Indonesia

indonesia

AYP Group allows you to provide localised benefits for employees in Indonesia within minutes. All on one manageable online dashboard.

  • Life Insurance
  • Health Insurance
  • Worker Compensation Insurance
  • Pension
  • Religious Festive Allowance
Currency
IDR
Payroll Frequency
Monthly
Employer Taxes
10.24% - 11.74%

Overview

Capital
Jakarta
Currency
Indonesian Rupiah (IDR)
Date format
dd/mm/yyyy

Contributions

Employer

Employer Payroll Contributions

0.24% – 1.74% Work Accident
3.70% Old Age
0.3% Death
2.00% Pension
4.00% Health Insurance
10.24% – 11.74% Total Employment Cost
Employee

Employee Payroll Contributions

2.00% Old Age
1.00% Pension
1.00% Health Insurance
4.00% Total Employee Cost

Employee Income Tax

5.00% Up to 50,000,00 IDR
15.00% 50M – 250M IDR
25.00% 250M – 500M IDR
30.00% 500M+ IDR
Income Taxes

Minimum Wage

General

The minimum wage requirement varies based on the local government regulations ranging from 1,798,979 IDR in Central Java to 4,416,186 IDR in DKI Jakarta.

Payroll

Payroll Cycle

The payroll cycle in Indonesia is generally monthly and is usually paid on the last working day, as agreed within the employment contract.

13th Salary

In Indonesia, there is a mandatory religious holiday bonus called Tunjangan Hari Raya (THR) payment, an annual payment made before the longest religious holiday. THR is prorated for any employees that have not completed one year of service.

THR includes base salary and fixed monthly allowance but does not have to cover other payments such as bonuses.

Working Hours

General

The working hours are arranged as follows:

Employees with 6 work days a week- 7 hours a day, 40 hours a week.
Employees with 5 work days a week – 8 hours per day, 40 hours a week.
These working hours rules do not apply to certain businesses and are usually regulated with a Ministerial decision.

On working days, an employer shall arrange a rest period during work for its employees of not less than half an hour after the employee has been working for not more than four consecutive hours

Overtime

All work above the standard working week is to be paid as overtime and is regulated by the employment contract/collective agreements. The maximum number of overtime hours is 4 per day and 18 per week. Overtime worked during weekdays is paid at 150.00% of the regular hourly wage for the first overtime hour, increasing to 200.00% for every subsequent overtime hour.

Suppose employees work overtime on a weekly rest day or any public holiday scheduled for a weekly rest day while working a six-day workweek. In that case, the overtime pay is calculated as follows:

For the first to the 7th hour of overtime, the employee is entitled to 200.00% of the regular hourly wage
For the 8th hour of overtime, the employee is entitled to 300.00% of the regular hourly wage
For the 9th to 10th hour of overtime, the employee is entitled to 400.00% of the regular hourly wage
If employees work overtime on a weekly rest day when working a six-day work week, the overtime pay is calculated as follows:

For the first to the 5th hour of overtime, the employee is entitled to 200.00% of the regular hourly wage
For the 6th hour of overtime, the employee is entitled to 300.00% of the regular hourly wage
For the 7th to the 8th hour of overtime, the employee is entitled to 400.00% of the regular hourly wage
If employees work overtime on a weekly rest day or a public holiday working a five-day workweek, the overtime pay is calculated as follows:

For the first to the 8th hour of overtime, the employee is entitled to 200.00% of the regular hourly wage
For the 9th hour of overtime, the employee is entitled to 300.00% of the regular hourly wage
For the 10th to the 11th hour of overtime, the employee is entitled to 400.00% of the regular hourly wage.

Leave & Public Holidays

Paid Time Off

Paid leave in Indonesia is set in the employment contract as at least 12 days of paid annual leave per year after completing one full year of employment. Employees who have been working for six consecutive years for the same employer are entitled to one month of leave in the seventh year of service and one month of leave in the eighth year of service.

Public Holidays

16 public holidays.

Sick Days

When employees are sick or injured, they are entitled to paid sick leave, provided they show a medical confirmation of their ill-health. Employees can also have long-term sick leave lasting for longer than 1 year. A doctor should recommend such leave in writing.

