Indonesia offers Southeast Asia's largest workforce and a fast-growing digital economy, with a mandatory religious holiday bonus. All-in employer cost runs around 1.11x the gross salary, before severance. Here is what to know before your first Indonesian hire.
Employment runs under the Manpower Law as amended by the Omnibus Law, with mandatory enrolment in the BPJS employment and health schemes and a statutory religious holiday allowance (THR) of one month's pay.
Minimum wages are set by province and regency and revised annually*, so the applicable rate depends on the location.
Monthly payroll, plus a mandatory religious holiday allowance (THR) equal to one month's pay for eligible staff.
Around 16 public-holiday days a year, including national and religious dates plus collective-leave days.
Written contracts are standard. Probation is allowed only for permanent contracts and capped at three months.
Employer BPJS contributions add roughly 10-11% on top of salary across the employment and health schemes, with severance obligations layered on top.
Pension and health contributions apply up to monthly wage ceilings, so the effective percentage falls for higher salaries.
Employees pay income tax (PPh 21) on a progressive scale plus their BPJS share, withheld at source. Withholding is the employer's responsibility, which under EOR means ours.
Twelve paid days a year after twelve months of continuous service.
Three months of maternity leave (before and after birth), paid by the employer.
Paid on a declining scale over an extended illness, with job protection under the Manpower Law.
Paid leave is provided for marriage, family events, and religious duties under the law.
Termination follows the Omnibus Law procedure, and disputes go through bipartite talks and the industrial-relations court.
Severance combines severance pay, service-appreciation pay, and compensation, scaled by tenure and the reason for termination*.
Allowed only for permanent contracts and limited to three months.
Fixed-term (PKWT) and outsourcing arrangements are regulated; misuse can convert a worker into a permanent employee with full entitlements.
*All figures are estimates from public sources (2025-26), pending ops verification - same basis as the EOR cost calculator. Not tax or legal advice.
Compliant Indonesian employment contract, payroll, BPJS, and the THR, handled. One invoice, flat $499 per month.