Hire in Indonesia

Here’s where you get started with human resources best practices and hiring in Indonesia.

beautiful scenery in the country of indonesia

Currency of Indonesia

Indonesian Rupiah (IDR)

The Capital of Indonesia


Time Zone in Indonesia


Important Facts About the Country of Indonesia

Introduction to Indonesia

Bahasa Indonesia is the national language of Indonesia. However, there are as many languages spoken as there are people of different ethnic backgrounds in the country.

Laws and customs in Indonesia

The Constitution of Indonesia (Undang-Undang Dasar 1945) is the basis for the government of Indonesia, as well as the common law system.

Culture Observations in Indonesia

Indonesia is the largest archipelago in the world, comprising around 17,500 islands. It is situated between two continents (Asia and Australia) and two oceans (the Pacific Ocean and the Indian Ocean). With a population of 273.5 million people, Indonesia has the fourth largest population in the world after China, India and the USA. There are over 300 ethnic groups in Indonesia, with 95% of them having native Indonesian ancestries. The largest ethnic group is the Javanese, who make up 41% of the total population. About 88% of the population of Indonesia is Muslim. Other minority religions are Christian, Hinduism, Buddhism and Taoism.

Indonesian Human Resources at a Glance

Employment Law Protections in Indonesia

Law No. 13/2003, dated 25 March 2003, regarding labor (the Labor Law), as amended by Law No. 11/2020, dated 2 November 2020, regarding Job Creation (the Job Creation Law) creates the legal framework for employment in Indonesia. The provisions apply to both local Indonesians and foreigners employed in Indonesia. It is not possible to contract out any terms of the employment legislation. However, many contracts do not comply.

Employment Contracts in Indonesia

Employment agreements can be concluded for either a definite or indefinite period. Specifically, a fixed-term employment agreement must be concluded in writing in the Indonesian language using the Latin alphabet (some Indonesian dialects do not use the Latin alphabet) (Article 57, labor Law). If an employment agreement is in both Indonesian and a foreign language, the Indonesian version prevails if there are differences in interpretation. Employment agreements of an indefinite term can be made either orally or in writing (Article 51, Labor Law). However, in practice, employment agreements should be made in writing.

Indonesia's Contract Terms

Employees working under both definite and indefinite contracts enjoy the same statutory employment rights. The Labor Law only stipulates the legal duration for a definite term employment agreement.

Fixed-term employment agreements, per the new Government Regulation: GR No. 35 2021, can only be performed for a maximum period of five years. This limit includes any extensions.

The normal retirement age (NRA) was initially set at age 56 but increased to age 57 in 2019. It will now increase by an additional year every three years until the NRA reaches 65 in 2043.

Work Rules in Indonesia

Companies with ten or more employees must renew and resubmit work rules every two years and obtain approval from the government. In practice, it’s common for companies with just one employee to maintain registered rules.

To establish company regulations, an employer needs to file an application and obtain consent from two employee representatives who have read, agreed to and signed off on the rules and regulations.

Severance Pay in Indonesia

Severance payments in Indonesia vary based on whether an employee is considered a definite-term employee or an indefinite-term employee.

For indefinite-term employees, mandatory severance payments consist of the following:

  • Severance pay
  • Service pay
  • Compensation (remaining annual leave, repatriation expenses, and other compensation as determined in the employment contract)
Severance Pay (Service Period) Severance Pay (Monthly Salary) Service Pay (Service Period) 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
5-6 years 6 18-21 years 7
6-7 years 7 21-24 years 8
7-8 years 8 >24 years 10
>8 years 9

There is a multiplier of 0.5x, 0.75x, 1.0x, 1.75x or 2x to the severance pay depending on the reason for termination In addition to service pay, according to service period and compensation:

Grounds of Termination Severance Calculation
Company merger & acquisition activities, company changing/reducing business activities or closure/bankruptcy 0.5-1x severance pay, 1x service pay and compensation
Employees’ voluntary resignation In addition to d compensation, another component of separation pay (or “Uang Pisah”) for employees on indefinite-term contracts who resign is required by law. The employee’s tenure must be 5 years or more. The calculation is regulated by the employment agreement, company regulation, or collective labor agreement.
Employees’ prolonged illness (>12 months) due to work accident, retirement, death 1.75-2x severance pay, 1x service pay and compensation


For definite term employees:

Definite-term employees are entitled to receive a compensation payment upon the completion of the employment contract. If the employer terminates the employment agreement of a definite term employee before its expiration, the employer is required to pay the employees’ salary until the completion of the employment agreement period.