Payment to employees on prolonged sick leave is as follows:

100% in the first four months
75% in the second four months
50% the third four months
25% of wages until termination

Maternity / Paternity Leave

Maternity Leave

Employees are entitled to three months of fully paid maternity leave prior to the estimated due date and one and a half months of leave following the birth. The maternity leave is paid at 100.00% of the regular salary rate of pay.

Paternity Leave

New fathers are entitled to 2 days leave for the birth of their child or a miscarriage.

Parental Leave

Employees are entitled to paid child leave in the following circumstances:

2 days paid leave for the circumcision of the employee’s child
2 days paid leave for the Baptism of the employee’s child.
2 days paid leave for the marriage of the employee’s child.
2 days paid leave for the death of the employee’s child.

Other Leave

Employees are entitled to up to 2 days of paid leave due to the death of their spouse, one day of paid leave for the death of their parents or parent-in-law, or the death of their children or children-in-law. If a member of the employee’s household dies, they shall be entitled to 1 day of paid leave.

Termination

Termination Process

Before an employee can be terminated, the employer must make a genuine effort to avoid the termination by negotiating with the employee and/or the employee’s labor union to find an accommodation such as a change in working hours, improved working methods, or coaching.

If termination cannot be avoided, the employer must explain the reasons for termination clearly in writing to the employee and/or the employee’s labor union.

If the employee believes the termination is unjust, the decision can be challenged in the Labor Court, which will give the final ruling.

The reasons for which employees can be discharged from work are as follows:

The employee violates the employment agreement
The employee is imprisoned
The employee is ill for more than 12 months
The employee is absent from work for more than 5 days without a valid reason, provided he or she has been notified twice
The employee has reached retirement age.
Not all reasons for employees’ dismissal should be related to their misbehavior. The employer can discharge employees for several business-related reasons:

There can be a change of the company’s status, its merger with another business, or acquisition of its ownership
The employer becomes insolvent
The employer has suffered continuous losses for two years consecutively as proven by financial reports
The employer is closing the business permanently.

Notice Period

Notice periods within Indonesia are generally 30 days, although employers can specify longer notice periods within the employment contract.

Severance Pay

In Indonesia, compensation pay is mandatory if applicable and is determined by the employee’s length of service.
Employers are required to provide Compensation Money to Workers whose contract ends due to the time period or completion of a predetermined work with a continuous working period of at least 1 month (Article 61A UUK & Article 15 PP 35/2021)
If the contract is extended, the compensation is given at the end of the contract period before the extension and for the extension of the contract, the next compensation is given after the extension of the contract period ends or is completed. (Article 15 Paragraph 3 PP 35/2021)
In the event that one of the parties terminates the Employment Relationship before the expiration of the period specified in the contract, the Employer is obliged to provide compensation money, the amount of which is calculated based on the contract period that has been implemented by the worker.

Probation Period

No Probation Period under fixed term

VISA

General

The government of Indonesia provides Visa exemptions to nationals of 169 countries, including the United States, Canada, Australia, and Singapore.

Previously, for a foreign employee to enter Indonesia for work, they would need an individual work permit (IMTA). This has now been replaced with a Notification from the Ministry of Manpower. Once an employee or business has obtained a notification, they can apply for an Indonesian visa. Foreigners will be issued a Visa Telex (visa index 312), which allows them to work and travel to Indonesia.

There are two types of Visas for foreign nationals who intend to live and work in Indonesia.

Izin Tinggal Terbatas or Electronic ITAS (e-ITAS), Employers need to apply for an ITAS on behalf of future employees. The ITAS grants employees the right to stay in Indonesia, as well as open a bank account. They can also stay in the country and, after three years, apply for a permanent residency. Before applying for the ITAS, the employee must also get a Visa Izin Tinggal Terbatas (VITAS) – an Indonesian limited-stay permit visa.

The Kartu Izin Tinggal Tetap (KITAP) is a visa an employee can also apply for, which grants the employee a permanent residence permit (KITAP), but this is only available to people who have held an ITAS for three or more years.

VAT

General

The standard rate of VAT in Indonesia is 10.00%

Date of Updates

Why AYP

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