A written employment contract is mandatory for all employees (permanent and temporary). The contract must outline job position, salary, working hours, and other terms of employment. It must be written in Indonesian, though an English version is allowed alongside.
Employer of Record (EOR) Indonesia
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Globaine takes care of all compliance matters, including payroll, taxes, and legal obligations, while providing seamless hiring processes. Our platform ensures that every aspect of employee management in Indonesia is handled efficiently and in full compliance with local regulations.
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We draft bilingual contracts compliant with Indonesian labor law.
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in Indonesia
A written contract is required before the employee starts working. This contract must be signed by both parties and should clearly specify employment terms.
Salaries should be stated in Indonesian Rupiah (IDR), and the contract must clarify gross salary, including benefits or bonuses (if applicable). Any deductions (taxes, insurance) must be outlined clearly.
Clauses may include probation periods (typically up to 3 months), non-compete agreements (limited in scope and duration), confidentiality, and grounds for contract termination. These clauses must comply with Indonesian labor law.
in Indonesia
1. What are the key steps in employee onboarding in Indonesia?
Employees must register for a tax identification number (NPWP) and enroll in social security (BPJS Kesehatan for health and BPJS Ketenagakerjaan for employment). Employees must also open a local bank account for salary payments.
2. When should employees complete pre-hire medical checks in Indonesia?
Medical checks are not required for all positions but may be mandated for certain high-risk roles (e.g., heavy labor, positions involving health risks).
3. What documents are required for onboarding in Indonesia?
Required documents include a valid passport (for foreigners), tax ID (NPWP), social security registration (BPJS), signed employment contract, and bank account details for salary payments.
in Indonesia
Remote employees’ payroll follows the same rules as in-office employees. Employers must ensure remote workers’ compensation is compliant with local labor laws, including applicable benefits and allowances.
The minimum wage varies by province. In 2024, the minimum wage in Jakarta is IDR 4.9 million/month, while other provinces may have lower thresholds.
in Indonesia
1. What are the income tax rates in Indonesia?
Indonesia has a progressive income tax system. Individual tax rates range from 5% to 30%, depending on income levels. Non-residents are taxed at a flat 20% on their Indonesia-sourced income.
2. How does the tax system apply to non-residents in Indonesia?
Non-residents are taxed at a flat rate of 20% on Indonesia-sourced income, with no allowances or deductions. Residents pay taxes based on progressive tax brackets.
3. When should tax returns be submitted in Indonesia?
Employees must submit an annual tax return by March 31st of the following year. Employers are responsible for withholding tax from employees’ salaries and remitting it to the government.
4. What social security contributions are required in Indonesia?
Employees must contribute 2% to BPJS Kesehatan (health insurance) and 1% to BPJS Ketenagakerjaan (employment insurance). Employers contribute 4% to BPJS Kesehatan and around 3.7% to BPJS Ketenagakerjaan.
in Indonesia
Employees are entitled to a minimum of 12 days of paid annual leave after completing one year of service. For each subsequent year of employment, employees are entitled to additional leave.
Employees can use their accrued annual leave after completing one year of continuous service with the same employer. Leave can be taken in full or in parts.
Maternity leave is 3 months (90 days) for female employees, with the first 1.5 months fully paid by the employer. Paternity leave is generally 2 days. Maternity benefits are provided through BPJS Kesehatan.
Indonesia has 14 public holidays annually, with additional regional holidays depending on local traditions or religious observances. Employees are entitled to these days off with full pay.
in Indonesia
1. What benefits are mandatory in Indonesia?
Employers must provide health insurance (BPJS), pension contributions (BPJS), and work accident insurance (JHT). These benefits are mandatory for all employees.
2. How is the home office allowance structured in Indonesia?
There is no legal requirement for home office allowances in Indonesia, but many companies provide them to remote workers for expenses like internet and electricity. These allowances must comply with tax regulations.
3. When should meal allowances be provided in Indonesia?
Meal allowances are not mandatory but are common in many sectors. If provided, they are typically tax-exempt up to certain limits defined by tax regulations.
4. What additional benefits are common in Indonesia?
Employers often provide private health insurance, performance bonuses, transportation allowances, and retirement benefits as part of their compensation packages.
FAQs
1. How does Globaine ensure full compliance with Indonesia’s labor laws when hiring and managing employees through the EOR solution?
Globaine ensures compliance by adhering to Indonesia’s labor regulations, including employment contracts, tax filings, social security contributions (BPJS), and mandatory benefits. We monitor updates to laws and ensure all processes align with legal requirements.
2. What specific cost savings can our company expect by using Globaine's EOR solution compared to setting up a local entity in Indonesia?
By using Globaine’s EOR, your company saves on the costs of entity setup, local legal fees, office space, and long-term commitments. You also avoid the complexities of managing payroll, taxes, and compliance.
3. How does Globaine guarantee fast onboarding within 12 hours, and what processes are in place to maintain this speed?
Globaine guarantees quick onboarding by utilizing a streamlined process that includes pre-established agreements, automated systems for document management, and a local expert team ready to onboard employees efficiently.
4. Can Globaine handle complex employment scenarios in Indonesia, such as drafting bilingual contracts and managing terminations?
Yes, Globaine can manage complex employment scenarios, including drafting bilingual contracts, addressing specific legal requirements, and overseeing terminations in compliance with Indonesian labor law.
