Employee agreements

Indonesian law requires written employment agreements for all permanent and fixed-term employees. These agreements must include job responsibilities, compensation details, benefits, and termination clauses. Contracts must be written in Bahasa Indonesia to be enforceable.

Probationary periods

Employers can apply for a probation period of up to three months for permanent employees. Note that fixed-term employees cannot be placed on probation.

Average working hours

The standard workweek is 40 hours. Employees may work eight hours across five days or seven hours across six days. Overtime pay is mandated by law and varies depending on hours worked.

How an EOR helps employers hire in Indonesia

Velocity Global helps businesses hire faster by handling employment contracts, onboarding, and compliance. Our experts manage local employment laws, so customers avoid delays and legal headaches.

Payroll cycles

Most companies pay employees monthly, typically on the last working day. Different schedules can be agreed upon in contracts.

Wages

Minimum wage rates vary by region. In 2025, Jakarta's minimum monthly wage is IDR5,067,381 (around US$325), according to the Indonesian Ministry of Manpower.

Bonus payments

A religious holiday bonus, THR, is mandatory and equals one month’s salary. It must be paid at least one week before a major religious holiday.

How an EOR helps run payroll

Velocity Global handles everything from salary calculations to tax withholdings and statutory bonuses. Our Global Work Platform lets companies stay audit-ready and in control of payroll without the manual lift.

Tax due dates

Employers must remit income tax monthly. Individual tax returns are due annually by March 31.

Tax thresholds

Indonesia uses a progressive tax system:

• 5%: Up to IDR60 million
• 15%: IDR60 million–250 million
• 25%: IDR250 million–500 million
• 30%: IDR500 million–5 billion
• 35%: Over IDR5 billion

Health insurance

All employees must be enrolled in Indonesia’s BPJS Kesehatan health insurance program. Both employer and employee share contributions.

Pensions

BPJS Ketenagakerjaan covers retirement and occupational insurance:

• Employer: 3.7% of gross salary
• Employee: 2% of gross salary

How an EOR helps manage taxes

Velocity Global ensures full compliance with tax and social security requirements. We handle BPJS enrollment, keep up with evolving regulations, and eliminate the risk of costly mistakes.

Annual leave

Employees receive 12 days of paid annual leave after one year of service. Employers may offer more generous leave policies.

Parental leave

• Maternity leave: three months (six weeks before and after birth)
• Paternity leave: two days

Sick leave

Paid sick leave is granted with a medical certificate. Employees receive 100% pay for the first four months, then decreasing percentages.

Public holidays

Indonesia observes 16–20 public holidays annually, including religious and national holidays like Eid al-Fitr, Christmas, and Independence Day.

How an EOR helps manage leave

Velocity Global tracks and administers all leave types. Customers stay compliant while supported employees get accurate, timely benefits.

Statutory benefits

Employers must provide health insurance, pension coverage, paid leave, and accident insurance.

Supplemental benefits

Many companies offer extra perks like:

• Private healthcare
• Meal and transport allowances
• Internet or mobile reimbursements
• Wellness or learning stipends

How an EOR supports benefits administration

Velocity Global makes benefits easy. We manage both statutory and supplemental perks, so supported employees feel valued and businesses stay competitive.

Notice periods

Permanent employees must receive 30 days' notice. Employers must often secure labor court approval unless both parties agree to terminate.

Severance pay

Termination entitlements vary by reason and tenure:

• Severance: 1–9 months of salary
• Long-service pay: 2–10 months (based on years worked)
• Compensation pay: Covers unused leave, relocation, etc.

How an EOR helps manage terminations

Velocity Global ensures compliant, respectful offboarding. We navigate court approval processes and calculate entitlements accurately.