TL;DR, Hiring in Indonesia
- Fully-loaded employer cost: ~10–11% (BPJS Kesehatan + Ketenagakerjaan)
- Mandatory THR (religious holiday allowance) of one month's salary, costed via payPeriods=13
- Severance under Omnibus Law (UU Cipta Kerja 2020) is substantial — up to 9 months at long tenures
- Setup via EOR: 7–14 business days; direct PT PMA entity: 3–6 months
Last reviewed:
Statutory employer costs in Indonesia
In Indonesia, employer contributions to BPJS Ketenagakerjaan (employment social security) total ~6.24–7.74% of capped salary: JHT 3.7% (old-age), JKK 0.24–1.74% (work-accident, industry-banded), JKM 0.3% (death), and JP 2% (pension, capped at IDR 10.6M/month wage). BPJS Kesehatan (health) adds 4% capped at IDR 12M/month wage. The mandatory THR religious holiday allowance equals one month's salary, paid before Eid al-Fitr. Total all-in employer cost typically runs 17–22% above gross monthly base.
| Contribution | Employer rate | Notes |
|---|---|---|
| BPJS Kesehatan (health) | 4.0% | Capped at salary of IDR 12M/month; employee adds 1%. Above the cap no further contribution. |
| BPJS Ketenagakerjaan – JHT (old age) | 3.7% | Employer share; employee adds 2%. Lump-sum payable on retirement or after 10 years. |
| BPJS Ketenagakerjaan – JP (pension) | 2.0% | Capped at IDR 10.6M/month wage (2025). Employee adds 1%. |
| BPJS Ketenagakerjaan – JKK (work injury) | 0.24–1.74% | Banded by industry risk class (I–V). Office work ~0.24%, mining/construction up to 1.74%. |
| BPJS Ketenagakerjaan – JKM (death) | 0.3% | Employer-only; flat across industries. |
Mandatory employee benefits
Beyond statutory contributions, Indonesia law requires the following benefits the employer must fund.
- THR (Tunjangan Hari Raya)
- Mandatory religious holiday allowance equal to one month's salary, paid no later than 7 days before Eid al-Fitr (or relevant religious holiday). Pro-rated for employees with <12 months tenure.
- Annual leave
- 12 working days after 12 months of service. Cannot be paid out in lieu except on termination.
- Long-service leave
- After 6 years of continuous service, employee earns 1 month additional paid leave (cuti besar).
- Maternity / paternity
- Mother: 3 months paid maternity leave (1.5 before + 1.5 after birth), or 6 months under the 2024 Mother and Child Welfare Law for first two children. Father: up to 5 days.
Termination, notice and severance
Probation
Maximum 3 months. Can be ended without severance during probation with proper documentation.
Notice period
14 days written notice from either party for indefinite-term contracts. Fixed-term (PKWT) contracts cannot be terminated early without paying the remainder.
Severance
Substantial under UU Cipta Kerja (Omnibus Law) 2020: uang pesangon (severance) + uang penghargaan masa kerja (long-service pay) + uang penggantian hak (rights compensation). At 8+ years tenure, a 'efficient business' termination can total ~9 months' salary. Multipliers vary by reason (0.5× for resignation with cause to 1.75× for retirement). Severance must be paid even if the employee resigns in many scenarios.
Common compliance pitfalls
- THR is non-negotiable and non-deferrable. Late payment triggers a 5% penalty plus per-day interest, and Ministry of Manpower (Kemnaker) audits enforce it aggressively each Ramadan.
- PKWT (fixed-term) contracts are limited to 5 years total (including renewals) under the Omnibus Law. Going beyond auto-converts to PKWTT (indefinite) with full severance exposure backdated.
- Severance multipliers depend on the legal ground for termination. 'Efficiency' termination requires Ministry of Manpower mediation (perselisihan hubungan industrial) and pays 1.75× the base table; firing without process pays 2× as wrongful-dismissal damages.
- Foreign companies sometimes assume PKWT can be repeatedly extended like an at-will contract — it cannot. The 5-year cap is hard, and Disnaker audits trigger automatic conversion + arrears.
Frequently asked questions
Sources
Statutory rates and rules verified against the following authorities. We update this page when rates change.