Indonesia
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Introduction
General Overview & Economic Facts
- Indonesia is an island located in Southeast Asia and Oceania.
- Indonesia is known for its diverse culture, breathtaking landscapes and deep history.
- Indonesia is the largest archipelagic country in the world consisting of over 17,000 islands.
Why Employ In Indonesia?
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- Top industries: Fintech, petrochemical, infrustructure and agriculture.
- As of September 2023 there are 277 million people in Indonesia. 26% of the popluation is younger than 14 and 68% of the population is between 15 and 64 years old. Indonesia has a relatively young & energegtic popluation compared to other Western nations.
Overview Of The Labour Law
- Labor law in Indonesia is mainly governed by Law No. 2 of 2022 on Job Creation (Regulation) and Government Regulation 35/2021 .
- The regulations govern the terms and conditions of employment such as working hours, holidays, rest periods, wages, overtime, leave, and termination of employment.
- The government of Indonesia operates under a unitary presidential constitutional republic system.
- Indonesian employment law is generally considered to be pro-employee.
Fun Country Facts
- Indonesia is home to over 100 endangered animals, including the Sumatran Tiger, Sumatran Rhinoceros, the Komodo Dragon, Orang-utans, and the Tarsius Tarsier.
- Indonesia has 100 active volcanoes, more than any other country in the world.
- Indonesia has only two seasons: the wet season and the dry season.
Why Use Playroll Services For Indonesia?
- Employing in Indonesia requires companies to have their own legal entity in the country as well as to manage payroll, employee benefits, taxes and legal compliance. This can get quite complicated, especially with the complexity of employment laws in Indonesia.
- With Playroll’s Employer of Record services, your team will be employed by our established legal entities in each country.
- We will take care of payroll, employee benefits, taxes, legal compliance and provide ongoing employee support, so that you can focus on growing your team.
Employer Contributions
These are additional costs incurred by employers over and above the employee’s monthly gross salary and/or bonus.
Social Security
Occupational Accident Benefit (JKK)
0.24% – 1.74% Depending on the company’s industry.
Death Benefits (JKM)
0.3%
Old-Age Security (JHT)
3.7%
Pension Contribution (JP)
11% on a maximum monthly salary of IDR 9 077 599
Health Care Benefits (BPJS Kesehatan)
4% on a maximum monthly salary of IDR 12 000 000
VAT
11.00%
ASTAKE Insurance
Applicable to employees on a work visa 6 months or less
IDR 762 000 – IDR 2 477 000 per annum
Employee Contributions
These are costs incurred by employees that reduce their monthly gross salary and/or bonus to determine their net “take home” pay.
Social Security
Applicable to local employees & employees working in Indonesia for more than 6 months
Old-Age Security (JHT)
2%
Pension Contribution (JP)
1% on a maximum monthly salary of IDR 9 077 599
Health care benefits (BPJS Kesehatan)
1% on a maximum monthly salary of IDR 12 000 000
Income Tax
Income tax is ‘Pay As You Earn’
Income bracket per annum
0 – 60 000 000
5.00%
60 000 000 – 250 000 000
15.00%
250 000 001 – 500 000 000
25.00%
500 000 001 – 5 000 000 000
30.00%
5 000 000 000 – above
35.00%
Non Resident Income Tax
20.00%
Employment Terms
General
Minimum Wage
- IDR 4 901 798
- Minimum wage varies by province & sector.
Working Hours
- 8 hours per day, 40 hours per week.
Overtime
- Maximum of 3 hours per day and 14 hours per week.
Notice Period
- Employer initiating termination: 14 days.
- Employee initiating termination: 30 days.
Severance Pay
- 1 months salary for every year of service, not exceeding 9 years.
Probation Period
Optional
- Indefinite term contracts: 3 months.
- Definite term contracts: prohibited.
Bonus
- Referred to as Tunjangan Hari Raya (THR) 1 months’ salary.
Public Holidays
- New Year’s Day – January 1
- Chinese New Year – January 22
- Ascension of the Prophet Muhammad (Isra Mi’raj) – February 18
- Hindu New Year – March 22
- Good Friday – April 7 Eid Al-Fitr – April 22 and April 23
- International Labor Day – May 1
- Ascension of Jesus Christ – May 18
- Pancasila Day – June 1 Waisak (Vesak) – June 4
- Idul Adha – June 29 and June 30
- Independence Day – August 17
- Islamic New Year – September 19
- Prophet Muhammad’s Birthday – September 8
- Christmas Day – December 25
- Boxing Day – December 26
Leave
Paid Leave / Vacation Days
- 12 days paid leave paid by employer.
Sick Leave
Can extend for longer than 1 year.
- First four months: 100% of the wages.
- Second four months: 75% of the wages.
- Third four months: 50% of the wages.
- Subsequent months: 25% of the wages until the employment is terminated.
- Paid by employer.
Maternity Leave
- 3 months paid leave paid by employer.
Paternity Leave
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2 days paid leave paid by employer.
Parental Leave
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2 days paid leave paid by employer.