Guide to employing in Indonesia

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XPANDIUM offers Employer of Record, payroll and contractor services for businesses seeking to hire employees in Indonesia without establishing a local entity.

When you choose to partner with XPANDIUM as your employer or record in Indonesia, your selected candidates will become employees through our Professional Employer Organisation entity. We will handle every aspect of workforce management to ensure your company complies with local regulations. We will take care of everything from onboarding processes to payroll and benefit management.

Our experience with EOR platforms in Indonesia will help you scale your business efficiently and effectively, leaving you to focus on the vital part – optimising your workforce and unlocking your business’ full potential.


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Xpandium - Hire your employees in Indonesia

Navigating the intricacies of local labour regulations can pose significant challenges for businesses looking to expand into global markets. Organisations will be required to be knowledgeable of and comply with regulations about hiring employees, working hours, leave policies, and terminating contracts.

XPANDIUM provides a strategic solution which enables businesses to expand into Indonesia without the stress and strain associated with this process.

As your strategic partner, XPANDIUM leverages its expertise as an Employer of Record provider in Indonesia to kickstart your business operations promptly, cost-effectively and in compliance with local labour laws - eliminating the need to establish a legal entity.

XPANDIUM understands these complexities and can offer your company seamless guidance and support, ensuring that the proper labour practices are maintained. 

When you partner with XPANDIUM, we will ensure your company complies and stays current with any Indonesian labour code changes.

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The following information is a basic guideline for employing staff in Indonesia and the salary calculator can easily help you to understand the basic costs.

Employment Contract

Employment relationships may be agreed on for

  • fixed term employment (temporary) or
  • indefinite duration (open-ended, permanent).

Probation period

Probation period is optional and cannot exceed 4 months.In case of fixed-term contracts, the probation period can not be more than 50% of the term of the contract.

Working hours

Full time employment is considered 8 hours per day and 40 hours per week in Indonesia. Less hours will mean part-time work.

Hours worked above 8 hours per day / 40 per week or on public holidays are considered overtime. Employer and Employee must agree on working overtime.

Overtime hours cannot exceed a total of 8 hours within a 7 days’ period and must be compensated during payroll for overtime as per local law.Parties may agree that the overtime hours over a 4-months’ time-frame schedule be an average 12 hours for every 7 calendar days.

Minimum wage

The current minimum wage is 584 EUR for full-time employment or 3.84 EUR for hourly work in Indonesia.

13th month salary

Not required.

Benefit package

In Indonesia, there are no obligatory fringe-benefits that an Employer must offer, however a custom benefit plan may be set up for your team (see more details at the Benefit section).

Payroll Cycle

Salaries are payrolled and paid on a monthly basis.

Health insurance in Indonesia

The Indonesian health insurance system is a solidarity-based social insurance system. This means it provides healthcare for everyone, including persons insured by employment agreement. Estonia is covered by health care and treatment is equally available in all regions. Employees can order a European Health Insurance Card or its replacement certificate in the State Portal.

Employer taxes

33.8% total employment cost in Indonesia.


Public Holidays

When managing your workforce in Indonesia, it’s important to acknowledge and incorporate national public holidays in your leave policies. This ensures that your employees will receive their required benefits and that your business stays compliant with local labour regulations. XPANDIUM is here to assist you in navigating these complexities, making sure that your workforce is managed in accordance with the law.

Indonesia formally celebrates 12 different public holidays throughout the year. As your Employer of record (EOR) in Indonesia, XPANDIUM stays up to date with these details to ensure your workforce is compliantly managed during these periods. It's important to note that these public holidays are separate from the minimum paid leave requirement so that employees can utilise both their leave and these public holidays.

Here is a list of all the recognised national public holidays in Indonesia:




New Years Day

January 1

Independence Day

February 24

Good Friday

April 2

Friday before Easter Sunday

Easter Monday

April 4

Varies yearly

Labor / Spring Day

May 1


May 23

Victory Day

June 23


June 24

Indonesian Day

August 20

Indonesian Restoration of Independence

Christmas Eve

December 24

Christmas Day

December 25

2nd Day of Christmas

December 26


Popular benefits in Indonesia

In Indonesia, all employees employed for at least six months must participate in the country’s social security program. This program includes mandatory benefits such as worker's compensation, old age, death, and pension benefits.

As of January 2019, the retirement age in Indonesia is set at 57 years old and will increase by one year every three years until it reaches 65. Once employees have completed 15 years or 180 months of enrolment in the program and reach retirement age, they become eligible for retirement benefits.

XPANDIUM’s Employer of Record (EOR) services in Indonesia offer businesses the opportunity to provide customised benefits beyond salary to enhance their employees' compensation packages. These additional benefits may include:

·        Supplementary medical insurance (private/dental/vision)

·        Supplementary life insurance or other special insurance,

·        Additional paid time off

·        flexible work schedules

·        voluntary pension fund scheme


By utilising XPANDIUM’s EOR services in Indonesia, businesses can tailor their compensation packages to attract professionals while ensuring compliance with local labour regulations.

