Payroll and Benefits Guide Indonesia

Last updated: Feb 28, 2022

Indonesian Rupiah (IDR)
Employer Taxes
10.24% - 11.74%
Payroll Frequency
Employee Costs
Date Format
Fiscal Year
1 January- 31 December



Employer Payroll Contributions

10.24% – 11.74% Total Employment Cost
0.24% – 1.74% Work Accident
3.70% Old Age
0.30% Death
2.00% Pension
4.00% Health Insurance (maximum of 480,000 IDR)


Employee Payroll Contributions

4.00% Total Employee Cost
2.00% Old Age
1.00% Pension
1.00% Health Insurance (maximum of 120,000 IDR)


Employee Income Tax

5.00% Up to 60 M IDR
15.00% 60M IDR – 250M IDR
25.00% 500M – 5 billion IDR
30.00% 5 billion IDR and over

Employer taxes


Employee taxes


Minimum Wage


The minimum wage requirement varies based on the local government regulations ranging from 1,798,979 IDR in Central Java to 4,416,186 IDR in DKI Jakarta.

Hourly wages for part-time workers

Indonesia has sought to reform its labor laws through the Omnibus Law and has since abolished the sectorial minimum wage through Government Regulation 36 of 2021 and introduced an hourly wage for part-time workers.

The formula for determining the hourly wage: Hourly wage = monthly wage/126

To calculate the daily wage:

Six working days/week: Daily wage = monthly wage/25

Five working days/week: Daily wage = monthly wage/21

The employer and employee are allowed to set their agreement, but the final salary should not be lower than the calculation using the aforementioned formulas.





Payroll Cycle

The payroll cycle in Indonesia is generally monthly and is usually paid on the last working day as agreed within the employment contract.

13th Salary

In Indonesia, there is a mandatory religious holiday bonus called Tunjangan Hari Raya (THR), an additional one month’s salary payment made prior to the longest religious holiday (Hari Raya Idul Fitri for Muslim workers and Christmas for other faith workers). THR includes a base salary and fixed monthly allowance, but does not have to cover other payments such as bonuses. THR is prorated for employees who have not completed a full year of service.

Authority Payments

Authority Payment  Dates Methods

Payroll Tax

10th of the following month

E-filing system provided by Indonesian Tax Office (ITO)

Social Security

15th of the following month

Health Tax

10th of the current month – new joiners need to be registered by the 10th

Working Hours


The working hours are arranged as follows:

  • Employees with 6 work days a week- 7 hours a day, 40 hours a week.
  • Employees with 5 work days a week – 8 hours per day, 40 hours a week.

These working hours rules do not apply to certain businesses and are usually regulated with a ministerial decision.
On working days, an employer shall arrange a rest period during work for its employees of not less than half an hour after the employee has been working for no more than four consecutive hours.


The general guidelines for overtime in Indonesia are as follows:

All work above the standard working week is to be paid as overtime and is regulated by the employment contract/collective agreements. The maximum number of overtime hours is 4 per day and 18 per week. Overtime worked during weekdays is paid at 150.00% of the regular hourly wage for the first overtime hour, increasing to 200.00% for every subsequent overtime hour.

Suppose employees work overtime on a weekly rest day or any public holiday scheduled for a weekly rest day while working a six-day workweek. In that case, the overtime pay is calculated as follows:

  • For the first to the 7th hour of overtime, the employee is entitled to 200.00% of the regular hourly wage
  • For the 8th hour of overtime, the employee is entitled to 300.00% of the regular hourly wage
  • For the 9th to 10th hour of overtime, the employee is entitled to 400.00% of the regular hourly wage

If employees work overtime on a weekly rest day when working a six-day work week, the overtime pay is calculated as follows:

  • For the first to the 5th hour of overtime, the employee is entitled to 200.00% of the regular hourly wage
  • For the 6th hour of overtime, the employee is entitled to 300.00% of the regular hourly wage
  • For the 7th to the 8th hour of overtime, the employee is entitled to 400.00% of the regular hourly wage

If employees work overtime on a weekly rest day or a public holiday working a five-day workweek, the overtime pay is calculated as follows:

  • For the first to the 8th hour of overtime, the employee is entitled to 200.00% of the regular hourly wage
  • For the 9th hour of overtime, the employee is entitled to 300.00% of the regular hourly wage
  • For the 10th to the 11th hour of overtime, the employee is entitled to 400.00% of the regular hourly wage

Working Week



Paid Time Off

Paid leave in Indonesia is set in the employment contract as at least 12 days of paid annual leave per year after completing one full year of employment. Employees who have been working for six consecutive years for the same employer are entitled to one month of leave in the seventh year of service and one month of leave in the eighth year of service.