Service Period 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)

Indonesia's Guidelines Regarding Probation Period

Article 60 of the Labor Law states indefinite contracts can enforce a probation period for no longer than three months. A definite contract cannot include probation.

Paid Leave

All employees are entitled to 12 working days of paid vacation per year following one year of uninterrupted service.


The basic policy of Indonesian labor law is that the dismissal of an employee should be prevented. In some cases, it is even prohibited. The general principle is that the Labor Court must approve every termination of employment unless the termination is agreed or otherwise not disputed by the employee.

The Labor Law (as amended by the Job Creation Law) and GR 35/2021 can be interpreted as allowing the employer to effectively terminate the employment relationship by written notice of termination with reasons – while ensuring the employee has the right to object, negotiate and commence legal proceedings in the Labor Court for wrongful dismissal. The announcement of the termination shall be made in a form of Letter of Termination and delivered to the affected employee no later than 14 (fourteen) working days before the effective date of the termination.

If, following written notice, the employee agrees to a voluntary mutual termination agreement (MTA), the question of an employee’s acceptance or rejection of the termination should not be relevant. The execution of the MTA will be the outcome based on the employee’s response.

The employer is required to report the termination of an employee to the local Manpower Office and Letter No. 4/2022 enforces the requirement for standard documentation to be submitted. This includes the termination notice, a non-rejection of termination letter from the employee along with a standard application form. Upon submission of these documents, the Manpower Office will issue a standard receipt.

Rules Regarding Bonus and 13th Month Pay in Indonesia

Religious Holiday Allowance (THR) for Employees (MOM No. 6) requires all employers to provide THR to employees who have at least one month of service. This applies regardless of whether the worker is employed on a permanent or temporary basis.

Workers who have served for a consecutive 12-month period are entitled to a minimum THR amount equal to one month’s salary. In practice, contractual or discretionary bonuses can be provided to employees.

Indonesian Laws Regarding Overtime

Overtime pay is required, except for cases where an employee’s position, function or job makes them a “thinker, planner, implementer or controller” whose working hours cannot be limited to normal working hours.

Indonesia's Requirements Regarding Notice Periods

Article 36 of GR 35/2021 specifies that written notice must be made in the form of a notification letter. This must be duly served to the employer at the latest 14 working days prior to the effective date of termination. However, a 30-day notice is recommended in practice.

Other Standard Items

Additional options beyond statutory benefits are limited. Common allowances are offered for transportation, meals, communications, etc. These are taxable. Net arrangements are common for expats.

Statutory Costs

The employer portion of health insurance and social security ranges from 10.24% to 11.24%. This covers public health insurance and social security.

Employers pay the monthly contribution to the designated banks by the 10th of the following month at the latest.

Tax and Social Security Information for Employers in Indonesia

Personal Income Tax in Indonesia

Resident and foreign employees are taxed on their salary earned in Indonesia and other remuneration earned during their stay in Indonesia. This includes bonuses and religious holiday allowances.

The Indonesian portion of the salary is taxed at source. The employer must withhold the tax.

A non-resident employee is an individual who does not reside in Indonesia and is present in Indonesia for less than 183 days in any 12-month period. This category also applies to an entity that is not domiciled in Indonesia and is not conducting business or carrying out activities in Indonesia through a permanent establishment. Non-resident employees are generally subject to a withholding tax of 20% of their gross income from Indonesia (Law No. 13 of 2003 on Manpower – Labor Law).

Benefits-in-Kinds (BIKs) reimbursement are taxable to the employee and the obligation to withhold income tax for the BIK shall apply. These include mobile phone bills, meals during business trips and medical insurance premiums.

Personal Income Tax Rates and Deductions

Non-resident individuals are subject to a withholding tax of 20% on their gross income from Indonesia unless the provisions of a double taxation treaty state otherwise.

Tax-resident individuals in Indonesia are subject to the following income tax rates:

  • Up to IDR 60 million: 5%
  • From IDR 60 million up to IDR 250 million: 15%
  • From IDR 250 million up to IDR 500 million: 25%
  • From IDR 500 million up to IDR 5 billion: 30%
  • Over IDR 5 billion million: 35%

Deductions can be calculated for dependents, spouses and children. Furthermore, foreign nationals may be able to claim some expenses paid for by the employer, including accommodation or vehicles. However, this eligibility will depend on how the employer has classified these payments. Items like healthcare costs are classified as income.

