Hire in Indonesia
Republic of Indonesia — 278 million population, $4,790 GDP per capita. Everything you need to know about employment law, tax, compliance and hiring in Indonesia.
Capital
Jakarta (moving to Nusantara)
Currency
Indonesian Rupiah (IDR)
Languages
Indonesian (Bahasa Indonesia)
Time zones
UTC+7 (WIB), UTC+8 (WITA), UTC+9 (WIT)
Hiring overview
- Typical time to hire
- 2-3 weeks for contractor, 3-6 weeks for full-time
- Entity requirement
- Indonesian PT (Perseroan Terbatas). Registration at OSS (Online Single Submission). Minimum capital requirements apply.
- EOR available
- Yes — from $399/employee/month through a Corpshore entity
- Contractor of record
- Yes — from $39/worker/month
Employment law
- Standard workweek
- 40 hours (7 hours/day 6 days or 8 hours/day 5 days)
- Maximum weekly hours
- 40 hours
- Minimum annual leave
- 12 working days after 12 months
- Public holidays
- 17 per year
- Maternity leave
- 3 months (1.5 before + 1.5 after), fully paid
- Paternity leave
- 2 days
- Notice period
- 14-30 days depending on contract
- Severance
- Complex formula under Omnibus Law (2020): severance (1-9 months based on tenure) + long-service pay (2-10 months) + compensation rights. Religious holiday allowance (THR): 1 month salary.
- Probation
- 3 months (indefinite contracts only; not permitted for fixed-term)
- Overtime rules
- 1.5x (first hour), 2x (subsequent). Maximum 4 overtime hours/day, 18 hours/week.
Tax overview
- Income tax range
- 5% to 35%
- Corporate tax
- 22%
- Social contributions
- BPJS Employment: employer ~10%, employee ~3%. BPJS Health: employer ~4%, employee ~1%.
- VAT / GST
- 11% (increased from 10% in April 2022; scheduled for 12% in 2025)
- Tax year
- Calendar year
- Treaty network
- Over 70 tax treaties
Compliance landscape
- Worker classification
- Omnibus Law on Job Creation (2020, amended 2023) significantly reformed employment law. PKWT (fixed-term) vs. PKWTT (indefinite) contracts. Outsourcing permitted for supporting activities.
- Data protection
- Personal Data Protection Law (UU PDP, 2022). Implementation period through 2024. Ministry of Communication and Information oversees.
- Right to work
- ITAS (foreign worker utilisation plan) approval + KITAS (temporary stay permit) required. Employer must have a plan to replace foreign worker with Indonesian.
- Non-compete
- Limited statutory basis. Generally considered unenforceable as restraint of freedom to work under Indonesian law.
- Collective bargaining
- Protected under the Manpower Law. Multiple unions per company permitted. Bipartite cooperation institution required for 50+ employees.
Payment rails
BI-RTGS for large-value transfers. SKNBI for retail. Digital wallets (GoPay, OVO) are widely used. QRIS (QR Indonesian Standard) unifies QR payments.
Key considerations for hiring
- THR (Tunjangan Hari Raya, religious holiday allowance) of 1 month salary is mandatory before major religious holidays
- Omnibus Law (2020/2023) significantly reformed employment, reducing severance and increasing flexibility
- Indonesia is Southeast Asia's largest economy and digital market (300M+ mobile internet users)
- Jakarta's tech scene (GoTo, Tokopedia, Bukalapak, Traveloka) is ASEAN's largest startup ecosystem
Business and cultural context: Indonesia
Business culture
Relationship-driven, hierarchical, and harmony-oriented. Javanese cultural values (halus: refined, smooth) influence business interactions. Religious diversity (Muslim majority but significant Christian, Hindu, Buddhist populations) shapes calendar and customs.
Key industries
Talent pool strengths
Historical context
Indonesia's digital economy is Southeast Asia's largest, projected to reach $130B by 2025 (Google-Temasek-Bain report). The country's tech ecosystem produced GoTo (merger of Gojek and Tokopedia) and multiple unicorns. With 278 million people across 17,000 islands, Indonesia's archipelagic geography drove mobile-first digital adoption that leapfrogged traditional infrastructure.
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