Vacation Days
Public Holidays

Public Holidays

There are 21 public holidays. Each year the government may decide if public holidays falling on weekends will be moved to a weekday or will be lost.

Sick Days

When employees are sick or injured, they are entitled to paid sick leave provided they show a medical confirmation of their ill health. Employees can also have long-term sick leave lasting for longer than one year. A doctor should recommend such leave in writing.

Payment to employees on prolonged sick leave is as follows:

  • 100.00% in the first four months paid by the employer
  • 75.00% in the fourth to eighth months paid by the employer
  • 50.00% in the eighth to twelfth months paid by the employer
  • 25.00% of wages from one year until termination, paid by the employer

Maternity Leave

Employees are entitled to three months of fully paid maternity leave prior to the estimated due date and one and a half months of leave following the birth. The maternity leave is paid at 100.00% of the regular salary rate of pay.



Paternity Leave

New fathers are entitled to two days’ leave for the birth of their child or a miscarriage.

Parental Leave

Employees are entitled to paid child leave in the following circumstances:

  • 2 days paid leave for the circumcision of the employee’s child
  • 2 days paid leave for the baptism of the employee’s child
  • 2 days paid leave for the marriage of the employee’s child
  • 2 days paid leave for the death of the employee’s child

Other Leave

Employees are entitled to up to two days of paid leave due to the death of their spouse, one day of paid leave for the death of their parents or parent-in-law, the death of their children, or the death of their children-in-law. If a member of the employee’s household dies, they shall be entitled to one day of paid leave.


Termination Process

Before an employee can be terminated, the employer must make a genuine effort to avoid the termination by negotiating with the employee and/or the employee’s labor union to find an accommodation such as a change in working hours, improved working methods, or coaching.

If termination cannot be avoided, the employer must explain the reasons for termination clearly in writing to the employee and/or the employee’s labor union.

If the employee believes the termination is unjust, the decision can be challenged in the Labor Court, which will give the final ruling.
The reasons for which employees can be discharged from work are as follows:

  • The employee violates the employment agreement
  • The employee is imprisoned
  • The employee is ill for more than 12 months
  • The employee is absent from work for more than five days without a valid reason, provided he or she has been notified twice
  • The employee has reached retirement age

Not all reasons for employees’ dismissal should be related to their misbehavior. The employer can discharge employees for several business-related reasons:

  • There can be a change in the company’s status, its merger with another business, or the acquisition of its ownership
  • The employer becomes insolvent
  • The employer has suffered continuous losses for two years consecutively as proven by financial reports
  • The employer is closing the business permanently.

Notice Period

Notice periods within Indonesia are generally 30 days, although employers can specify longer notice periods within the employment contract.

Severance Pay

In Indonesia, severance pay is mandatory if applicable and is determined by the employee’s length of service:

  • Less than 1 year of employment – 1-month wage
  • 1 year or more, but fewer than two years – 2 months’ wage
  • 2 years or more but fewer than 3 years – 3 months wage
  • 3 years of more, but fewer than four years – 4 months’ wage
  • 4 years or more, but fewer than 5 – 5 months’ wage
  • 5 years or more, but fewer than 6 – 6 months’ wage
  • 6 years or more, but fewer than 7 – 7 months’ wage
  • 7 years or more, but fewer than 8 – 8 months’ wage
  • 8 years or more – 9 months’ wage

Probation Period

The probation period in Indonesia for permanent employees is generally set at three months.

Common Benefits


Meals allowance, commuting expenses (from and to the office e.g train tickets/bus, average petrol), gym membership allowance, and internet allowance.



The government of Indonesia provides visa exemptions to nationals of 169 countries, including the United States, Canada, Australia, and Singapore.

Previously, for a foreign employee to enter Indonesia for work, they would need an individual work permit (IMTA). This has now been replaced with a notification from the Ministry of Manpower. Once an employee or business has obtained a notification, they can apply for an Indonesian visa. Foreigners will be issued a Visa Telex (visa index 312), which allows them to work and travel to Indonesia.

There are two types of visas for foreign nationals who intend to live and work in Indonesia.

Izin Tinggal Terbatas or Electronic ITAS (e-ITAS) where employers need to apply for an ITAS on behalf of future employees. The ITAS grants employees the right to stay in Indonesia as well as open a bank account. They can also stay in the country and after three years, apply for a permanent residency.

Before applying for the ITAS, the employee must also get a Visa Izin Tinggal Terbatas (VITAS) – an Indonesian limited-stay permit visa. The Kartu Izin Tinggal Tetap (KITAP) is a visa an employee can also apply for which grants the employee a permanent residence permit (KITAP), but this is only available to people who have held an ITAS for three or more years.



