours. The maximum amount of overtime in Indonesia is three hours per day, or 14 hours per week.

In Indonesia, a written agreement regarding the request of overtime hours is necessary. This must be consented to by the employee.

In most cases, senior-level positions in Indonesia are not paid overtime. 

Hire compliantly in Indonesia without a local entity.

Quick, compliant hiring in 12 hours—no subsidiary required.

Holidays in Indonesia

Indonesia has a range of national public holidays that are celebrated annually. In 2024

these holidays are:

DateHoliday name
1 Jan, 2024New Year’s Day
8 Feb, 2024Ascension of the Prophet Muhammad (Tentative Date)
9 Feb, 2024Lunar New Year’s Day
10 Feb, 2024Lunar New Year Joint Holiday
11 Mar, 2024Bali’s Day of Silence and Hindu New Year (Nyepi)
12 Mar, 2024Joint Holiday for Bali’s Day of Silence and Hindu New Year (Nyepi)
29 Mar, 2024Good Friday
8 Apr, 2024Idul Fitri Joint Holiday
9 Apr, 2024Idul Fitri (Tentative Date)
10 Apr, 2024Idul Fitri Holiday (Tentative Date)
17-21 Jun, 2024Idul Adha (Tentative Date)
8 Jul, 2024Muharram (Islamic New Year)
17 Aug, 2024Indonesian Independence Day
25 Dec, 2024Christmas Day

Income tax

The following rates of income tax apply to residents of Indonesia: 

  • Up to IDR 50 million: 5%
  • From IDR 50 million up to IDR 250 million: 15%
  • From IDR 250 million up to IDR 500 million: 25%
  • Over IDR 500 million: 30%

Health insurance

Indonesia has a compulsory universal healthcare system. Employers and employees share the costs of funding health care insurance, which is approximately 5% of earnings. Expats are also required to make these contributions.

Vacation leave

Indonesian labor laws require employees to receive 12 day’s paid leave per year. Indonesia also has what’s known as ‘Cuti Bersama’. This is shared leave that all employees take on the same day to encourage domestic tourism. The day (or days) for Cuti Bersama changes each year and is determined by the government. This form of leave is usually deducted from an employee’s vacation leave.

Sick leave

Indonesian law does not require employers to provide a set number of sick days. An employee’s sick pay may be reduced based on the time away from work. 

For the first four months an employee is sick, they are entitled to 100% of their pay. For periods of sickness beyond four months, an employee’s pay is reduced by 25%. If an employee has been sick for longer than 12 months, an employer is legally entitled to terminate their employment. 

Maternity and paternity leave

Expectant mothers are entitled to take three month’s paid maternity leave. Half of this leave is typically used before the child’s birth, with the remaining half used after the birth. Maternity leave is paid at the full amount of the mother’s wages.

Fathers in Indonesia are entitled to two day’s paternity leave. 

Family leave

Employees in Indonesia are entitled to paid family leave in the following situations:

  • Circumcision of the employee’s child
  • Baptism of the employee’s child
  • Marriage of the employee’s child 
  • Death of the employee’s child

Full salary is granted to the employee during time off, although the employer is not required to pay the typical allowances that the employee is due to receive. 

hassle-free Indonesia compensation & benefits

Compensation & Benefits

Indonesia compensation laws

In Indonesia, minimum wages are determined by the location in which your businesses operates and the financial needs of the local area. After a staff member has worked with a business for longer than a year, minimum wage restrictions cease to apply. At this point, employers and employees will generally negotiate a suitable wage and/or benefits package. 

Compensation laws in Indonesia can also be influenced by collective bargaining agreements (CBAs). Again, this will vary between different locations and provinces.

A CBA will cover an organization and is valid for two years. Business owners can commence negotiations within three months of a CBA expiration and all negotiations should include wage forecasting and bonuses. Alternatively, employers and employees can settle on an appropriate compensation package through direct negotiations. However, as of recent data, the average monthly salary is approximately IDR 3.9 million per month.

Minimum Wage Country Comparison Chart(Per month in USD)
Switzerland (Geneva)$4,000
Guaranteed benefits in Indonesia

In Indonesia, every company’s benefit management plan needs to include statutory benefits, as mandated by law. This includes time off for the nation’s 14 public holidays. Many employees may also request additional time off to observe religious traditions.

Employees in Indonesia are entitled to 12 day’s annual leave, as well as shared leave – known as ‘Cuti Bersama’.  This form of leave is taken by all employees on the same day and is deigned to encourage domestic tourism.

After 30 days of employment, employees must be enrolled in the national social security programme (BPJS). This covers:

  • workplace accident and death benefits; 
  • retirement pension; 
  • healthcare.


Workplace accident and death coverage is funded entirely by the employer. Other benefits are payed partly by the employer and partly by the employee.

When you partner with Horizons, we provide your business with peace of mind by ensuring that your workforce is registered in the Indonesian health care and benefits system. 

Indonesia benefit management

For employers that choose to oversee compensation and benefits distribution themselves – as opposed to outsourcing – is is important they do so in the most effective manner. Employers need to be mindful that many employees will expect supplemental benefits to be included in their salary. Whilst such benefits are not mandatory, offering them to staff members will assist employers to attract and retain the best talent. 

As the majority of Indonesia’s population is Muslim, employers should also be mindful of how they distribute benefits. As an example, all employees in Indonesia are eligible for a 13-month bonus – known as THR. This is a religious day allowance that is paid one week prior to a holiday — Idul Fitri for practicing Muslims and on a set date each December for non-Muslim employees.

Benefits and compensation restrictions

Possibly the biggest restriction for managing benefits and compensation in Indonesia is the establishment of a local entity. This is needed before a business can successfully recruit employees and add them to their company payroll.

Depending on the type of an entity that a business chooses, the incorporation process in Indonesia can take weeks or even months. When you partner with Horizons, you no longer have to worry about the burden of establishing a foreign subsidiary. Through our Indonesia Employer of Record services, you can begin your Indonesian operations quickly, compliantly, and cost-effectively. 

Hire in Indonesia in 12h
without a local entity.

With Horizons, you get quick service, transparent pricing, and expert support.


Generally speaking, the terms “Indonesia PEO” and Indonesia EOR” are used interchangeably.

An EOR in Indonesia can feasibly hire both local and foreign nationals to work in Indonesia.

However, the ability of Horizons to sponsor your foreign national employee in Indonesia may be limited due to visa quotas practiced in many countries.

Contact us with your requirements and our Global Mobility team with review the case and get back to you within 2 business days.

In most cases, Horizons’ Indonesia EOR can hire & onboard your employee within 24 hours. The actual start date of the employee will depend on their notice period obligation to their previous employer as well as any relevant hiring rules in Indonesia.

It is possible to get a work visa in Indonesia. Horizons’ Global Mobility team is a dedicated team of work visa experts. They assess the details of each case to determine feasibility and costs before Horizons applies for the work visa on behalf of your employee. If the Global Mobility team determines that your case is feasible, the process is smooth and transparent. Visa spots in Indonesia are limited, however—get started today to secure your employees’ visa spot.

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