Countrypedia · Asia Pacific
Hiring in Indonesia
A practical guide to employing staff in Indonesia — contracts, working time, leave, termination, BPJS and employer costs for 2026.
Employment contracts
The Manpower Law as amended by the Job Creation Law and Government Regulation 35/2021 distinguish permanent (PKWTT) and fixed-term (PKWT) employment. Contracts must be in Bahasa Indonesia; bilingual versions are common, with Indonesian prevailing.
- Fixed-term (PKWT) contracts are only for temporary work and may last up to 5 years in total; at the end, the employer must pay compensation of 1 month’s salary per year of service.
- Probation: up to 3 months, only for permanent contracts.
- Foreign employees need an approved RPTKA (foreign manpower plan) and a work KITAS.
Working hours
| Normal hours | 40 hours a week (7 hours × 6 days or 8 hours × 5 days) |
|---|---|
| Overtime limit | 4 hours a day and 18 hours a week |
| Overtime pay | 1.5 times the hourly rate for the first hour, 2 times thereafter (higher on rest days) |
Minimum wage
Minimum wages are set each year by province (UMP) and often higher by city or regency (UMK). Examples for 2026:
| DKI Jakarta (UMP 2026) | IDR 5,729,876 per month |
|---|---|
| Other regions | Set by the provincial governor; industrial areas such as Bekasi and Karawang have higher UMKs |
Leave and holidays
| Annual leave | 12 working days after 12 months’ service |
|---|---|
| THR (religious holiday allowance) | 1 month’s salary after 12 months (pro rata after 1 month), paid at least 7 days before the employee’s main religious holiday |
| Sick leave | Paid on a sliding scale: 100% for the first 4 months, 75%, 50%, then 25% until termination is permitted |
| Maternity | 3 months on full pay; may be extended to 6 months in specific medical circumstances under Law 4/2024 |
| Paternity | 2 days, with further days possible under Law 4/2024 |
| Public holidays | Around 16 days plus government-designated collective leave days |
Termination and severance
Termination must follow the procedures in GR 35/2021: written notice with reasons at least 14 working days in advance, and bipartite negotiation if the employee disputes it, followed by mediation and the Industrial Relations Court if needed.
| Severance pay | Up to 9 months’ salary, depending on years of service |
|---|---|
| Long-service pay | Up to 10 months’ salary for 24+ years of service |
| Compensation of rights | Unused leave, travel costs back to the place of hire and other entitlements |
| Multipliers | Amounts are adjusted (from 0.5 to 2 times) depending on the reason for termination |
Payroll and employer costs
Income tax (PPh 21) is withheld monthly using effective rate (TER) tables and reconciled in December. Taxes are paid by the 15th and reported by the 20th of the following month.
| BPJS Kesehatan (health) | 4% employer + 1% employee (salary cap IDR 12 million) |
|---|---|
| JHT (old-age savings) | 3.7% employer + 2% employee |
| JP (pension) | 2% employer + 1% employee, up to an annually adjusted wage cap |
| JKK (work accident) | 0.24% – 1.74% by risk level (employer) |
| JKM (death) | 0.3% (employer) |
Annual income tax rates
| Up to IDR 60 million | 5% |
|---|---|
| IDR 60 – 250 million | 15% |
| IDR 250 – 500 million | 25% |
| IDR 500 million – 5 billion | 30% |
| Above IDR 5 billion | 35% |
Benefits and practice
- THR is mandatory; an additional 13th-month bonus is common but contractual.
- Private health insurance on top of BPJS is standard for professional roles.
- Transport and meal allowances are common fixed allowances and count towards the wage base when fixed.
Hire in Indonesia with Truerix
Truerix employs your Indonesian staff compliantly — bilingual contracts, BPJS registration, PPh 21 withholding, THR and work permits (RPTKA / KITAS) handled for you.
Sources: IDN Financials – Jakarta 2026 minimum wage · RSM Indonesia – Employment updates · BPJS Ketenagakerjaan · Directorate General of Taxes – PPh 21