PIT: Employer Requirements

Income tax is withheld on a monthly basis. The employer is to provide an annual tax slip to the employee by the end of the year (Form 1721 A1). The employee must file the annual individual tax return by March 31 of the following year at the latest

Social Security in Indonesia – BPJS

There are two types of national insurance:

  • Public health insurance (‘BPJS Kesehatan’), and
  • Social security program (‘BPJS Ketenagakerjaan’), covering work-related injury insurance (JKK), non-work-related accidental death insurance (JKM), old age benefit (JHT) and pension plan (JP)
Contribution Employer Employee
Workers Accident Benefit (JKK) % of monthly salary 0.24% – depending on business classification 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 IDR 200,846 1%, max IDR 100,423
Public Health Insurance (BPJS Kesehatan) % of monthly salary (salary cap IDR 12,000,000) 4% 1%

*The above table serves as a broad guideline. Actual rates charged by GoGlobal will differ.

Individual participation in these schemes is mandatory for all residents of Indonesia, including expats on ITAS/P. Expat employees who are working at least six months, as well as their dependent family members, must be registered by their employer. In general, private insurance is necessary in Indonesia.

There is no Unemployment Insurance Scheme that is mandatory for employers or employees to pay.

Important Information for Indonesian Employees

Salary Payment

Generally, a salary payment is disbursed monthly around the 25th day of the month via bank transfer. Salary payments must be made in Indonesian Rupiah. International payments are also acceptable.


The payslip can be a hard copy or soft copy (PDF) by email. This is subject to the company’s discretion. In practice, for blue-collar level, the common method is hard copy – carbonized paper. For white-collar level, the common method is soft copy (PDF file) via email. Alternatively, some employers give employees access to the company’s HRIS portal.

Holiday Allowance

  • Workers who work a five-day week have Saturdays and Sundays off. Those who work six days a week are entitled to Sundays off.
  • Indonesian public holidays are set by Joint Ministerial Decree. Every year, the Minister of Manpower, together with the Minister for Religious Affairs and the Minister for the Utilization of State’s Apparatus, issue a Joint Ministerial Decree specifying dates for each public holiday
  • Most public holidays are religious dates. Since most religions follow a different calendar (for example, the lunar cycle), the exact holiday dates vary from year to year. Public holidays are included in the minimum statutory holiday entitlement.
  • There are usually 16 public holidays in total together with several cuti bersama holidays.
  • The concept of ‘cuti bersama’ (joint holiday) has been introduced by the Indonesian Government with the goal to promote domestic tourism. Joint holidays are provided to extend holiday weekends (usually given on a Monday or Friday). Thus, if a public holiday falls on a Thursday, the ‘joint holiday’ program encourages employers to give Friday off so employees have a four-day weekend. .
  • According to Article 85 of Act 13 of 2003 Indonesian Manpower/Labor Law, workers are not required to work on public holidays. However, if work must be performed on public holidays, employers are liable for paying overtime payments to the workers.

Annual Leave

  • For 12 months of consecutive work, an employee is entitled to at least 12 days of annual leave. This can accrue one day per month from the commencement of employment. Employers have discretion to give more.
  • Staff may normally wish to take a vacation leave over the Lebaran holiday period. In theory, the full holiday entitlement must be taken in one segment. However, if the employer agrees, the holiday may be taken separately provided that at least six working days are taken in one segment.
  • In practice,  employees are not allowed to take annual leave during the probation period. Any absence will be regarded as unpaid leave.
  • Carry-over of leave is subject to company discretion. For example, a leave balance can be carried forward up to March 31 of the following year. If the employee does not take his or her leave entitlement within six months of earning it, the annual leave will be forfeited.
  • An employee who has been working under the same employer for six consecutive years may also be entitled to a leave of at least two months in the seventh and eighth year of employment.

Sick Leave

  • Employees are entitled to both paid sick leave as well as extended paid sick leave.
  • Employees are entitled to paid sick leave in cases where an illness or injury is evidenced by a medical certificate or statement.
  • Employees are also entitled to long-term paid medical leave, provided such leave is recommended in writing by a doctor and lasts for a period greater than one year.
  • If a permanent employee is absent from work due to a severe illness, he or she is entitled to a monthly salary. This is to be paid by the employer):
    • For the first four months of absence, the employee must receive 100% of wages.
    • For the second four months of absence, they must receive 75% of wages.
    • For the third four months of absence, they must receive 50% of the wages.
    • For subsequent months, they must receive 25% of wages until a termination occurs.

