INDONESIA PEO & EOR
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DID YOU KNOW
- Indonesia operates the world’s largest archipelagic nation and is the fourth-most populous country globally, with over 17,000 islands that influence diverse regional labour, culture, and regulatory environments.
- By mid-2025, the future capital city Nusantara’s first phase infrastructure was largely completed and it hosted Independence Day ceremonies in August 2024, though full completion won’t be until circa 2045
- Indonesia straddles the equator, spanning both the Northern and Southern Hemispheres. This gives the nation a notably consistent tropical climate year-round, with minimal variation in daylight hours.
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INDONESIA PEO Services
A Bridge into Southeast Asia’s Largest Economy
Working in INDONESIA
Financial Year Dates
Indonesia’s financial tax and reporting year runs from 1 January to 31 December.
Minimum Wage
In 2025, Indonesia has implemented a 6.5% increase to its national minimum wage, raising the average minimum wage to approximately Rp3,315,727. This increase is being rolled out across various provinces, with each region determining its specific minimum wage based on economic factors and government guidelines.
Standard working hours
Employees may work 40 hours/week, structured as either 7 hours/day over 6 days, or 8 hours/day over 5 days. Breaks and rest days are regulated
Overtime
Overtime must be agreed upon and is capped at 3 hours/day or 14 hours/week. Pay:
- 150% of hourly wage for the 1st overtime hour
- 200% thereafter
Holiday Allowance
Employees with at least 1 month of service receive a religious holiday allowance (THR) equal to one month’s salary (prorated if service is under 12 months), to be paid at least 7 days before major holidays like Eid al-Fitr or Christmas.
Sick Leave
In Indonesia, employees are entitled to paid sick leave, with the amount of pay dependent on the duration of the illness. For the first four months of illness, employees receive 100% of their salary. This is then reduced to 75% for the following four months, 50% for the next four months, and 25% for any subsequent months.
Maternity & Paternity Leave
Maternity leave provides for a minimum of three months of paid leave for working mothers, with the possibility of an extension for an additional three months under specific circumstances (e.g., medical reasons). Paternity leave is generally two days, but can be extended to five days with employer agreement.
Public Holiday
Indonesia observes major national holidays including:
- New Year’s Day
- Indonesian Independence Day
- Islamic Holidays (e.g., Eid al-Fitr, Eid al-Adha)
- Christmas, Nyepi, Vesak, and other regional observances (e.g., Bali)
Social Contributions
Since its inception in 2014, Indonesia’s National Social Security System (SJSN), managed by BPJS, has aimed to offer comprehensive protection through health insurance, employment injury, old age provident fund, pension insurance, death benefits, and job loss insurance.
Income Tax
Individual Income Tax Tax Rate
Up to IDR 50 million 5%
Over IDR 50 million to IDR 250 million 15%
Over IDR 250 million to IDR 500 million 25%
Over IDR 500 million 30%
Health Care
Indonesia offers public healthcare via BPJS Kesehatan, funded by the social contributions noted above. Quality and access can vary by region, and some employers supplement with private health insurance for employees.
Visas
Foreign nationals intending to work in Indonesia typically require:
- Work Visa: requires Indonesian employer sponsorship; validity and renewability vary by type and contract duration.
- Business Visas / KITAS: for investors or long-term assignments, with pathways to residency.
- Family reunification visas may be available. (Specific details depend on immigration authorities.)
13th salary?
Indonesia does not mandate a 13th salary. However, all employees are entitled to the THR holiday bonus, which functions similarly and is legally required ahead of religious holidays. For more details, see our 13th & 14th Salary Guide.
Cultural Information
Indonesia’s immense diversity (across archipelago, ethnicities, and religions) profoundly influences workplace culture. Key cultural traits include:
- Collectivism & Respect for Hierarchy: Decision-making often values consensus and formality, especially from senior leadership.
- Religious Observance: With the world’s largest Muslim population, religious holidays and practices are deeply integrated into work rhythms.
- Regional Diversity: Customs and languages differ greatly—what applies in Jakarta may not in Bali or Papua.