Payroll and Benefits Guide - Indonesia

Indonesia
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Currency

Indonesian Rupiah
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Capital

Jakarta
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Employer Taxes

10.24%-11.74%
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Date Format

dd/mm/yyyy
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Fiscal Year

1 Jan – 31 Dec

Fun Facts

With an estimated 300,000 animal species, Indonesia has the second-highest number in the world, behind Brazil.

There are nine UNESCO World Heritage Sites in the nation, including the Sumatran Tropical Rainforest Heritage.

Around 25% of the world’s fish species are found in Indonesia, which has one of the longest coastlines in the world.

With around 18,110 islands, Indonesia is the world’s biggest archipelago.

It ranks fourth in terms of population in the globe, only behind China, India, and the US.

They are known for the Kopi Luwak, or civet coffee.

Indonesia

Contributions

Employee Payroll Tax

Contribution TypeRate
Old Age2.00%
Pension1.00%
Health Insurance1.00%

Employer Payroll Tax

Contribution TypeRate
Health Insurance4.00%
Old Age3.70%
Pension2.00%
Work Accident0.24% – 1.74%
Death0.30%

Payroll

Payroll Cycle

In Indonesia, wages are typically paid once per month on the last working day as specified in the employment contracts.

13th Salary

In Indonesia, there is a required religious holiday bonus known as Tunjangan Hari Raya (THR), which is an additional one-month wage payment paid before the longest religious holiday (Christmas for people of other faiths and Hari Raya Idul Fitri for Muslims). THR must pay a base salary and a set monthly stipend, but not additional compensation like bonuses. For workers who haven’t put in a full year of service, THR is prorated.

Work Hours and Week

In Indonesia, a work week could either have five eight-hour days or six seven-hour days.

These working hours regulations, which are typically governed by a ministerial decree, do not apply to all firms.

On working days, an employer must set aside a rest period of at least 30 minutes for each employee after they have put in no more than four hours straight of labor.

Overtime

The employment contract and collective agreements decide overtime pay. There can be a maximum of four overtime hours per day and eighteen per week. Weekday overtime is compensated at 150.00% of the standard hourly rate for the first overtime hour, and at 200.00% for each additional hour.

Otherwise, overtime pay is then determined according to the manners described below.

In the case of employees who have a designated weekly rest day or any other public holiday also work overtime:

  • For the first seven hours, they earn at a rate of 200.00% their usual pay.
  • For the eighth hour, they earn at a rate of 300.00% their usual pay.
  • For the ninth and tenth hours, they earn at a rate of 400.00% their usual pay.

In the case of employees who work overtime during a six-day work week but on a weekly rest day:

  • For the first five hours, they earn at a rate of 200.00% their usual pay.
  • For the sixth hour, they earn at a rate of 300.00% their usual pay.
  • For the seventh and eighth hours, they earn at a rate of 400.00% their usual pay.

In the case of employees who work overtime during a six-day work week but on a weekly rest day or a public holiday:

  • For the first eight hours, they earn at a rate of 200.00% their usual pay.
  • For the ninth hour, they earn at a rate of 300.00% their usual pay.
  • For the tenth and eleventh hours, they earn at a rate of 400.00% their usual pay.

Indonesia

Leave

Paid Time Off

After working a full year, Indonesian employers are required to give their employees at least 12 days of paid annual leave each year. Employees who have worked for the same employer for six years in a row are eligible for one month of leave each in their seventh and eighth year of service.

Public Holidays

There are 21 public holidays in Indonesia.

Sick Days

Employees who are unwell or wounded are entitled to paid sick leave as long as they can submit a doctor’s note attesting to their condition.

Long-term sick leave that lasts for a longer period of time is also an option for employees. Such leave should be recommended by a doctor in writing.

Employees on extended sick leave receive the following compensation in such rates:

  • For the first four months, 100.00%
  • For the fourth to eighth months, 75.00%
  • For the eighth to twelfth months, 50.00%
  • For the first year onwards, 50.00%

Maternity Leave

Prior to the anticipated due date, employees are entitled to three months of fully compensated maternity leave, as well as 1.5 months of leave once the baby is born at the full rate of their usual wage.

For their first two children, eligible expecting mothers are entitled to 100% of their regular income rate for 26 weeks; this benefit is reduced to 12 weeks for any further children. In the six weeks immediately following the day of delivery or a miscarriage, a woman is not permitted to work.

The employee must have worked for the employer for at least 80 days in the 12 months prior to the anticipated due date in order to be eligible.

A woman who lawfully adopts a child under three months of age or a commissioning mother (a biological mother who uses her egg to develop an embryo that is implanted in another woman) is eligible to maternity benefits for a period of 12 weeks starting on the day the baby is given to them.

Paternity Leave

In the case of the birth of a child or a miscarriage, employees are given two days of leave.

Parental Leave

Employees who are parents are given two days of paid leave in the events of either baptism, circumcision, marriage, or death of a child.

Other Leave(s)

In the case of a death in an employee’s family, they are given one to two days of paid leave.

Termination

Termination Process

A fixed-term contract may be terminated by the employer for any of the following reasons: business, personal, or employee misconduct. It necessitates notice and a justification for the termination in writing. If misconduct was the root of the problem, the employee must be warned and given the opportunity to defend their actions. In the event of a wrongful termination, an employee has the right to sue an employer in court; the company must then provide proof that the termination was justifiable. The employee may be entitled to compensation or to bre reinstated in their job if the employer doesn’t show proof of a legal dismissal.

Notice Period

Although employers may stipulate lengthier notice terms in the employment contract, notice periods are typically 30 days.

Severance Pay

If applicable, severance pay is required and is based on the employee’s length of service. Less than a year of service will guarantee a severance pay of a month’s salary and will increase a month per year of service rendered until it caps at nine months worth of pay.

Probation Period

Probation Period

For permanent employees, probationary period is typically three months.

Immigration

An individual work permit (IMTA) was once required for a foreign employee to enter Indonesia for employment. An announcement from the Ministry of Manpower has taken its place. An employee or company may apply for an Indonesian visa after receiving a notification. A Visa Telex (visa index 312) will be given to foreigners, enabling them to travel and work in Indonesia.

A foreigner may apply for either the Izin Tinggal Terbatas or Electronic ITAS (e-ITAS) visa or the Kartu Izin Tinggal Tetap (KITAP) whichever is applicable.

VAT

The commonly used VAT rate in Indonesia is 11.00%.