Maternity & Parental Leave

  • Women are entitled to three months paid maternity leave (by employer), but half of this period must be taken before the expected date of childbirth and the other half after.
  • The maternity leave period may be extended on the advice of an obstetrician or midwife.
  • Male workers are entitled to two days’ paid paternity leave if their wife gives birth or miscarries.

Other Leaves

  • Employees can take short periods of other paid leave for a variety of personal reasons. For instance, they are allowed:
    • three days’ leave for their marriage
    • two days’ leave for the marriage of their child
    • two days’ leave for the circumcision of their child
    • two days’ leave for the baptism of their child
    • two days’ leave for the death of their child
  • Labor laws in Indonesia are silent on carers’ rights. In practice, leave can be granted by an employer as unpaid leave. This also applies for emergency care for a dependent, spouse or close family member.
  • Female employees who suffer from pain during menstruation can take paid leave on the first and second day of their cycle.
  • Muslim employees have a statutory right to take up to three months’ paid leave to complete the Haj pilgrimage to Mecca. An employee can take this leave only once during his or her lifetime.

THR Mandatory Allowance

Employers in Indonesia are required to pay a non-wage income or bonus (‘tunjangan hari raya’ or THR Mandatory Allowance) once a year to employees with one or more years of service. This must be disbursed at least seven days in advance of their religious holiday. Religious holidays in Indonesia include Eid al-Fitr (for Muslims), Christmas Day (for Christians), Day of Silence (for Hindus), Waisak (for Buddhists) and Chinese New Year (for Confucianists). According to Indonesian law, the payment is compulsory. It must be made based on the employee’s religion.

The bonus is equivalent to a minimum of one month’s pay. Alternatively, the employer can agree with the employee to pay on a specific date.

  • For workers that have a minimum 12 month of service, THR amount is a minimum of one monthly salary/wages (basic salary + other fixed allowance).
  • For workers that have more than one month of service and less than 12 months of service, the THR amount is apportioned accordingly (month of service/12 x 1 monthly salary)

Indonesians place a large emphasis on their religious diversity and collectivist society. During these periods, they spend money on items that are important to their culture, traditions, family and communities. As a result, THR plays a vital role for Indonesian families to be able to afford these festivals. The ceremonies and celebrations would be challenging for them to uphold without the THR.

According to Indonesian law Regulation 6/2016, employees hired on a permanent basis and temporary basis (freelance employees are included after the amendment of law) are eligible to receive THR.

If an employee has only worked for one month, he or she is still entitled to receive the THR payment. It is also worth noting the eligibility of THR is not based on an employee’s performance.

In cases where employees are terminated or if employees submit a resignation 30 days from their Religious Day, he/she is still eligible to receive THR Mandatory Allowance. (Article 7 MoM No. 6 Year 2016). This only applies for employees under an indefinite contract (permanent employees).

Benefits to the Employee in Indonesia

Overtime Rates

An employee can work a maximum of 40 hours per week, allocated in one of the following ways:

  • seven hours a day, six days a week
  • eight hours a day, five days a week

In general, employers that require an employee to work outside the normal working hours have to pay overtime wages to the employee unless the employee’s position, function or role is that of a “thinker, planner, implementer or controller.” This would usually mean executives or manager level employees whose working hours cannot be limited to normal working hours. These categories of employees are not entitled to overtime wages but are entitled to a higher salary than the ordinary employees. Overtime can only be performed for a maximum period of four hours per day and 18 hours per week. The overtime pay rate for one hour is 1/173 of the monthly wage plus fixed allowances (if any).

Pension Benefits

The following sets out the benefits to be received under the old age benefit (JHT) and pension plan (JP) components of the social security program (‘BPJS Ketenagakerjaan’).

Event Old Age Insurance Benefit (JHT) Pension Benefit (JP)
Termination Full lump sum None
Still employed and has contributed for 10 years or more Can apply to receive 30% of total fund for home purchase or 10% of total fund for other necessities in preparation of retirement None
Retirement* and has contributed for less than 15 years full lump sum Full lump sum
Retirement* and has contributed for 15 years or more Full lump sum Monthly pension
Permanent disability Full lump sum Monthly pension
Death Full lump sum 50% of monthly pension for widow/widower, child (max. 2 until 23 yeras old) or parent (max.1)
Permanent departure from Indonesia Full lump sum Full lump sum**

* The retirement age is set at 58 years old, and it will continue to increase by one year every three years until it reaches the maximum retirement age of 65 years.

