resources
Expansion
Product Help
Globe
India
What should I know about hiring in Indonesia?
Hiring employees in Indonesia can be complex, particularly if you are unfamiliar with local regulations and practices. Before initiating the recruitment process, it is essential for employers to have a good understanding of the employment landscape.
Firstly, Indonesia’s employment laws govern various aspects, such as employment contracts, wages, benefits, and termination procedures. Compliance with these laws is crucial to avoid legal issues and ensure a smooth employment process. Additionally, understanding the nuances of payroll processing and tax obligations is essential to meet regulatory requirements.
Indonesia has a unique business culture influenced by its diverse population and historical background. Respect for hierarchy, interpersonal relationships, and local customs plays a significant role in business interactions. Employers should navigate these cultural norms carefully to foster effective working relationships and enhance business success.
Why is Indonesia a good choice for finding remote employees?
Indonesia presents a compelling case for finding remote employees due to several key factors. Firstly, Indonesia boasts a large and diverse talent pool across various industries, including technology, customer service, and digital marketing. This diversity allows companies to tap into a wide range of skills and expertise tailored to meet specific business needs.
Moreover, Indonesia’s growing economy and youthful population contribute to a dynamic workforce eager to engage in remote work opportunities. Many Indonesians are fluent in English and possess strong communication skills, facilitating effective collaboration with international clients and teams.
From a business perspective, Indonesia offers a favourable time zone for collaboration with clients in Asia-Pacific regions, making it convenient for companies to provide continuous customer support or conduct real-time meetings across different time zones.
Lastly, Indonesia’s progressive regulatory environment supports remote work arrangements, offering flexibility in employment practices and facilitating smoother operations for businesses embracing remote work trends.
How can Native Teams help you hire in Indonesia?
For a streamlined hiring process in Indonesia, Native Teams offers invaluable support through our Employer of Record services. Our solutions are designed to navigate the complexities of Indonesian employment regulations, cultural intricacies, business practices, and language nuances.
Our team comprises experienced tax and legal professionals who serve as your reliable partners throughout the recruitment journey in Indonesia. We ensure compliance with local payroll requirements, tax obligations, and intricacies of HR documentation, enabling you to seamlessly hire and onboard Indonesian talent into your remote team.
Hire your first Indonesian employee with Native Teams.
Legal requirements for hiring in Indonesia
Minimum wage
The minimum wage in Indonesia varies by province and is reviewed annually by local governments. Each province sets its minimum wage, considering inflation, cost of living, and economic conditions. For instance, as of 2024, Jakarta, one of the provinces with the highest minimum wage, set its minimum wage at IDR 5,067,381 million per month.
Contributions & Taxes
Employer Tax
The total employer cost in Indonesia can vary between 10.24% and 11.74%, based on several factors.
Corporate Tax
The corporate tax in Indonesia is 22%.
Employee Tax
The employee tax in Indonesia is currently 4%.
Income Tax
Indonesia has a progressive income tax system, and the current income rates in 2024 are:
- 0 to 60 million IDR → 5%
- 60 to 250 million IDR → 15%
- 250 to 500 million IDR → 25%
- 500 to 5 billion IDR → 30%
- More than 5 billion IDR → 35%
To calculate the salary and taxes for Indonesia please click here.
Payroll cycle
The payroll cycle in Indonesia is generally monthly, with payments typically made on the last day of the month.
Is there a 13th salary in Indonesia?
The 13th salary is called “Tunjangan Hari Raya (THR)” in Indonesia, and it is a mandatory benefit for the employees.
Labor rules
Probation period
In Indonesia, the probation period for employees is regulated under the Indonesian Manpower Law (Undang-Undang Ketenagakerjaan). The maximum probation period is three months.
Notice Period
In Indonesia, the duration of the notice period can vary depending on the terms agreed upon in the employment contract, company regulations, or collective labour agreements (if applicable). It’s common for notice periods to range from 1 to 3 months, but this can vary.
Severance Period
Employees who have completed a certain period of continuous service with an employer are generally entitled to severance pay upon termination. The entitlement and calculation of severance pay depend on the reason for termination and the length of service.
Working Hours
The standard working hours in Indonesia are 40 hours per week, typically spread over 5 or 6 days, depending on the industry and company policy.
Leave and benefits
Public holidays
In Indonesia, public holidays are observed based on the national calendar, which includes both religious and secular holidays.
Indonesia celebrates several national holidays, including:
- New Year’s Day (Tahun Baru Masehi) – January 1
- Chinese New Year (Imlek) – varies based on the lunar calendar
- Nyepi (Balinese Day of Silence) – varies based on the Balinese calendar
- Good Friday (Jumat Agung) – varies based on the Christian calendar
- Labour Day (Hari Buruh Internasional) – May 1
- Ascension of Jesus Christ (Kenaikan Isa Almasih) – varies based on the Christian calendar
- Eid al-Fitr (Hari Raya Idul Fitri) – varies based on the Islamic calendar
- Independence Day (Hari Kemerdekaan RI) – August 17
- Eid al-Adha (Hari Raya Idul Adha) – varies based on the Islamic calendar
- Islamic New Year (Tahun Baru Hijriyah) – varies based on the Islamic calendar
- Christmas Day (Hari Natal) – December 25
Some regions in Indonesia may observe additional regional holidays based on local customs, traditions, or historical events. These holidays can vary by province or locality.
Sick leave
Employees are entitled to sick leave for periods of illness or injury that prevent them from performing their duties. The specific entitlements may vary depending on company policies, collective agreements (if applicable), and the employee’s length of service. Usually, the employer pays 100% of the salary for the first four months of sick leave and 75% for the 4th to 8th months of sick leave.
Maternity leave & Paternity leave
After giving birth, working moms are entitled to three months of maternity leave. This can extend to six months if their doctor certifies their newborn has health problems. Paternity leave for fathers is two days.
Other leave
Bereavement leave
Bereavement leave is up to two days in Indonesia.
Marriage leave
Employees are entitled to two days of leave in the case of marriage.
Care leave
Care leave, also known as compassionate leave or family responsibility leave, is provided to employees to address specific family-related needs or emergencies in Indonesia. The duration is not exact, and it depends on the company’s policy.
What are the minimum vacation days?
The Indonesian labour law does not specify a minimum number of vacation days in absolute terms.
Insurance
Health Security & Private Insurance
Anyone who has worked for an employer for at least three months within the previous fifteen months is entitled to free medical and dental care through the Social Security Administration.
*Native Teams can support you in finding the best private insurance in the country. Contact us and we will send a comparison of insurance packages and prices.*
Why use Native Teams for hiring in Indonesia?
Native Teams lets you employ team members ‘like a local’ meaning you get all the benefits of a global team, wherever you are based. Here are the reasons why you should use Native Teams for hiring:
- No paperwork: We will handle all the necessary paperwork for you.
- Save on taxes: We help you handle your taxes.
- No company set up: You can expand your business using our company entitles.
- Online onboarding: We’re here to ensure your onboarding process is trouble-free.
- No accounting: We will handle all of your accounting needs, including invoicing, payroll, and more.
- Increase your profit: We assist you in growing your business and maximizing your profits.
- Compliance expertise: we can assist your company in navigating the regulatory environments and ensure you meet all relevant requirements.
- Local support: We can assist you in understanding and complying with the relevant local laws.
