You can hire employees in Indonesia without the need for an entity.
Typically, to hire employees in Indonesia, your business must have an entity, which involves establishing a local office, registering an address as a subsidiary, and opening an account with a local bank. Managing regional benefits, payroll, tax, and HR laws throughout this process can take several months.
Indonesia has separate regulations for contractors compared to full-time employees, making it crucial to avoid misclassification to avoid potential penalties. ATA streamlines the process of hiring employees in Indonesia, ensuring speed, simplicity, and compliance. Additionally, our platform automates tasks such as tax document collection, payroll, benefits, and more.
Our quickstart guide to hiring in Indonesia
Navigate the tabs below to learn everything you need to know about hiring an employee in Indonesia
- Minimum Wage Requirements
- As minimum wages in Indonesia are set at the provincial level, thus different wages were applied in the 30 provinces across the country.
- Individual Income Tax
- The range of individual income tax varies from 5% to 35% and is calculated using progressive rates.
|Type of leave||Time period|
|Annual leave/Earned Leave||12 days|
|Sick Leave||0 days|
|Maternity Leave||12 weeks|
To terminate employees, an employer must either file a lawsuit and obtain approval from the Industrial Relations Court (IRC) or register a Mutual Termination Agreement with the IRC. According to the Labor Law, employers are not allowed to dismiss employees who get married, are absent due to illness for less than 12 consecutive months, or hold a position in a trade union.
Employees who are on probation are entitled to a notice period of up to 30 days. In contrast, employees who have completed their probationary period are entitled to a notice period of up to 3 months.
Employers may be required to pay standard severance, long service pay, compensation pay, and/or separation pay depending on the reasons for terminating an employee’s employment.
In Indonesia, employees are entitled to various statutory benefits including social security contributions (also referred to as BPJS ketenagakerjaan), statutory leaves, 13th-month pay (also known as Tunjangan Hari Raya or THR) which should be paid one week before the religious holiday and ideally paid during Idul Fitri for Muslim employees and in December for non-Muslim employees, as well as mandatory contributions towards insurance through the Social Security Management Board (also known as BPJS).
After the client signs the SOW, the onboarding process typically requires two-three business days.
- Employee contract
- Employment contracts in Indonesia are written in the Indonesian language using Latin alphabets. While dual-language contracts may be prepared, the Indonesian language version must be included.
- Probation period
- The maximum probation period in Indonesia is 3 months.
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