Indonesia
Min. wage
(x13 payments)
Varies by region
About the minimum wage
Employer tax
~10.24-11.74%
Understand employer tax
Annual leave
12 days
Learn about annual leave
Notice period
14 days min
Termination and notice info
Updated
Oct 2026
PKWTT (Perjanjian Kerja Waktu Tidak Tertentu) is the standard permanent, open-ended employment contract with no fixed end date. It is the default and required contract type for work of a permanent nature, and carries full statutory termination protections, notice requirements, and severance/service/compensation pay entitlements on termination.
PKWT (Perjanjian Kerja Waktu Tertentu) may only be used for temporary, seasonal, project-based, or new-product/activity-trial work — not for roles of a permanent nature. Maximum cumulative duration (including renewals) is 5 years under PP 35/2021; exceeding this, or using PKWT for permanent work, causes the contract to convert automatically to PKWTT (indefinite). Must be in writing and registered; PKWT employees are entitled to 'compensation pay' (uang kompensasi) at contract end, roughly equivalent to one month's salary per year of service.
Standard working hours under the Manpower Law are capped at 40 hours/week. Overtime is permitted (with employee consent) up to 4 hours/day and 18 hours/week, paid at a premium: 1.5x the hourly rate for the first overtime hour and 2x for each subsequent hour on a normal working day, with higher multipliers on weekly rest days and public holidays.
Employers may set a probationary period of up to 3 months for PKWTT employees only; any probation clause included in a fixed-term (PKWT) contract is legally void. The minimum wage must be paid in full during probation — sub-minimum 'trainee' pay is not permitted. Termination during probation still requires the statutory shorter notice (7 days) and a documented, justifiable reason to avoid disputes.
THR (Tunjangan Hari Raya Keagamaan) is a mandatory allowance under Permenaker No. 6/2016, paid once a year ahead of each employee's major religious holiday (Eid al-Fitr for Muslims, Christmas for Christians, Nyepi for Hindus, Vesak for Buddhists, Chinese New Year for Confucians). Employees with 12+ months' tenure receive one full month's salary; those with 1-12 months receive a pro-rated amount. THR must be paid no later than 7 days before the relevant holiday; late or non-payment carries statutory fines.
Indonesia does not broadly regulate private-sector job titles, but certain roles (Director, Commissioner) have specific statutory duties under the Company Law, and Manpower Ministry regulations restrict foreign nationals from holding specific positions (notably HR/personnel management roles) and require a valid RPTKA/work permit tied to a specific approved job title for any foreign hire.
Employer-funded BPJS Ketenagakerjaan (employment social security): JHT old-age savings 3.7%, JKK work-accident insurance 0.24%-1.74% (varies by industry risk class), JKM death benefit 0.3%, JP pension 2% (capped at a periodically-adjusted wage ceiling, ~IDR 10.5 million/month as of 2025-26). Employer-funded BPJS Kesehatan (health insurance): 4% (capped at a periodically-adjusted wage ceiling, ~IDR 12 million/month). Combined employer cost is roughly 10.24%-11.74% of gross salary depending on JKK risk class; separately, the government-funded JKP (job-loss guarantee) is financed via state budget plus a small reallocation from JKK/JKM, not an added direct employer cost.
Employee-funded BPJS Ketenagakerjaan: JHT 2%, JP 1% (subject to the same wage cap as the employer share). Employee-funded BPJS Kesehatan: 1% (subject to wage cap). Total statutory employee contribution is approximately 4% of gross salary, withheld and remitted by the employer alongside PPh 21 income tax.
In addition to statutory leave, employees are entitled to the following statutory benefits:
Indonesia's social security system has two mandatory schemes: BPJS Ketenagakerjaan (employment social security) and BPJS Kesehatan (national health insurance). Both are funded through combined employer and employee contributions calculated on gross monthly wages, with wage caps applying to the pension and health schemes.
Workplace accident coverage is provided through the JKK (Jaminan Kecelakaan Kerja) scheme under BPJS Ketenagakerjaan, funded entirely by the employer at a rate of 0.24% to 1.74% of gross salary depending on the employer's industry risk classification (very low to very high risk).
JKK covers medical treatment costs for work-related accidents and occupational diseases, cash compensation during recovery, permanent or partial disability benefits, and death benefits (including a funeral allowance and periodic payments to dependents) if an accident is fatal. Employers are legally required to register all employees, including foreign workers, for JKK coverage.
Severance in Indonesia (regulated by PP 35/2021 under the Job Creation/Omnibus Law, which restructured the older Manpower Law No. 13/2003 formula) is made up of three components: Uang Pesangon (UP, severance pay), Uang Penghargaan Masa Kerja (UPMK, long-service/recognition pay), and Uang Penggantian Hak (UPH, compensation for unused rights such as accrued leave and relocation costs).
UP scales from 1 month's salary (under 1 year of service) up to a maximum of 9 months' salary (8+ years). UPMK applies once tenure exceeds 3 years, ranging from 2 up to 10 months' salary at 24+ years. A multiplier (0x to 2x) is then applied to UP and UPMK depending on the reason for termination — e.g., voluntary resignation or gross misconduct pays 0x UP, while redundancy, prolonged illness, disability, or death can pay up to 2x.
This is a complex, frequently-litigated area of Indonesian labor law that has changed materially since the Job Creation Law (generally reducing employer severance obligations versus the pre-2020 Manpower Law) and remains subject to further regulatory adjustment — employers should obtain a case-specific calculation from local counsel or payroll before any termination.
Indonesia does not have a traditional 13th-month salary, but the mandatory THR (Tunjangan Hari Raya Keagamaan / Religious Holiday Allowance) functions equivalently. THR is required under Permenaker No. 6/2016 and must be paid once per year, no later than 7 days before each employee's major religious holiday (Eid al-Fitr, Christmas, Nyepi, Vesak, or Chinese New Year, depending on the employee's declared religion).
Employees with 12 months or more of continuous service receive a full one-month salary; employees with 1-12 months of service receive a pro-rated amount calculated as (months of service ÷ 12) × one month's salary. Failure to pay THR on time exposes employers to administrative fines and penalty interest.
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Your employee's hours, time off, holidays, bonuses, and commissions are automatically calculated into payroll. RemoFirst will invoice you in either US Dollars (USD), Euros (EUR), British Pounds (GBP), Canadian Dollars (CAD), Australian Dollars (AUD), or Singapore Dollars (SGD) around the 15th of each month to make sure your employees are paid on time. To make it even easier, you can summarize your entire global team's salaries to aggregate them into one payment (instead of many individual payments).
Unlike full-time employees, contractors work on projects with multiple companies at a given time and are technically self-employed. Full-time employees are solely focused on their employer and usually receive benefits (such as health insurance, equity or stock options, and time off) as an additional form of compensation. While it can be cheaper to work with international contractors instead of paying benefits to a full-time employee, you run the risk of misclassification. It's recommended to work with an EOR for contractor onboarding and payments, so you can know that your international contractors are paid compliantly and on time.
Whenever the employee or employer has a question about, or anything else related to international employment, they can speak with our customer support team to get answers from our team of experts.
