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SALARY PAYMENT IN Indonesian Rupiah (IDR, Rp)
CONTRACT LANGUAGES Bahasa Indonesia / English
PAYROLL TAX 10.24% – 11.74%
PAYROLL CYCLE Monthly
TIME TO HIRE 12 hours
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Hire and pay talents
with Horizons in
180+ countries
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 PEO is the quickest and most cost-effective way to enter the Indonesia market.
| PEO Platform Hire in Indonesia, and pay employees through our platform or app. | PEO Cost Our Indonesia PEO solution is the most affordable on the market. | Time-to-hire Fast onboarding in Indonesia, hire in as little as 12 hours. |
| Contracts 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 PEO |
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 PEO, Horizons’ team of local experts can provide assistance for drafting strong employment contracts that are compliant with local regulations.
| Probationary period | None |
| Termination notice period | 14 days (standard) |
| Severance | Severance pay: 1 month’s salary per year of service, up to 9 months’ salary maximum ‘Severance appreciation pay‘, a reward for service rendered: |
| Probationary period | 3 months (standard) |
| Termination notice period | 14 days (standard) |
| Severance | Mandatory |
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.
Quick, compliant hiring in 12 hours—no subsidiary required.
| Date | Holiday name |
|---|---|
| 1 Jan, 2023 | New Year’s Day |
| 22 Jan, 2023 | Lunar New Year’s Day |
| 23 Jan, 2023 | Lunar New Year Joint Holiday |
| 18 Feb, 2023 | Ascension of the Prophet Muhammad (Tentative Date) |
| 22 Mar, 2023 | Bali’s Day of Silence and Hindu New Year (Nyepi) |
| 23 Mar, 2023 | Joint Holiday for Bali’s Day of Silence and Hindu New Year (Nyepi) |
| 7 Apr, 2023 | Good Friday |
| 21 Apr, 2023 | Idul Fitri Joint Holiday |
| 22 Apr, 2023 | Idul Fitri (Tentative Date) |
| 23 Apr, 2023 | Idul Fitri Holiday (Tentative Date) |
The following rates of income tax apply to residents of Indonesia:
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.
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.
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.
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.
Employees in Indonesia are entitled to paid family leave in the following situations:
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.
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 a period of 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.
| Minimum Wage Country Comparison Chart | (Per month in USD) |
| Switzerland (Geneva) | $4,000 |
| Italy | $2,255 |
| China | $308 |
| Indonesia | $121 |
| Uzbekistan | $22 |
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 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.
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.
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 PEO and Employer of Record services, you can begin your Indonesian operations quickly, compliantly, and cost-effectively.
With Horizons, you get quick service, transparent pricing, and expert support.
An Indonesia PEO and an Indonesia EOR are two types of companies which specialize in providing human resources services to businesses in Indonesia.
The main difference between an Indonesia PEO and an Indonesia EOR is in the scope of their services.
Indonesia PEOs provide a full range of HR services, including payroll, benefits administration, and employee recruiting—all under one roof as a co-employer. Engaging an Indonesia PEO is essentially outsourcing your HR duties in Indonesia.
Indonesia EORs actually take over as the legal employer of your employees based abroad. Indonesia EORs become responsible for labor compliance for your employees in Indonesia.
At Horizons, we offer both PEO and EOR services in Indonesia. Get in touch now and let us know what service you are seeking.
A PEO 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 PEO 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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