That system encompasses a central healthcare program, an occupational injury fund, a retirement savings fund, a pension benefits program, and a death benefits fund.

Payroll and taxesĬompanies must pay payroll taxes into Indonesia’s universal social security system. The calculation is based on the termination background and the employee’s length of service. The rate is based on the PKWT period worked.įor regular or indefinite contracts, termination may trigger severance.

For regular employees, the mandatory notice period is a minimum of 14 days and a minimum of 7 days during the probationary period.įor fixed-term contracts, if one of the parties terminates the employment relationship before the expiration of the period stipulated in the Perjanjian Kerja Waktu Tertentu (PKWT), or the term of the employment agreement, the employer must provide the compensation outlined in Government Regulation No. Notice of resignation is required per Indonesian labor law. However, if inconsistencies exist between the terms of the contracts in two languages, the terms of the Indonesian agreement will prevail. The law does allow for bilingual agreements. Indonesian law requires companies to write all fixed-term employment contracts in Indonesian. Fixed-term contracts can run for a maximum of five years in total. Each contract should specify the job duties, compensation, benefits, and termination requirements.

Terminating employees also requires paying severance.Ĭontracts in Indonesia may be indefinite contracts or fixed-term contracts that run for a certain time or until the completion of a specific job. Indonesia does not have at-will employment, so hiring new employees requires signing employment contracts. Let’s examine these topics in more detail. You should also know the makeup of the workforce, some recent labor law changes, and the languages spoken throughout the country. What to know before hiring in Indonesiaīefore your company can begin building teams in Indonesia, you’ll need to become familiar with topics like contracts, wages, benefits, and working hours. That’s why we’ve prepared this guide to hiring employees in Indonesia - so you can make informed personnel decisions that will add value to your company year after year. However, the nuances of labor law can be confusing, even for the savviest companies. Its tremendous workforce and enviable access to large, lucrative Asian markets can lead to valuable connections and profits. When your company is exploring the possibility of scaling internationally, Indonesia presents an exciting growth opportunity.

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