Hiring in Indonesia

Indonesia’s vast workforce and rapid growth offer potential, but its labor laws can challenge employers. Omnipresent, as your Employer of Record (EOR), ensures compliance with BPJS regulations, no entity required.

Our EOR services manage payroll, benefits like the THR bonus, and taxes, letting you lead teams in Jakarta or Bali with ease. We deliver a tech-driven solution for Indonesia’s dynamic landscape.

• Quick setup for hiring.
• Payroll in IDR, fully compliant.
• Local market wage guidance.
• Hassle-free scaling support.

Employer costs include Health, Pension, and Life/Death Insurance. Use the OmniCalculator to estimate costs or contact us for further information.

The rate of personal taxation varies depending on the income tax bracket the individual belongs to. This ranges between 5% - 30%.

Employee contributions include Old Age, Pension, and Health Insurance.

Typical working hours in Indonesia are 7 hours a day, with 40 hours a week limit in a 6-day week or 8 hours a day, 40 hours a week in a 5-day week. In Indonesia, overtime must be agreed with the employee. The maximum overtime is 3 hours per day and 14 hours per week. Payment rate and other specifics on overtime are provided in the employment agreement. 

Employees are entitled to paid sick leave provided they show a medical certificate. Sick leave is paid at 100% of salary received during the first 4 months of sickness and pay percentages decrease thereafter. If the illness lasts longer than 12 months, the employer is entitled to terminate the employment with severance payment. 

Maternity Leave:

From 2024 working mothers are entitled to three months of maternity leave after childbirth and six months if they have a certificate from their doctor stating that their newborn faces health issues. The first four months will be fully paid, while the fifth and sixth months will be paid at 75 percent of their full salary.

The previous allowance under the Labor Law was three months of leave, equally divided before and after childbirth.

Employees who experience a miscarriage are still entitled to 1.5 months of extra leave. This can be extended if supported by a certificate from a doctor.

The law will also allow mothers who are breastfeeding to negotiate their working hours with their employer, hoping to create a more flexible working environment.

Paternity Leave:

Male employees are entitled to two days of paternity leave which can be extended by a further three days. Male employees are also entitled to two days of leave in the event of a miscarriage.

Employees in Indonesia are entitled to a minimum of 12 working days of paid annual leave per year after one year of uninterrupted employment.

Unused vacation days expire six months after the date they were supposed to be taken. Employees and employers may agree upon compensation for unused vacation  days.

Muslim employees may take special leave to fulfil religious duties.

Employees are entitled to severance payment, as listed below, when they are terminated.

• Standard severance pay is one months’ salary for every year of service, up to 9 months salary.

• Service appreciation pay is 2 months salary for the first 3 years of service, followed by an additional month of salary for every 3 years of service thereafter, up to a maximum of 10 months salary for 24 years of service.

Employees who resigns voluntarily and/ found guilty of serious misconduct are generally not entitled to severance pay.

If the termination is without cause or there is termination on retirement, the employee is entitled to 2 times the severance pay amount plus the standard service appreciation pay.

Termination requires approval from the Industrial Relations Court (IRC) and requires a cause, unless agreed to a mutual termination with the employee. This agreement should be registered with the IRC to be valid.

An employee can declare their rejection of the termination by submitting a written rejection no later than 7 working days after receiving the notice.