Hire employees
and contractors in Indonesia

Capital city
Jakarta
Currency
Indonesian Rupiah (IDR)
Population size
267,670,543 (2018)
Languages spoken
Indonesian (national), Javanese (regional)
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Grow your team in Indonesia with Remote

Remote currently offers contractor payment and management services in Indonesia. We are busy building our own entity in the country to provide you with best possible employment solutions for your employees.

  • Capital city
    Jakarta
  • Currency
    Indonesian Rupiah (IDR)
  • Languages spoken
    Indonesian (national), Javanese (regional)
  • Population size
    267,670,543 (est. 2018)
  • Ease of doing business
    Easy
  • Cost of living index
    37.44 (2021)
  • Payroll frequency
    Monthly
  • VAT – standard rate
    10%
  • GDP - real growth rate
    5.0 (2019)
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Facts & stats

Officially the Republic of Indonesia, Indonesia is a conglomerate of 17,000 islands, and is simultaneously the world’s 4th most populous nation and Southeast Asia’s most powerful economy, with a GDP valued at over $3.5 trillion.

Home to over 1,300 ethnic groups and 700 languages, Indonesia hosts one of the world’s most ethnically diverse population, its second-most biologically diverse, and a history of record economic growth over the past two decades.

Indonesia Map
Indonesia risks illustration

Risks of misclassification

Indonesia, like many other countries, treats self-employed individuals or contractors and full-time workers differently and there are risks associated with misclassification.
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Employing in Indonesia

Indonesia’s Labor Law of 2003 is the principal labor regulation that defines provisions for employee protections and workers’ rights at the federal level which are applicable to Indonesia’s workforce of 4.2 million.

Employees in Indonesia enjoy protections against discrimination based on age, religion, gender expression, and race.

Common questions that could come up during the hiring process include the minimum wage, overtime rates, and guaranteed paid time off. Remote can help you offer a complete, competitive, and compliant benefits package to your employees in Indonesia.

Public holidays

Date Holiday Name Extra information
New Year’s Day
Lunar New Year
Prophet's Ascension
Cuti bersama
Nyepi
Good Friday
Labour Day
Lebaran
Cuti bersama
Ascension Day
Vesak
Pancasila Day
Eid al-Adha
Islamic New Year
Independence Day
Prophet's Birthday
Cuti bersama
Christmas Day
Minimum
Wage

Indonesian minimum wage rates are fixed at the provincial level and are reviewed annually. Currently, the minimum wage ranges from IDR 1,704,608 ($117.65) to IDR 4,276,349 ($295.15) per month in Jakarta, the capital city.

Payroll
Cycle
For customers of Remote, all employee payments will be made in equal monthly instalments on or before the last working day of each calendar month, payable in arrears.
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Competitive benefits package in Indonesia

Remote can help you provide a competitive and compliant benefits package for your employees in Indonesia. If you have questions or would like to offer a custom benefit, let us know and we can help.

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05

Taxes in Indonesia

Learn how employment taxes affect your payroll and your employees’ paychecks in Indonesia.

  • Employer

    • 0.24% - 1.74% - Work accident insurance
    • 3.7% - Old Age
    • 0.3% - Death benefit contribution
    • 2% - Pension contribution
    • 4% - Health insurance
  • Employee

    • 2% - Old Age
    • 1% - Pension
    • 1% - Health Insurance
  • Personal income tax rates

    • 5% - Up to IDR 50M ($3450.55)
    • 15% - 50M – 250M ($3450.55 - $17252.72)
    • 25% - 250M – 500M ($17252.72 - $34505.45)
    • 30% - Over 500M (Over $34505.45)
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Types of leave

Paid
time off

Employees who have worked for an employer for at least 12 months consecutively are entitled to 12 days of paid annual leave. Employers are obligated to respect any provisions pertaining to leave entitlement stipulated in an employee’s contract or negotiated under a collective bargaining agreement.

Public
holidays

Employees are entitled to 15 public holidays off annually and must be compensated if required to work on a holiday. Employees who’re expected to a work on a public holiday will have their compensation structured as follows:

  • 1st – 7th hour: 200% hourly wages
  • 8th hour: 300% hourly wages
  • 9th & 10th hour: 400% hourly wages
Sick
leave

Indonesian labor laws offer essentially unlimited sick leave that extends until an employee is fully recovered or the term of the employment contract elapses. Over the course of an employee’s illness, they’re entitled to 100% of their wages for the first four months, 50% of their wages for the next four months, and 25% of their normal wages until the employee recovers.

Maternity
leave

Female employees are entitled to three months of paid maternity leave, starting six weeks before delivery.

Paternity/Parental
leave

Fathers can take two paid days off work after their partner’s delivery.

Other
leave
  • Bereavement leave: employees are entitled to two days of paid leave for the death of any 1st or 2nd-degree relative or one day in the event of a household member’s death.
  • Religious observance: parents can request two days of paid leave to get their children circumcised or baptized.
  • Marriage leave: Employees can take three days off work to attend to their marriage rites, or two, if the employee’s child is getting married.
  • Adoption: adoptive parents can exercise the same leave entitlements as natural parents, i.e., three months paid leave for female employees and two days of paid leave for the father.
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Employment
termination

Termination process

Indonesian labor law is unique in that it places the onus on employers to go the extra mile to avoid terminating an employee by negotiating to offer better working conditions, coaching, etc.

That aside, employee contracts can be terminated if a just cause is established, such as dishonesty, negligence, fraud, work-related offenses, sustained illness over the course of 12 months, or business contingencies like redundancy or insolvency.

Notice period

There is no notice stipulated notice period but employers are generally expected to provide 30-days advance notice before terminating an employee.

Severance pay

Employees are entitled to severance pay that’s proportional to their tenure with an employer as defined below:

  • 1 months wages: Up to 1 year of employment
  • 2 months wages: Up to 1 year, but less than 2 years of employment
  • 3 months wages: Up to 2 years, but less than 3 years of employment
  • 4 months wages: Up to 3 years, but less than 4 years of employment
  • 5 months wages: Up to 4 years, but less than 5 years of employment
  • 6 months wages: Up to 5 years, but less than 6 years of employment
  • 7 months wages: Up to 6 years, but less than 7 years of employment
  • 8 months wages: Up to 7 years, but less than 8 years of employment
  • 9 months wages: 8 or more years of employment

Probation periods

Probationary periods can only be set for employees on indefinite-term contracts and cannot exceed three months.

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