Hire in indonesia
indonesia PEO &
Employer of Record
Hire & manage teams remotely in indonesia without a local entity. We handle HR compliance, payroll & taxes so you can focus on your business.
Hire Employees in indonesia
The NNRoad Advantage ☺
Pay as you go
Global account manager
Employer of Record in indonesia
Compliance & Payroll
Recruiting process outsourcing – including but not limited to resume screening, shortlisting candidates, coordination for interviews, and assistance for salary negotiation.
Hiring and termination of employees/local labor contracts (contract administration – engagement, extension termination and conversion to permanent hire).
On-boarding and off-boarding employees following labor law practice.
Complete payroll solution and benefit administration
Employee management – employee record retaining, time keeping, bonus and allowance management, expense and claims, and leave employee database management accordingly to the local law.
Mandatory insurance compliance (i.e. pension, labor and health insurance) according to the local labor laws.
Payment management (Invoicing customers/clients and vendor payments).
Work VISA application assistance, if needed.
Local individual income tax reporting.
Payroll & PEO in indonesia
Compliance & Payroll
Registering the necessary company and personnel information for payroll calculation in the payroll software and system
Monthly Payroll Processing
Year-End Adjustment and Annual Declaration
Taxes & Payroll in indonesia
Employee Income Taxes:
Incomes at or bellow 5000 MYR per year are not taxed. In Indonesia, income tax is imposed on both individuals and companies, with different tax rates applied to each. For individuals, tax rates range from 0% to 30% depending on their taxable income. Taxpayers are required to file their annual tax returns and pay their taxes by the end of March of each year. Failure to file tax returns and pay taxes on time may result in penalties and interest charges.
15.00%: 50M – 250M IDR
25.00%: 250M – 500M IDR
30.00%: >500M IDR
30% * 200M = 60M
25% * 250M = 62.5M
15% * 200M = 30M
5% * 50M = 2.5M
60M+62.5M+30M+2.5M = 155M
Yearly income tax = 155M IDR
Employer Costs in indonesia
Employer costs in Indonesia can include various expenses related to hiring and employing workers, such as salaries and benefits, tax obligations, insurance premiums, and more. Some of the most significant costs for employers in Indonesia include contributions to the National Health Insurance (JKN) and the Social Security Administrator (BPJS) on behalf of their employees, as well as work accident insurance premiums through Jamsostek.
Employers are also responsible for paying taxes on behalf of their employees, including income tax and value-added tax. Additionally, employers may be required to provide additional benefits, such as housing allowances, transportation allowances, and bonuses. The costs of employing workers in Indonesia can vary depending on the type of business, the size of the company, and the location of the business. It is important for employers to understand and budget for these costs to ensure the financial stability of their business.
Labor costs: This refers to the wages and salaries that employers must pay to their employees.
Benefits: This includes employee benefits such as health insurance, retirement benefits, and paid time off.
Taxes: Employers are required to pay various taxes on behalf of their employees, such as income tax, social security contributions, and others.
0.24% – 1.74% – Work Accident
3.7% – Old Age
.3% – Death
2% – Pension
4% – Health Insurance
2% – Old Age
1% – Pension
1% – Health Insurance
Benefits & Insurance in indonesia
In Indonesia, some of the most common and mandatory benefits and insurance include the National Health Insurance (JKN), the Social Security Administrator (BPJS), and the Work Accident Insurance (Jamsostek). The JKN covers health insurance for all Indonesian citizens and covers medical expenses incurred in government and private hospitals.
The BPJS is a social security program that provides insurance coverage for retirement, death, and disability. Jamsostek is an insurance program that provides protection to workers in case of work-related accidents, illnesses, and death. Employers are required to contribute to these programs on behalf of their employees, and employees are also eligible to make additional contributions to increase their coverage. These benefits and insurance programs play an important role in ensuring the well-being and financial security of the Indonesian population.
There are two main mandatory social security related to deductions in Indonesia:
Health-related social security, or BPJS Kesehatan. (BJPS stands for badan penyelenggara jaminan sosial) This gives employees, and their families, access to the state health system and hospital care.
Workers social security, or BPJS Ketenagakerjaan. This provides cover includes work accidents, old-age pension, and death cover.
