What We Can Do for Your Business
Our expert solutions are designed to support your business growth and ensure a smooth, efficient workforce management experience for your remote talent in Indonesia
Employer of Record
We become the legal employers of your employees and take care of all legal and administrative responsibilities. This enables you to hire remote talent quickly and compliantly without setting up your company.
Explore Our Employer of Record Service in Indonesia
Payroll management
We ensure that your employees are paid accurately and on time, every time. Our Experts handles all aspects of payroll processing, including wage calculation, tax deductions, and statutory contributions.
Learn about Our Payroll Service in Indonesia
Employee Benefits
Offer competitive employee benefits tailored to the needs of your workforce in Indonesia, including health insurance, retirement plans, and other perks to stay compliant and to keep your team motivated and satisfied.
Explore the Global Benefits to Retain Top Talent
Local Compliance
Our experts ensure that your business adheres to all Indonesian labor laws and regulations. We keep you updated on legal changes and handle all compliance-related matters to minimize risks and safeguard your business operations.
Ensure Compliance with Local Laws in Indonesia
Minimum Wage Requirements
The minimum wage in Indonesia ranges from IDR 2,170,475.32 (US$132.79) to IDR 5,396,761 (US$ 330.18) per month, subject to the specific regulations set by each local province. The wage amount depends on the region where the employer’s company is incorporated.
Personal Income Tax Structure
Income tax in Indonesia is calculated based on progressive rates, which means the tax rate increases with higher income levels. The applicable tax rate depends on the gross annual income of the individual taxpayer.
Gross Annual Income (IDR) and the Tax Rate (%)
- Up to IDR 60 million: 5%
- From IDR 60 million to IDR 250 million: 15%
- From IDR 250 million to IDR 500 million: 25%
- From IDR 500 million to IDR 5 billion: 30%
- Above IDR 5 billion: 35%
Employer Expenses
The total employer cost is generally estimated at 4.24% of the employee’s salary. These contributions cover various benefits and protections for employees, ensuring their well-being and financial security.
Estimated Employer Cost Breakdown in Indonesia:
- Provident Fund: 3.70%
- Death Security: 0.30%
- Work-related Accident Benefit: 0.24%
- Healthcare and Social Security: IDR 480,000
- Pension Fund: IDR 191,192 (applicable for monthly gross salaries higher than IDR 9,559,600)
Overtime Compensation & Maximum Hours
Standard working hours are 8 hours per day for 5 working days, and 7 hours per day for 6 working days, making a total of 40 hours per week. The standard workweek is from Monday to Friday.
Overtime in Indonesia is subject to specific rules. While overtime payment is not mandatory, employees may be eligible for overtime compensation for hours worked outside of standard work hours. The maximum overtime allowed is 4 hours per day and 18 hours per week. Here are the overtime rates:
For regular work days:
- 150% of the hourly rate, the first 1 hours.
- 200% of the hourly rate, the following hours.
For weekends or public holidays:
- 200% of the hourly rate for the first 8 hours of overtime.
- 300% of the hourly rate for the following 1 hour of overtime.
- 400% of the hourly rate for the subsequent 2 hours of overtime.
The actual overtime pay depends on whether it is a regular workday or a weekend/public holiday, as well as the number of overtime hours worked, providing fair compensation for extra working hours.
Maternity Leave
Pregnant employees are entitled to 3 months of paid maternity leave. Out of the total duration, 1.5 months must be taken before the child’s birth, and the remaining 1.5 months must be taken after the child is born.
During the maternity leave period, the employee will receive 100% of their regular salary, and the employer is responsible for providing this pay. Unfortunately, the employee cannot extend the maternity leave beyond the specified 3-month period.
Paternity Leave
Employees are entitled to 2 days of paid paternity leave, during which they will receive 100% of their average salary. The employer will be responsible for providing this pay.
Paternity leave cannot be extended beyond the specified 2-day period.
Parental Leave
In Indonesia, there is no statutory provision for parental leave. Nevertheless, employees may qualify for both maternity leave and paternity leave benefits.
Sick Leave
In Indonesia, sick leave does not have a maximum limit on the number of days an employee can take. The employer provides sick leave with different pay rates based on the length of the leave:
- For the first 4 months, the employee receives 100% of their base salary.
- From 4 to 8 months, the employee receives 75% of their base salary.
- From 8 to 12 months, the employee receives 50% of their base salary.
- From 12 to 13 months, the employee receives 25% of their base salary.
This arrangement remains in effect until the employer decides to terminate the employment contract.
Employee Termination Procedures
Terminations in Indonesia can be complex and must adhere to the country’s specific rules and regulations. Employers are responsible for managing off-boarding procedures in coordination with key stakeholders, and this process may involve additional fees and specific steps depending on the termination case.