The standard rate of VAT in Indonesia is 11.00% and the VAT will increase to 12% by 1 January 2025.

Stay up to date on payroll & employment law changes

Version History

April 19, 2022
The standard rate of VAT in Indonesia increased to 11.00%
February 28, 2022
Payroll contributions and personal income tax rates have been updated.

Questions & Answers

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Kim W.
Kim W.
2 years ago

Is Tunjangan Hari Raya payment paid to all types of workers?

Erez Greenberg
Erez Greenberg
2 years ago
Reply to  Kim W.

Hi Kim, Yes, Tunjangan Hari Raya payment must be paid to all employees whether they have become permanent employees, contract employees, or part-time employees.

1 year ago

What is the minimum number of days I have to allow an employee to take off consecutively using their annual leave?

Emily Kuhnert
Emily Kuhnert
1 year ago
Reply to  Jared

Hi, if your employee would like to use their annual consecutively, the minimum number of days you must approve is 6.

Lim N.
Lim N.
1 year ago

How do we do pro-rate annual leave for Indonesian employees who left the employer in the middle of the calendar year?

Emily Kuhnert
Emily Kuhnert
1 year ago
Reply to  Lim N.

Hi Lim, this would depend on how long the employee has been employed, however, you would need to calculate the monthly accrual amount and multiply it by the number of months completed.

Lim N.
Lim N.
1 year ago

Are there any criteria for a male employee to be entitled to paternity leave of 2 days? Must the employee work with the employer for a minimum of 3 months?

1 year ago

My father worked more than 3 years in indonesia as a machenical engineer later they passed away because of heartattack in company area. What is the compensation in this situation???

Erez Greenberg
Erez Greenberg
1 year ago
Reply to  Anoop

According to Article 166 of Law Number 13 of 2003 concerning Manpower (“Labor Law”), in the event that an employment relationship ends due to the death of an employee, the heirs will be paid an amount that is equal to twice the severance pay based on the years of service.

In addition to two times the severance pay, heirs are eligible for a one-time service payment, which consists of three months’ wages and compensation for entitlements that should have been received. This includes:

-Unused annual leave
-Some transportation costs
-Housing allowances and medical and health care allowances are calculated at 15% of severance pay and/or reward for years of service.
-The rest of the compensation is determined by individual work agreements, enterprise rules, and regulations, or collective agreements.

1 year ago

As a foreign company in Indonesia, how to find the reference from any local companies on monthly allowance for sales people

Erez Greenberg
Erez Greenberg
1 year ago
Reply to  Kate

Which allowances are you referring to?

1 year ago
Reply to  Erez Greenberg

Thank you for reply.
I meant
1. Petro
2. Car depreciation (in case employee owns car)
3. Car maintenance

Erez Greenberg
Erez Greenberg
1 year ago
Reply to  Kitti

There are no rules around petrol reimbursement etc – it is left to each company to decide their policy.

4 months ago

Hi Need Help! Does contribution to Pension Fund mandatory in *Indonesia*? If *Yes*, what is the *minimum percentage* contribution defined for *employer and employee*?

3 months ago

Are employers required by law to provide their employees payslips showing amount deducted for taxes, BPJS, and any reimbursement claims?

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Payroll and Benefits Guide
in Indonesia

What’s covered in this guide:

  • Employer/employee contributions
  • Minimum wage
  • Working hours
  • Visa requirements

And more...

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Public Holidays Calendar

Indonesia 2023
Day Date Holiday Notes
Sunday Jan-1 New Year’s Day
Sunday Jan-22 Chinese New Year
Saturday Feb-18 Isra Mi’raj
Wednesday Mar-22 Bali Hindu New Year
Friday Apr-7 Good Friday
Wednesday Apr-19 Hari Raya Idul Fitri
Thursday Apr-20 Hari Raya Idul Fitri
Friday Apr-21 Hari Raya Idul Fitri
Saturday Apr-22 Hari Raya Idul Fitri
Sunday Apr-23 Hari Raya Idul Fitri
Monday Apr-24 Hari Raya Idul Fitri
Tuesday Apr-25 Hari Raya Idul Fitri
Monday May-1 Labour Day
Thursday May-18 Ascension Day of Jesus
Thursday Jun-1 Pancasila Day
Sunday Jun-4 Vesak Day
Thursday Jun-29 Idul Adha Some companies may choose to give 28th June and 30th June in addition.
Wednesday Jul-19 Islamic New Year
Thursday Aug-17 Independence Day
Thursday Sep-28 Prophet Muhammad’s Birthday
Monday Dec-25 Christmas Day