Employee portal for new or existing personnel.
Employment Guideline in Indonesia
Working Contract Types
Kontrak Kerja Waktu Tertentu (PKWT)
Fixed-Term Employment Agreement
This is a contract that has a specified time limit. It is usually used for temporary work, specific projects, or seasonal work. A probationary period does not exist in this contract.
Kontrak Kerja Waktu Tidak Tertentu (PKWTT)
Indefinite-Term Employment Agreement
A contract without a specified time limit. This means the worker is employed for an indefinite period, and the employment relationship ends only for specific reasons in accordance with labor laws.
Perjanjian Kerja Harian Lepas (PKHL)
Freelance Work
This contract is usually for daily or short projects. Payment is based on the number of days worked without full social security, such as BPJS Ketenagakerjaan and BPJS Kesehatan (social security insurance).
Kontrak Outsourcing
A company can hire another company that provides outsourcing services to help their work in Indonesia. The contract refers to PKWT or PKWTT depending on the agreement.
Salary and Tax
Minimum Wage in Indonesia
- Jakarta: IDR 5,067,381
- Surabaya: Rp5.343.430
- Denpasar (Bali): IDR 3,096,823
- Medan: IDR 3,769,082
- Bandung: IDR 4,209,309
Minimum wage varies according to each province and city. Minimum wage is reviewed annually and released before year end.
Individual Tax
| 5 Persen | |
|---|---|
| Penghasilan Pertahun (Aturan Baru) | Rp60 juta |
| 15 Persen | |
|---|---|
| Penghasilan Pertahun (Aturan Baru) | Rp60 – Rp250 juta |
| 25 Persen | |
|---|---|
| Penghasilan Pertahun (Aturan Baru) | Rp250 – 500 juta |
| 30 Persen | |
|---|---|
| Penghasilan Pertahun (Aturan Baru) | Rp500 juta – Rp5 miliar |
| 35 Persen | |
|---|---|
| Penghasilan Pertahun (Aturan Baru) | > Rp5 miliar |
Payroll Cost and Allowance
Below are mandatory payroll costs applicable for employees in Indonesia:
| Component | Description |
|---|---|
| Basic Salary (Gross) | Salaries inclusive of income tax (PPh21) |
| BPJS Kejehatan |
|
| BPJS Ketenagakerjaan |
|
| THR / Religious Festival Allowance |
|
| End of Contract Compensation | Define contact employees who have been working for 12 months continuously have the right to compensation money of 1 months salary. Employees who have a working period of more than 1 month but less than 12 months get proportional or proveraged compensation of less than 1 month’s salary. |
Note: For better understanding and specific cost, please contact us.
Working time and Overtime Rules
According to the regulations, overtime is allowed maximum 4 hours a day and 18 hours a week.
Working week is from Monday to Friday. The standard working hours are 8 hours a day for 5 days, and 7 hours a day for 6 days, with 40 hours total per week. The standard work week is from Monday to Friday.
Overtime payment is calculated according to how many hours the employee works.
- For the first hour of overtime work at 1.5 times the hourly rate; and
- For each subsequent hour of overtime work, at 2 times the hourly rate.
For overtime on the weekend or official holidays:
For 6-day workweek and 40 hours a week:
- The first hour up to the seventh hour, paid at 2 times the hourly rate;
- Eighth hour, paid at 3 times the hourly rate; and
- Ninth hour, tenth hour, and eleventh hour, 4 times the hourly rate;
For a 5-day workweek and 40-hour week:
- The first hour up to the eighth hour, 2 times the hourly rate;
- Ninth hour, three times the hourly rate; and
- Tenth hour, eleventh hour, and twelfth hour, 4 times the hourly rate.
Note: For better understanding and specific cost, please contact us.
Leave Policies
Maternity Leave
Duration of maternity leave:
- Female employees are entitled to at least 3 months leave after childbirth and able to extend another 3 months where there are medically certified special conditions (eg. childbirth complications).
- Employees also entitled 1.5 months leave due to miscarriage.
Wages during maternity leave:
- Employees are entitled to receive full pay for the first four months, and 75% of base salary for the fifth and sixth months.
- Employees are also entitled to receive full pay due to miscarriage.
Paternity Leave
Duration of paternity leave:
Fathers/husbands are entitled to two days leave for live birth (may be extended by another three days or by agreement) or miscarriage.
Wages during paternity leave:
While the new regulation does not specify payment during paternity leave as the leave is not expressly stated to be unpaid, employers should consider the entirety of the paternity leave (including any extension) to be paid leave.
Sick Leave
Employers are prohibited from terminating the employment on the reason that a laborer is absent from work due to sickness according to a doctor’s statement for a period not exceeding 12 months continuously.
If employees are on leave due to illness based on a doctor’s statement, then they are entitled to receive their salary.
Wages paid to sick workers/laborers are as follows:
| Period | Pay (% of base salary) |
|---|---|
| First 4 months | 100% |
| 4-8 months | 75% |
| 8-12 months | 50% |
| 12-13 months | 25% before the employer terminates the employment contract |
Termination
Termination by the employee requires a 30 days minimum notice period or as per each company’s policy
In Indonesia there is no minimum notice period by the employer. However, it is usually in this period:
- For employee in probationary period: 7 days
- For permanent employee: 30 days
Termination Requirements
There are various reasons of termination in Indonesia:
Voluntarily by the employee:
- By mutual agreement
- Death of worker
- Completion of assignment
- By expiration of the contract
By the employer:
- Probationary period
- Objective grounds
- Disciplinary dismissal
- Low performance due to unsuitability for the job
- Company merger or acquisition
- Bankruptcy
- Inability to work due to medical conditions/illness
Severance
Employers are prohibited from terminating the employment on the reason that a laborer is absent from work due to sickness according to a doctor’s statement for a period not exceeding 12 months continuously.
If employees are on leave due to illness based on a doctor’s statement, then they are entitled to receive their salary.
Wages paid to sick workers/laborers are as follows:
| Length of employment | Pay (% of base salary) |
|---|---|
| Less than 1 year | 1 month wage |
| Between 1 to 2 years | 2 month wage |
| Between 2 to 3 years | 3 month wage |
| Between 3 to 4 years | 4 month wage |
| Between 4 to 5 years | 5 months wage |
| Between 5 to 6 years | 6 months wage |
| Between 6 to 7 years | 7 months wage |
| Between 7 to 8 years | 8 month wage |
| Above 8 years | 9 month wage |