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Current Region & Language
Current Region & Language
Currency
Indonesian Rupiah (IDR)
Employer Taxes
Employer contributions can be around 17.24% of gross salaries for BPJS (social security).
Payroll Frequency
Monthly
Language
Indonesian
Date Format
DD/MM/YYYY
Indonesia By The Numbers
276 million
Population
IDR 18 quadrillion
GDP
N/A
National Holidays
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Weekly Working Hours
National Holidays
Leave
In Indonesia, employees are entitled to at least 12 days of annual paid leave after completing one year of service. Female employees are granted 3 months of paid maternity leave, while male employees are entitled to 2 days of paternity leave. In cases of miscarriage, employees are entitled to 1.5 months of leave or as per the doctor’s medical certificate. For sick leave, employees receive 100% of their salary during the first 4 months of sickness, with the salary decreasing after that (75% for the next 4 months, 50% for the following 4 months, and 25% thereafter until termination). Other types of leave include 2 days of paid leave for events like a child’s wedding, circumcision, or baptism, 2 days of paid leave for the death of a close relative, 1 day for the death of a family member living in the same household, and 3 days of paid leave for marriage.
Employment Contracts
Fixed-term employment must be documented in an Indonesian language agreement or a bilingual format, with the Indonesian version taking precedence in case of discrepancies. Permanent employment can be verbal but should be documented with at least a letter of appointment.
Types of Employment
There are two types of employment: Employees and Independent Contractors.
Employment Costs
There are no specific requirements regarding employment costs
IC Class Factors
When determining the classification of an Independent Contractor (IC), several factors are considered, including financial control, behavior control, and the relationship between the parties.
Labor Leasing
A labor leasing license is required for an outsourcing company.
Minimum Wage Requirements
Indonesia does not have a national minimum wage rule. Each province and district or city issues their own minimum wage amount each year as issued by the respective governors. Micro and small businesses are exempt from the minimum wage rule.
Medical Benefits
There are no requirements regarding medical benefits.
Probationary Periods
Probationary periods can last up to 3 months for permanent employees, with at least 7 working days’ notice required for termination during this period. Probation is not allowed for fixed-term contracts.
Termination Notice
The statutory notice of termination must be given at least 14 working days before the effective termination date. If the employee accepts the termination, they must provide written confirmation. If the employee rejects the termination, they must submit a written rejection with reasons within 7 working days and then initiate mediation with the Ministry of Manpower (MOM). If the dispute remains unresolved, the employee can escalate the claim to the Labor Court.
Severance
Severance pay and long-service pay are calculated based on the duration of employment. For severance pay, employees are entitled to one month’s salary if employed for less than one year, and this increases incrementally up to nine months’ salary for those employed for eight years or more. Long-service pay is provided for employees who have been with the company for three or more years, with the amount ranging from two months’ salary for three to six years of service to ten months’ salary for those with 24 years or more of service.
In addition to severance and long-service pay, employees may also receive compensation for unused annual leave, costs related to returning to their place of recruitment (if applicable), and any other benefits outlined in their employment agreement, company regulations, or collective labor agreements (CLA). Separation pay may also be provided based on specific terms set out in the employment contract.
The total compensation received is determined by a formula prescribed by GR 35/2021, and the specific amount will depend on the reason for termination.
Pre-hire Checks
Background checks are not specifically regulated by the Labor Law. However, employers commonly conduct checks on an applicant’s educational credentials, employment history, and professional licenses, which are typically provided voluntarily by the applicant. Some checks, such as drug testing and medical tests, can be performed with the consent of the employee. Additionally, foreign workers are required to have a valid work permit in order to be employed.
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