It is important to note that Indonesia does not allow at-will terminations for employers beyond the probation period. Terminations must be justified with valid reasons, and compliant terminations can occur through various means, including:
- Voluntary resignation by the employee
- Mutual agreement between the parties
- Termination due to the worker’s demise
- Completion of assigned tasks
- Contract expiration
Unilateral termination by the employer can be based on the following grounds:
- Termination during the probation period
- Objective reasons for termination
- Dismissal for disciplinary reasons
- Termination due to unsuitability for the job
- Termination during a company merger or acquisition
- Termination due to bankruptcy
- Inability to work due to medical conditions
Notice Requirement
In Indonesia, there is no legally stipulated minimum notice period for terminations. However, customary practices for termination by the employer are as follows:
- Notice during the probation period: 7 days
- Minimum notice period: 30 days
For terminations initiated by the employee, the customary minimum notice period is also 30 days.
Severance for Employees
In Indonesia, all employees who are terminated are entitled to severance pay. Severance pay will depend on the length of employment and base salary.
Length of employment and Severance pay:
- For less than 1 year severance pay is 1 month wage
- Between 1 to 2 years severance pay is 2 months wage
- Between 2 to 3 years severance pay is 3 months wage
- Between 3 to 4 years severance pay is 4 months wage
- Between 4 to 5 years severance pay is 5 months wage
- Between 5 to 6 years severance pay is 6 months wage
- Between 6 to 7 years severance pay is 7 months wage
- Between 7 to 8 years severance pay is 8 months wages
- Above 8 years severance pay is 9 months wage
To protect you from unforeseen financial risks related to terminations, RecruitGo implements a Severance Accrual in all employment agreements. Our expert team ensures compliance with legal entitlements and best practices. If an employee resigns or is not eligible for severance, any unused amounts will be refunded to you.
Paid Time Off
Full-time employees enjoy 12 days of paid time off (PTO) annually, accruing 1 day per month. Eligibility for annual leave begins after completing 1 year of employment.
However, part-time employees are not entitled to PTO benefits.
Public Holidays
In Indonesia, there are 15 national holidays celebrated, including:
- New Year’s Day
- Lunar New Year
- Ascension of the Prophet Muhammad
- Silence Day
- Good Friday
- Eid al Fitr
- Labor Day
- Ascension of Jesus Christ
- Pancasila Day
- Vesak Day
- Eid al Adha
- Islamic New Year
- Indonesia Independence Day
- Prophet Muhammad’s Birthday
- Christmas Day
Onboarding
Our streamlined onboarding process is completed within 3 to 5 business days.
To ensure a smooth start, employees are required to submit all necessary documents before their designated start date. Mandatory document submission is not allowed after the start date, while optional documents can be submitted later.
Employment Contract Details
Contracts must be in Indonesian language and latin alphabet, and can be bilingual. They must be in writing and signed by both parties.
A contract should include the following details:
- Name, address of the company, and nature of business
- Position of the employee
- Place of work
- Salary and payment method
- Terms of employment, outlining the rights and obligations of both the employer and employee
- Start date and period of the employment agreement
- Place and date the employment agreement is made.
Probation Period
Probation periods are not mandatory in Indonesia. For indefinite contracts, the probation period is typically 3 months. There is no minimum length for definite contracts, and fixed-term contracts cannot have probation periods.
Find the Right Experience to Match Your Business Needs
Entry-level
staff
Typical monthly cost: $435
Administrative Assistant, Sales Associate, Customer Service
Mid-level
staff
Typical monthly cost: $1100
Managers, Financial Analyst, Software Developer
Management
staff
Typical monthly cost: $2200
Branch Manager, Country Coordinator, Regional Officer
Testimonials
Don’t take our word for it. See what our clients say.
David Catindoy
SLEEQ
RecruitGo team is such a pleasure to work with. They understand what we need as a business and provided us recommendations that are tailored to our needs. I really appreciate the effort that the team has put in to go above and beyond to nurture the relationship and meet certain demands of our business. I highly recommend RecruitGo and it’s really nice to have a partner that you can rely on.
Hamzah Jasim Alomairi
Bridges LLC. (United Arab Emirates)
I would recommend RecruitGo on my behalf due to the excellent job you have done in managing Bridges llc account for RecruitGo. You are certainly welcome Emma! Great service overall!
Vipinkumar Ramakrishnan
Skuad
Really a great partner to work with. Sharp on timelines quick responses, I’m very much happy with the Philippines team – America, Jilian, Gabe – for the continuous support.
Francois Myburgh
Centaur
As always, we love working with RecruitGo!
Meet Our Experts
Gary Beltran
COO, RecruitGo
Jillian Ongsip
Head of Sales
Alfred Tolentino
Head of Recruitment
Schedule a call with a RecruitGo consultant
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