PEO/Employer Of record in Indonesia

Hire staff in Indonesia while we manage all employment and HR operations. No local company needed! 

PEO/Employer of Record in Indonesia - Hire Employees Compliantly

We are a Professional Employer Organization (PEO) that provides Employer of Record services in Indonesia, also known as “employment solutions” or “PEO solutions”.

Many companies opt to outsource their employment to minimize costs and legal risk when expanding their business operations in Indonesia.

We can help foreign companies navigate through Indonesian employment laws and requirements, saving you time so you can focus on core business activities.

While all employment, HR, administrative and legal matters are outsourced to us, you are able to have a physical presence in Indonesia without the need to set-up a legal entity.

Entity Not Required

Foreign clients do not need to register a legal entity in Indonesia when using PEO services.

100% compliant

We strictly follow official compliance guidelines to ensure a safe legal environment for all clients.

Fast Market Entry

We will help you to hire and onboard employees within one week.

Complete PEO package for efficient and compliant employment

On-board staff in Indonesia without any risks

Employment and payroll regulations in Indonesia

Table of Contents

Employment in Indonesia is regulated mainly by one comprehensive law – Law No. 13 of 2003 on Manpower, also known as the Labour Law.

Employment contracts

Employees can be hired either on one of two types of a contract under Labour Law. Both of these carry similar treatment and rights for employees.

  • Definite term employees 
  • Indefinite term employees

Contracts must be written in the Indonesian language using the Latin alphabet. They must include:

  • Employee details
  • Position, type of work, place of work, salary
  • Starting date and contract period.

Working Hours

Full-time work is defined as seven hours per day, 40 hours per week, and six days per week. Many employees though work eight hours per day for five days, and this can be agreed with employees.

Indonesian law does not recognize part-time work, and such employees would receive the same treatment and benefits as full-time employees.

Annual Leave

Employees are entitled to a maximum of 12 vacation days per year.

Sick Leave

Employees are entitled to generous paid sick leave. This is paid by the employer and cannot be in any part recovered from the government.

Sick leave is fully paid for up to four months.

Maternity And Family Leave

Maternity leave for mothers is three months, on full salary. This should be taken half before birth and half after birth.

Limited paternity leave is also offered.

Public Holidays

Employees do not have to work on defined public holidays. If required, the Labour Law states that the overtime rate should be paid.

Probationary Period

There is no allowance under the Labour Law for a probationary period.

Termination and Severance Pay

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.

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.

Social security

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.

Individual income tax

All employees, both local and foreign, pay the same income tax in Indonesia. This should be deducted by the employer, with further information or taxation handled by additional self-assessment by the employee.

Taxation is on a progressive scale, with higher income bands subject to higher tax rates.

Minimum Wage

There is no national minimum wage in Indonesia. Instead, each of the 33 provinces set its own minimum wage.

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