Basic information
Capital: Jakarta
Time Zone:GMT+7
Language: Bahasa Indonesian
Currency code:IDR or Rp
Human Resources at a Glance
Contract Terms
– Names and details of employers and employees
– The employee’s date of birth
– posts
– Duties and Responsibilities
– Place of work
– Employment status (full-time, part-time, or temporary)
– The start and end dates of the contract
– Salary level
– Date of payment
– working hours
– Leave entitlements
– Termination of Employment
Guidelines Regarding Probation Period/Trial Period
Article 60 of the Labour Law stipulates that a probationary period of not more than three months may be enforced on an indefinite term contract. An explicit contract cannot include a probationary period.
Regulations and Rules Regarding Working Hours
The standard working hours are 7.6 hours per day and 38 hours per week (1967 hours per year). The standard work week runs from Monday to Friday.
Minimum Wage Requirements
JAKARTA – Monthly IDR 5,067,381 ,the minimum wage in other provinces varies.
Payroll Cost
Employer costs are typically estimated at 4.24% of an employee’s salary.
Provident Fund – 3.70%
Death benefit – 0.30%
Workers’ Compensation Benefit – 0.24%
Health Care and Social Security – IDR 480,000
Pension – IDR 9,559,602 for employees with a gross monthly salary above IDR 191,192.
Termination
Grounds
The basic policy of Indonesian labor law is to prevent the dismissal of employees. In some cases, it is even banned. The general principle is that each termination of employment must be approved by the labor court, unless the termination agreement is agreed by the employee or is not contested.
Labour Law (as amended by the Job Creation Act) and GR 35/2021 can be interpreted to allow employers to effectively terminate employment by giving written notice of termination and stating reasons, while ensuring that employees have the right to object, negotiate and resolve issues. Filing legal proceedings in the Labor Court for wrongful dismissal. Notice of termination shall be made in the form of a termination letter and delivered to the affected employee within 14 (fourteen) business days prior to the effective date of termination.
If, after written notice, the employee agrees to voluntarily terminate the agreement (MTA) with each other, the question of the employee’s acceptance or rejection of the termination is unimportant. The execution of the MTA will be based on the response of the employees.
Employers are required to report the dismissal of an employee to the local manpower office, and Letter No. 4/2022 mandatorily requires the submission of standard documents. This includes a notice of dismissal, an employee’s letter of no rejection of dismissal, and a standard application form. Once these documents are submitted, the Human Resources Office will issue a standard receipt.
Notice Period
Written notice must be given in the form of a notification letter. The document must be duly served on the employer no later than 14 business days prior to the effective date of termination. However, it is actually advisable to give 30 days’ notice.
Redundancy/Severance Pay
Severance pay in Indonesia varies depending on whether the employee is considered a fixed-term employee or an indefinite employee.
For indefinite employees, mandatory severance pay includes the following:
-Severance pay
-service charge
-Compensation (remaining annual leave, repatriation expenses, and other compensation as specified in the employment contract)
| Severance Pay (Service period). | Severance Pay (Monthly Salary). | Service Pay (Service Period Severance Pay (Server).) | Service Pay (Monthly Salary). |
| <1 year | 1 | 3-6 years | 2 |
| 1-2 years | 2 | 6-9 years | 3 |
| 2-3 years | 3 | 9-12 years | 4 |
| 3-4 years | 4 | 12-15 years | 5 |
| 4-5 years | 5 | 15-18 years | 6 |
| 5-6years | 6 | 18-21 years | 7 |
| 6-7 years | 7 | 21-24 years | 8 |
| 7-8 years | 8 | >24 years | 10 |
| ＞8 years | 9 | ||
Depending on the reason for termination, severance pay has a multiplier of 0.5x, 0.75x, 1.0x, 1.75x, or 2x in addition to the service fee, depending on the length of service and compensation:
In the event of a company’s merger & acquisition activities/change of company/reduction of business activities or closure/bankruptcy, 0.5-1 times severance pay, 1 time service fee and compensation will be paid.
In the case of voluntary resignation of an employee, in addition to compensation, employees with indefinite contracts are required by law to pay severance pay (or”) upon resignationUang Pisah”). The tenure of the employee must be 5 years or more. This calculation is subject to an employment agreement, company regulations, or collective labor agreement.
Long-term illness due to work-related injury, retirement, death of an employee (> 12 months) and other situations will receive 1.75-2x severance pay, 1x service fee and compensation.
For fixed-term employees: Fixed-term employees are entitled to compensation after the completion of the performance of the employment contract. If the employer terminates a fixed-term employee before the expiration of the labor contract, it shall pay the employee’s wages until the end of the labor contract.
| Service Period Term of Service | Compensation |
| <1 month | None |
| >1 month but<12 month | Service period/12)x(1 month salary+fixed allowance) |
| 12 month | 1 month salary +fixed allowance |
| >12 month | Service period/12)x(1 month salary+fixed allowance) |
Payment & leaveCompensation & Holidays
Salary Payment
In general, wages are paid by bank transfer around the 25th of each month. Wages must be paid in IDR. International payments are also acceptable.
