# Hire in Indonesia

Source: https://overseashire.com/hire/indonesia · verified 2026-10-05 · confidence medium

Large, young population with a growing developer base and competitive labour costs. Employer on-costs are moderate; THR and severance add predictable obligations.

## Employer cost
Employer on-costs 10.2–11.7% of gross salary. Derived: employer BPJS contributions of 0.24%-4% per scheme (PwC) summed from secondary-source rates: JHT 3.7% + JP 2% + JKK 0.24-1.74% + JKM 0.3% + BPJS Kesehatan 4% = 10.24%-11.74%. JP is capped at about IDR 11.09m (Mar 2026) and health at IDR 12m a month, so effective percentage falls for high earners. Excludes the JKP job-loss premium (funded by government/employer; rate unclear), the mandatory THR holiday allowance (one month's pay, ~8.3%), leave and severance.

| Contribution | Rate | Notes |
|---|---|---|
| BPJS Ketenagakerjaan - JHT (old-age savings) | 3.7% | Employee 2%. |
| BPJS Ketenagakerjaan - JP (pension) | 2% | Employee 1%; wage cap about IDR 11,086,300 from March 2026 per secondary source. |
| BPJS - JKK (work accident) | 0.24%-1.74% | By risk class. PwC gives the overall range as 0.24%-4%. |
| BPJS - JKM (death) | 0.30% |  |
| BPJS Kesehatan (health) | 4% (employee 1%) | Salary ceiling IDR 12,000,000. |
| JKP (job-loss security) | 0.36% total (secondary), no employee share | Employer vs government split not verified. |

Mandatory benefits: THR religious holiday allowance of one month's pay; BPJS Ketenagakerjaan and Kesehatan coverage; 12 working days' annual leave after 12 months; Severance, service and compensation payments on termination (PP 35/2021)

## Rules
- Payroll: Monthly; THR paid at least 7 days before the religious holiday (general knowledge)
- Probation: Maximum 3 months for permanent (PKWTT) contracts; not allowed for fixed-term (PKWT).
- Notice and severance: Termination requires notice and compensation under PP 35/2021: severance pay up to 9 months' wages by years of service, long-service pay up to 10 months, plus a rights-compensation component; multipliers vary by reason of termination. Not verified in detail.
- Termination: Termination must be based on listed grounds; many exits go through bipartite negotiation or industrial relations court. PKWT contracts are capped (up to 5 years including extensions).
- Working time: 40 hours per week (6 days x 7 hours or 5 days x 8 hours). Overtime has multiples under government regulation.
- Paid leave: 12 working days of annual leave after 12 months of service, plus national holidays and collective leave days (general knowledge).
- Minimum wage: No single national minimum wage; provincial (UMP) and regency/city (UMK) minimums apply from 1 January 2026, e.g. DKI Jakarta IDR 5,729,876 and West Java IDR 2,317,601 (secondary source) - the UMK, where set, is the binding floor.

## Contractors
Contractors are common but outsourcing and misclassification are tightly regulated under the Job Creation Law. Moderate to high risk for long-term dependent workers.

## EOR
A foreign company needs a PT PMA (foreign-owned limited company) or EOR to employ locally. EORs handle BPJS, PPh 21 and THR. Timelines not verified.
Onboarding: EOR not verified; own entity not verified.

## FAQ
**What employer contributions does Indonesia require?** BPJS schemes: JHT 3.7%, JP 2%, JKK 0.24-1.74%, JKM 0.3% and health 4%, roughly 10-12% of salary subject to caps.

**Is the holiday allowance mandatory?** Yes, THR equals one month's pay for staff with 12+ months' service, prorated for shorter tenure.

**Is there a national minimum wage?** No; provincial and city minimums apply and the higher local figure binds.

**Do I need a local entity?** A PT PMA or an EOR is required for direct employment.

Unverified: Individual BPJS rates are from secondary sources; PwC gives only an overall range; JKP split and rate; PP 35/2021 severance multipliers; Leave, probation and working-time figures from general knowledge; 2026 UMK figures for specific cities; EOR/entity timelines

Sources:
- https://taxsummaries.pwc.com/indonesia/corporate/other-taxes
- https://www.secondtalent.com/resources/indonesia-payroll-benefits-tax/
- https://www.teamed.global/country-hiring-guides/indonesia/tax-and-payroll
- https://employsome.sda.company/?p=6734

Not legal or tax advice.