Employer of Record in Indonesia

General Information

• Currency: Indonesian Rupiah (IDR)
• Employer Taxes: 10.24% – 11.74%
• Payroll Frequency: Monthly
• Employee Costs: 4%
• Capital: Jakarta
• Fiscal Year: 1 January – 31 December

Main Aspects of the Labour Code

Minimum Wage

General: The minimum wage requirement differs depending on local government regulations, ranging from 2,036,947 IDR in Central Java to 5,067,381 IDR in DKI Jakarta.

Hourly wages for part-time workers

Indonesia has reformed its labor laws through the Omnibus Law, abolishing the sectoral minimum wage via Government Regulation 36 of 2021 and introducing an hourly wage system for part-time workers.

The formula for calculating hourly wages is as follows:
Hourly wage = monthly wage / 126

To calculate the daily wage:

• For a six-day work week: Daily wage = monthly wage / 25
• For a five-day work week: Daily wage = monthly wage / 21

Employers and employees can agree on wages, but the final salary must not be lower than the amounts calculated using these formulas.

Payroll

Payroll Cycle: In Indonesia, the payroll cycle is typically monthly, with payments usually made on the last working day, as specified in the employment contract.

13th Salary

In Indonesia, employers are required to provide a religious holiday bonus known as Tunjangan Hari Raya (THR). This bonus amounts to an additional one month’s salary and is paid before the major religious holiday—Hari Raya Idul Fitri for Muslim workers and Christmas for workers of other faiths. The THR includes the base salary and fixed monthly allowances but does not need to cover other payments like bonuses. For employees who have not yet completed a full year of service, the THR is prorated accordingly.

Working Hours

General: Working hours are structured as follows:

• For employees working 6 days a week: 7 hours per day, 40 hours per week.
• For employees working 5 days a week: 8 hours per day, 40 hours per week.

These rules may not apply to certain industries and are typically regulated by a ministerial decision.

On workdays, employers must provide a rest period of at least half an hour after no more than four consecutive hours of work.

Overtime: The general overtime guidelines in Indonesia are as follows:

All work beyond the standard working week is considered overtime and is regulated by employment contracts or collective agreements. The maximum allowable overtime is 4 hours per day and 18 hours per week.

For overtime on weekdays:

• The first hour of overtime is paid at 150% of the regular hourly wage.
• Subsequent hours are paid at 200%.

For employees working a six-day workweek and doing overtime on a weekly rest day or public holiday:

• For the 1st to 7th hour of overtime, pay is 200% of the regular hourly wage.
• For the 8th hour, pay is 300%.
• For the 9th and 10th hours, pay is 400%.

If overtime is worked on a weekly rest day with a six-day workweek:

• For the 1st to 5th hour of overtime, pay is 200%.
• For the 6th hour, pay is 300%.
• For the 7th and 8th hours, pay is 400%.

For a five-day workweek and overtime on a weekly rest day or public holiday:

For the 10th and 11th hours, pay is 400%.

For the 1st to 8th hour of overtime, pay is 200%.

For the 9th hour, pay is 300%.

Leave

Annual Leave (Vacation):

In Indonesia, paid leave is outlined in employment contracts and provides a minimum of 12 days of annual leave per year after completing one full year of employment. Employees who have worked for the same employer for six consecutive years are entitled to one month of leave in both their seventh and eighth years of service.

Public Holidays

Each year the government may decide if public holidays falling on weekends will be moved to a weekday or will be lost.

Sick Days

When employees are sick or injured, they are entitled to paid sick leave upon presenting medical confirmation of their condition. Employees may also take long-term sick leave exceeding one year if recommended in writing by a doctor.

The payment structure for prolonged sick leave is as follows:

25% of wages after one year, until termination, paid by the employer.

100% of wages during the first four months, paid by the employer.

75% from the fifth to the eighth month, paid by the employer.

50% from the ninth to the twelfth month, paid by the employer.

Maternity Leave

Employees are entitled to three months of fully paid maternity leave. The maternity leave is paid at 100.00% of the regular salary rate of pay.

Paternity Leave

New fathers are entitled to two days’ leave for the birth of their child or a miscarriage.

Parental Leave

Employees are entitled to paid child leave in the following circumstances:

2 days paid leave for the death of the employee’s child

2 days paid leave for the circumcision of the employee’s child

2 days paid leave for the baptism of the employee’s child

2 days paid leave for the marriage of the employee’s child

Other Leave

Employees are entitled to up to two days of paid leave due to the death of their spouse, one day of paid leave for the death of their parents or parent-in-law, the death of their children, or the death of their children-in-law. If a member of the employee’s household dies, they shall be entitled to one day of paid leave.

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