Payslip Payroll
Payslips can be hard copies or soft copies (PDFs) sent via email. It depends on the discretion of the company. In practice, for the blue-collar class, the common method is hard copy – carbonized paper. For white-collar workers, a common approach is to send a soft copy (PDF file) via email. Alternatively, some employers allow employees to access the company’s HRIS portal.
Annual Leave
Employees are entitled to at least 12 days of annual leave for 12 months of continuous service. This fee can be accumulated for one day per month from the date of employment. Employers have the right to give more at their discretion.
Employees may often want to take time off during Eid al-Fitr. Theoretically, full vacation entitlements must be obtained in one flight segment. However, separate leave is allowed if the employer agrees, but each leave takes at least six working days.
In practice, employees are not entitled to annual leave during the probationary period. Any absence from work will be considered unpaid leave.
Leave carryover is at the discretion of the company. For example, leave balances can be carried forward to March 31 of the following year. If the employee does not take the leave entitlement within six months of being granted the leave entitlement, the annual leave will be cancelled.
Employees who have worked continuously with the same employer for six years are also entitled to at least two months’ leave in the seventh and eighth years of employment.
Sick Leave
Employees are entitled to paid sick leave and extended paid sick leave. Employees are entitled to paid sick leave if they have a medical certificate or statement proving illness or injury. Employees are also entitled to long-term paid sick leave, provided that such leave is recommended in writing by a physician and lasts longer than one year.
If a permanent employee is absent from work due to serious illness, he or she is entitled to a monthly salary. This fee is paid by the employer):
For the first four months of absence, employees must receive 100% of their wages. In the last four months of absence, they must receive 75% of their salary. During the third or fourth month of absence, they must receive 50% of their salary. In the months after which they are absent, they must receive 25% of their salary until the contract is terminated.
Other leaves
Employees can take short-term other paid leave for a variety of personal reasons. For example, they can take three days off for marriage, two days off for a child’s marriage, two days off for a child’s circumcision, two days off for a child’s baptism, and two days off for a child’s death
Indonesia’s labor law does not mention caregiver rights. In practice, employers can treat holidays as unpaid leave. This also applies to urgent care for dependents, spouses, or close family members.
Female employees with menstrual pain can take paid leave on the first and second days of their menstrual cycle.
Muslim employees are legally entitled to up to three months of paid leave to complete the Hajj to Mecca. Employees can only take this leave once in their lifetime.
Maternity & Parental Leave
Women are entitled to three months of paid maternity leave (provided by their employer), half of which must be taken before the expected date of delivery and the other half after the expected date of delivery.
The period of maternity leave can be extended on the recommendation of an obstetrician or midwife.
If the wife of a male worker gives birth or miscarries, he is entitled to two days of paid paternity leave.
Tax and Social Security Information for Employers
Personal Income Tax
Unless otherwise provided for in the provisions of the Double Taxation Treaty, non-resident individuals are subject to a withholding tax of 20% on their gross income in Indonesia.
Residents:
Individuals who are tax residents in Indonesia are subject to the following income taxes:
Below IDR 60 million: 5%
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%
Over IDR 5 billion: 35%
Deductions for dependents, spouses, and children can be calculated. In addition, foreigners may be able to declare some of the expenses paid by their employers, including accommodation or vehicle costs. However, this eligibility will depend on how the employer classifies these payments. Items such as medical expenses are classified as income.
There are two types of National Insurance: Public Health Insurance (“BPJS Kesehatan” and the Social Security Scheme (“BPJS Ketenagakerjaan”), which covers Workers’ Compensation Insurance (JKK), Non-Work Accident Death Insurance (JKM), Old Age Benefits (JHT) and Pension Scheme (JP).
| Contribution insurance benefits | Employer | Employee | |
| Workers Accident Benefit(JKK) | %of monthly salary | 0.24%-depending on business | 0% |
| Worker Accident Insurance(JSHK) | %of monthly salary | 0.24% | 0% |
| Death/Life Insurance Benefit(JKM) | %of monthly salary | 0.3% | 0% |
| Old Age Benefit (JHT) | %of monthly salary | 3.7% | 2% |
| Pension Benefit (JP) | %of monthly salary (salary cap IDR 10,042,300) | 2%,max IDR200,846 | 1%,max IDR |
| Public Health Insurance (BPJS Kesehatan) | %of monthly salary(salary cap IDR 12,000,000) | 4% | 1% |
Public Holidays 2024
| Occasional holidays | Date |
| New Year’s Day | 1.1 |
| Isra Mi’ra | 2.8 |
| Chinese New Year | 2.9-2.10 |
| President Election Day | 2.14 |
| Bali Hindu New Year | 3.11-3.12 |
| Good Friday | 3.29 |
| Easter Day | 3.31 |
| Hari Raya ldul Fitri (Lebaran Holiday) | 4.8-4.15 |
| Labour Day | 5.1 |
| Ascension Day of Jesus Christ | 5.9-5.10 |
| Vesak Day | 5.23-5.24 |
| Pancasila Day | 6.1 |
| Adul Adha and joint holidays | 6.17-6.18 |
| Islamic New Year | 7.7 |
| Independence Day | 8.17 |
| Prophet Muhammad’s Birthday | 9.16 |
| Christmas Holiday | 12.25- |