Minimum Wage Requirements
The minimum wage in Indonesia ranges from IDR 1,958,169 (US$126) to IDR 4,901,798 (US$316) 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 50 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%
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.