***Although not stated in the regulation, expatriates should be able to claim both old age and pension benefits in lump sum upon permanent departure from Indonesia.

Other Benefits

An employer may provide additional benefits to an employee (e.g. pension plan managed by a private financial institution). Employers may also provide full supplemental coverage of health insurance for employee and family (spouse and up to three children). This can include items such as in-patient care, out-patient care, dental care, vision and maternity care .

Rules Regarding Visas and Foreign Workers in Indonesia

General Information

Foreign workers and expatriates must possess valid working visas, work passes and employment passes before starting work in Indonesia.

Note: Ministry of Manpower & Transmigration Decree, No. 228 of 2019 details the job positions prohibited to be held by foreign workers.

Types of Visa

Limited stay visas:

A foreign national must obtain a limited stay visa (‘Visa Tinggal Terbatas’ VITAS) in order to be eligible to work in Indonesia. This visa has a minimum validity period of one month and a maximum validity period of one year. 12 months VITAS can be renewed up to 5 (five) times.

The procedure for obtaining visa approval is the same as for obtaining approval of permits. Getting a VITAS usually takes about one month.

Application Process

Procedure for obtaining approval of a VITAS:

The employer must first apply for the visa through the Ministry of Manpower and Transmigration online system ( This will be done for the Ministry’s approval of its Expatriate Manpower Utilization Plan (RPTKA), which is the master document for processing individual work permits for foreign employees. The RPTKA contains information on the number, functions and employment periods of the foreign employee.

Processing an RPTKA approval takes about 7 working days upon receiving the complete set of documents.

After receiving the RPTKA, an employer must obtain a separate permit to employ an expatriate (IMTA) from the Minister of Manpower and Transmigration. The application for IMTA must be submitted through the Ministry of Manpower and Transmigration online system ( The IMTA is valid for one year.

In certain regions, foreign nationals who work in Indonesia must obtain a few other permits.

The employer must pay an annual contribution of US$1,200 to the Compensation Fund for the Utilization of Expatriate (‘Dana Kompensasi Penggunaan Tenaga Kerja Asing’ – DKP-TKA).

After the issuance of both the RPTKA and IMTA, the employer can submit a VITAS application to the Immigration Office. VITAS application will be automatically initiated after the DKP-TKA of USD 1,200 have been paid. The VITAS Government billing code will be sent to employer email. Since the E-Visa implementation, the foreign national can enter Indonesia directly without having to collect the visa at the Indonesian Embassy abroad.

The time frame for processing the required permits is about two to three months.

The limited stay permit will be sent automatically to the employer’s email in PDF format upon the foreign worker’s entry to Indonesia. Any changes in the passport address or immigration status must be submitted to the immigration office where the KITAS is registered.

Filings when foreign nationals start work:

There are no official filings that need to be made when foreign nationals start working in Indonesia, except for an extension of the work permit and stay permit and other related documents, as they are valid for 12 months.

Things to note:

  • DKP-TKA payment code is only valid for 5 calendar days after the invoice is issued.
  • The Biometric Process starts after the ITAS (Limited Stay Permit) application is submitted and the Immigration office will inform the schedule. If the foreign national has yet to arrive in Indonesia, the ITAS application can be processed before his/her arrival, and the foreign national shall do the Biometric Process at the respective airport.
  • After ITAS is issued, the foreign national needs to apply for STM (police report) & SKTT (residence certification). These two documents are needed when the company wants to extend an employee’s KITAS and to avoid any immigration checking.

Public Holidays Recognized by Indonesia in 2024

Occasion Date
1 New Year’s Day January 1
2 Isra Mi’raj February 8
3 Chinese New Year February 9 – 10
4 President Election Day February 14
5 Bali Hindu New Year March 11 – 12
6 Good Friday March 29
7 Easter Day March 31
8 Hari Raya Idul Fitri (Lebaran Holiday) April 8 – 15
9 Labour Day May 1
10 Ascension Day of Jesus Christ May 9 – 10
11 Vesak Day May 23 – 24
12 Pancasila Day June 1
13 Adul Adha and joint holidays June 17 – 18
14 Islamic New Year July 7
15 Independence Day August 17
16 Prophet Muhammad’s Birthday September 16
17 Christmas Holiday December 25 – 26

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