The total contribution for heath related social security is 5% of the employee’s monthly salary. This is split between employer and employee.
The total employee contribution to workers’ social security is 3% of the employee’s monthly salary.
Working Hours in indonesia
Working Hours Per Week
In Indonesia, the maximum legal working hours per week is 48 hours, with a maximum of 8 hours per day. However, the government has allowed certain sectors to exceed this limit by up to 60 hours per week in certain circumstances. The typical working hours in Indonesia are Monday to Friday, from 8:00 AM to 5:00 PM, with a one-hour lunch break.
The Indonesian Labor Law also requires employers to provide at least one day off per week, which is typically Sunday. In addition, workers are entitled to annual leave and public holidays, with the number of days off varying depending on the worker’s length of service. It is important for employers to ensure compliance with the Indonesian Labor Law in order to avoid legal penalties and to maintain good relations with their employees.
According to Indonesian labor regulations, employees are entitled to receive additional compensation for overtime work, typically at a higher rate than regular wages. The maximum limit for overtime hours is set at 3 hours per day and 14 hours per week, with a maximum of 168 hours per year. Employers are required to obtain the consent of their employees before assigning overtime work and ensure that it does not exceed the legal limits.
Part Time Work
Indonesian law does not recognize part-time work, and such employees would receive the same treatment and benefits as full-time employees.
Termination Laws in indonesia
In Indonesia, termination of employment can occur due to mutual agreement between the employer and employee, termination by the employer for cause, or termination by the employee. In cases of termination by the employer for cause, the employer must provide written notice and a valid reason for termination.
In cases of termination by mutual agreement, the employer and employee must agree on the terms and conditions of termination. In both cases, the employer is responsible for providing severance pay to the employee, which is calculated based on the length of service.
Severance pay must be given to dismissed employees.
There are two types of severance pay:
Standard severance pay – One month’s salary per year of service, up to 9 months in total.
Appreciation pay – 2 months salary for the first 3 years of employment, plus 1-month salary every three years after. Up to a maximum of 10 months salary.
Labor law in Indonesia does not define a notice period for employers to terminate a contract. In practice, though, many employers will offer a 30 day notice period to terminate a contract.
Employment Contract in indonesia
Employees can be hired either on one of two types of a contract under Labor Law. Both of these carry similar treatment and rights for employees.
Definite term employees
Indefinite term employees
In Indonesia, labor contracts are agreements between an employer and employee that outline the terms and conditions of employment. The contracts must be in writing and include provisions such as the type of work to be performed, the length of the contract, and the compensation to be paid.
The contract must include:
Position, type of work, place of work, salary
Starting date and contract period.
Indonesian law sets minimum standards for wages and working conditions, and labor contracts must comply with these standards. Both parties have the right to terminate the contract, but there are specific requirements and procedures that must be followed. Labor contracts play a crucial role in protecting the rights of workers and ensuring fair and equitable treatment in the workplace.
There is no allowance under Indonesian Labor Law for a probationary period.
Types of Leaves in indonesia
Indonesian workers are entitled to a minimum of 12 days of paid annual leave per year after 1 year of employment.
Unused vacation days expire 6 months after the date they were supposed to be taken. Employees and employers may agree upon compensation for unused vacation days.
Employees are entitled to paid sick leave at 100% of normal salary for up to 4 months provided they show a medical certificate. The sick leave salary pay percentage decreases after 4 months. If the employee is sick for longer than 12 months, the employer has the right to terminate the employment with severance payment.
Maternity leave for mothers is 3 months, on full salary. This should be taken half before birth and half after birth.
Male employees are entitled to 2 days paid leave after birth or after a miscarriage.
Public Holidays in indonesia
In Indonesia, the government recognizes 17 national holidays, known as “cuti bersama.” These holidays are determined by the Indonesian Ministry of Manpower and Transmigration and are observed by most businesses and organizations. Some regions may also have their own local holidays, but these are not recognized as national holidays.
The laws regarding public holidays in Indonesia require employers to provide their employees with a day off on these days, with the exception of certain industries, such as hospitals and transportation, where employees may be required to work on holidays. Employees who are required to work on holidays are entitled to receive additional compensation, such as overtime pay.