Supplementary medical insurance  icon

Supplementary medical insurance (private / dental / vision)

Supplementary medical insurance  icon

Supplementary Life or other special insurance

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Additional paid holidays

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Flexible work schedule

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Voluntary pension fund scheme

Benefit planning process includes

Creating an attractive benefits package to attract talent can be a complex process. Offering an individual benefit for one or a select group of employees needs to be planned and advised to be signed with a side agreement and the employment contract.

As a leading employer of record providers in Indonesia, XPANDIUM can help simplify this process. This will include:

1.     Determining the annual amount you want to offer employees – this amount can be divided into 12 instalments and integrated into the regular payroll.

2.     Select the specific benefit items your company would like to offer its employees – this may include voluntary benefits such as medical insurance, additional paid time off and flexible work schedules.

3.     Creating internal policies which will outline the details of the benefits plan. These policies must be formally and thoroughly communicated to relevant employees and integrated with the monthly payroll.

4.     Ensuring employees have accurately completed benefit statements – specifying preferred benefits and respective amounts.


Types of Leaves

Paid leave

Employees are entitled to 28 days.

Public holidays

There are 12 public holidays in Indonesia.

Sick leave

An employee is entitled to 182 sick-leave days yearly while enrolled in the national social security system.

Payment is 70% of the employee’s average salary, which is paid by the Employer from the 4th day of sickness but from the 9th day the payment is taken over by the State.

Pregnancy and maternity leave

Expecting women can have a total of 20 weeks / 140 days.

Maternity leave may include and start 70 days prior to giving birth. State health insurance covers maternity leave with 100% payment.

Parents receive a one-time 320 EUR allowance for child birth and in case of triplets the payment is 1,000 EUR per child.

Paternity / paternal leave

The father is entitled to 10 working days off for paternity leave which can be granted within 2 months of the expected child’s birth date. After the birth, fathers are entitled to 2 months of paternity leave with the payment of 100% average salary payment, however it is capped at 3 times of the minimum wage amount.

Other / Child Adoption leave

Employees are entitled to a special leave if adopting a child under the age of 10.

Other / Child care leave

Any parent may take paid leaves for taking care of a child.

Leave varies based on the age of child:

  • 3 days - up to 2 children under the age of 14
  • 6 days - 3+ children under the age of 14

Payment for days taken is calculated based on the minimum wage.


Employment termination

Employers have the below options to terminate an employment contract in Indonesia:

Termination under probation period

Termination by the Employer is immediately effective with a special 15 days’ written notice to the Employee.

Resignation by Employee

Employees may freely terminate their employment contract with a written notice of minimum 14 days to 1-month notice.

Termination by Employer with notice

An employment agreement may be terminated by the Employer by notice with below period of notices.

If employment period is

  • up to 1 year period: 15 calendar days
  • from 1 to 5 years of employment: 30 calendar days
  • from 5 to 10 years of employment: 60 calendar days
  • 10+ years of employment: 90 calendar days

Termination of fixed term contract

If termination is due to Employer’s redundancy, the employee is entitled to the salary that they would have received from the date of termination to the expiry date of the contract.

Termination by mutual consent

The termination by mutual consent allows the Employer and Employee to agree freely in a written agreement with each other on the conditions of termination.

Expiry of employment contract

When the employment contract expires then such employment is automatically terminated.

Severance pay

Employee is entitled to severance pay if the Employer terminates the contract due to redundancy. The severance pay is the average salary calculated based on the latest 6 months salary.

Employees are entitled to receive higher amounts of severance pay depending on the length of employment with the Employer:

  • From 5-10 years of employment: +1 month salary
  • over 10 years of employment: +1 month salary

How EOR works in Indonesia

XPANDIUM offers Employer of Record services in Indonesia, providing businesses with a solution to effortlessly hiring, onboarding and supporting employees worldwide while staying compliant with local labour regulations. With our EOR services, your employee becomes a part of your company while we serve as their employer in Indonesia.

We take responsibility for ensuring that your employees are employed in accordance with local labour regulations. This includes managing payroll administration, handling salary payments, and fulfilling employment-related tax obligations. By handling the complexities of employment in Indonesia, we free up your time to focus on growing your business.

Take the complexity out of hiring employees in Indonesia, and contact XPANDIUM for a tailored solution.


Payments to employees in Indonesia

When it comes to payroll in Indonesia, XPANDIUM offers a solution that covers all aspects of payroll management. As your trusted EOR, we use our extensive experience in payroll, tax systems and labour regulations to simplify this process for your business. XPANDIUM handles everything from organising payroll setup and salary calculations to ensuring compliance with labour contracts.

Moreover, XPANDIUM facilitates the payout of approved salaries based on your chosen policy—whether it's net or gross income, taxable or non-taxable earnings and recurring or non-recurring payments.

We also take care of reimbursements, contributions to insurance and payments for individual income tax (IIT).

Partner with XPANDIUM and experience the benefits of our expert payroll services in Indonesia.