Employee Benefits in Indonesia: A Guide for Employers

If you’re hiring in Indonesia this guide is for you. Indonesia, the fourth most populated country globally, boasts a GDP of over $1 trillion. It’s a cost-effective option for sourcing remote employees due to its highly skilled workforce, particularly in ICT (Information and Communication Technology).

In this article, we’ll explore employee benefits in Indonesia, covering both mandatory and additional perks.

Mandatory Employee Benefits in Indonesia

In Indonesia, employees who have worked for an employer for more than 3 continuous months are entitled to employee benefits, including social security, health insurance, paid annual leave, sick leave, and parental leave, as per Law No. 13 of 2003 on Employment. You need to budget for health and work accident insurance contributions, which are shared between you and your employees. These costs are mandatory and non-negotiable.

This applies to full-time, part-time, and temporary employees, apprentices, and trainees. Freelancers or independent contractors, however, usually aren’t eligible for the same statutory benefits but may still be offered supplemental benefits.

Let’s take a look at these mandatory employee benefits: 

Religious Holiday Bonus (THR – Tunjangan Hari Raya): 

An obligatory bonus equal to one month’s salary before holidays like Hari Raya Idul Fitri and Christmas. This bonus includes both the wage and a fixed monthly allowance, prorated for employees who have not yet completed a year of service. 

Overtime Pay: 

Strictly regulated with a maximum of 4 hours per day and 18 hours per week. 

Weekday overtime starts at 150% of the wage for the first hour and 200% for subsequent hours. Pay rates for working hours on rest days or public holidays can range from 200% to 400% of the regular hourly wage, depending on the number of hours worked.

Maternity Leave: 

Mothers are entitled to 1.5 months of maternity leave at full pay before birth and 1.5 months after birth. This ensures expectant and new mothers can adequately prepare for and recover from childbirth while maintaining financial security.

Paternity Leave: 

Fathers are entitled to 2 days of paid paternity leave, acknowledging the importance of a father’s involvement in the early days following a child’s birth.

Parental Paid Leave: 

Both mothers and fathers are entitled to an additional two days of annual paid parental leave for events involving their children, such as marriage, circumcision, baptism, or death. This leave acknowledges the significance of these family events and allows parents to be present and involved without the stress of work obligations.

Sick Leave: 

Employees are eligible for paid sick leave, compensated differently over time:

• For the first 0 to 4 months, employees receive 100% of their salary paid by the employer.
• From 4 to 8 months, compensation is reduced to 75% of the salary.
• From 8 to 12 months, compensation decreases to 50% of the salary. This entitlement is contingent upon the submission of a doctor’s note.

Annual Leave: 

Employees receive 12 days of paid leave after completing 12 continuous months of service, which must be utilized within six months. After 6 years of service, employees are entitled to one month of paid annual leave in each of the following 2 years.

Additional Employee Benefits

To attract top talent, you will be interested in adding some additional benefits to make your offer more attractive. In Indonesia, employee benefits are categorized into fixed and non-fixed benefits. Fixed benefits include retirement benefits, health insurance contributions, and service awards, providing consistent support. Non-fixed benefits, like meal allowances and performance-based bonuses, provide additional rewards based on performance.

Here are some of the additional benefits you can consider: 

• Health Insurance: You can provide your employees with extended health coverage (extra dental, outpatient, and inpatient benefits) or the option to cover their dependents.
  
• Role-Based: Your position at the company comes with more than a title; it brings benefits tailored based on roles and responsibilities. These perks show appreciation and recognition for your employee’s hard work.
• Performance-Based: Who doesn’t appreciate a pat on the back for a well-done job? Performance-based bonuses serve as fives that motivate your team to achieve greater heights.
• Transportation Assistance: Commuting in Indonesia can be quite an adventure. For example, Jakarta traffic is infamous for its congestion. Providing support for transportation makes daily travel less burdensome and more enjoyable. 
• Meal Allowances and Perks: For those who work late into the night or start early in the morning, meal perks ensure your team is well-nourished and energized. It’s not about food; it’s about providing the fuel for performance.
  

Offer Employee Benefits to Your Remote Employees with RecruitGo’s 

Striking a balance between employee well-being and financial sustainability is crucial for successful remote hiring in Indonesia. With RecruitGo’s EOR services, you can ensure your employees feel valued without overburdening your budget.

Want to discuss how you can hire and manage top talent in Indonesia? Reach out to us today via the form below and establish yourself as an employer of choice in Indonesia.