
Indonesia
Indonesia is a nation in the Indian and Pacific oceans, off the coast of Southeast Asia. It is an archipelago that lies across the equator and extends for one-eighth of the circumference of the planet.
Since the middle of the 20th century, Indonesia has had a low impact on global economic activity, despite its size, wealth, and location seeming to call for a more significant contribution. The nation produces large-scale exports of natural gas and crude oil. Along with producing a wide variety of other goods like sugar, tea, tobacco, copra, and spices, Indonesia is one of the world's major producers of rubber, coffee, cocoa, and palm oil.
Business activities are optimistic, with notable performance in the services sector, including business operation outsourcing, real estate, tourism, and finance and insurance industries.
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Why work in
Indonesia
?
Indonesia has two key advantages that few countries can boast of: it has the largest population in Southeast Asia and a population that will remain youthful for the foreseeable future.
The Labor Law of 2003 is the primary labor code that sets rules for employee protections and rights at the federal level that applies to Indonesia's 4.2 million workforces. Employees in Indonesia are shielded from discrimination based on age, religion, gender identity, and race.
For its economy to meet its growth targets, Indonesia also depends on foreign investment. Businesses are motivated to grow in this nation for this reason.
According to an Asian Development Bank assessment, Indonesia's GDP is anticipated to increase by 5.0% in 2022, and 5.2% in 2023 as domestic demand continues to recover.
The country's economic foundation has changed from the primary sector to the secondary and tertiary industries, manufacturing, trade, and services, even though Indonesia has continued to be a significant importer of manufactured products, high technology, and technical skills since the early 1970s.
Early in the 1990s, manufacturing overtook agriculture as the largest contributor to GDP and has remained so ever since. Employment costs are low, making hiring in Indonesia very attractive for international companies. Indonesia is well-recognized for its outsourcing capabilities, rapidly expanding economy and enthusiastic young workforce. With almost one-third of GDP coming from services, this sector of the Indonesian economy is significant.
Through the Gloroots’ Recrew platform, you can discover amazing talent in Indonesia.

Grow your team in
Indonesia
Unlock growth in Indonesia with Gloroots as your trusted Employer of Record (EOR). We handle payroll, tax, benefits, and compliance, letting you focus on employees and company growth. Partner with Gloroots' Indonesia EOR for streamlined operations and compliance with employment laws. We manage cross-border complexities, ensuring a smooth expansion. Focus on talent and team growth while we handle compliance and payroll. Trust Gloroots to navigate Indonesia's labor market and unlock your business potential.
Risks of misclassification
Proper employee classification is crucial in Indonesia to avoid legal issues. Opt for a reliable PEO/EOR to safeguard your business. They ensure compliance, accurate classification, and smooth payroll. These experts also manage benefits for your workforce's protection. Trust them for employment tasks in Indonesia while you focus on your business.
Employing in
Indonesia
Discover the wealth of talent in Indonesia, a country with a vibrant young workforce and strong educational foundation. With numerous top-ranking universities and a thriving tech and business scene, it's a haven for skilled individuals. As you plan to hire the best minds, remember to navigate labor laws, contracts, and important policies like social security, payroll, and benefits. To ensure a smooth journey, consider teaming up with Gloroots for expert guidance and support. Your path to building a talented team starts here.
Legal aspects of employing in
Indonesia
Working hours
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Payroll
Three major laws govern employment laws in Indonesia are governed:
- Labor Law of 2003 on Manpower as recently amended by Law No. 11 of 2020 on Job Creation and recently revoked by Government Regulation in Lieu of Law No. 2 of 2022 on Job Creation;
- Law No. 21 of 2000 on Labor Union; and
- Law No. 2 of 2004 on Industrial Relations Dispute Settlement.
EMPLOYMENT CONTRACT
Employers provide two kinds of employment contracts: fixed-term and indefinite-term contracts.
Fixed-term contracts are for specific job roles and don't exceed 2 years. They require no probation period and must be in writing and in Indonesian.
Indefinite-term contracts are for full-time employees and often include a 3-month probation.
Contracts include:
- Employee's name, age, address, gender
- Company's name, address, business type
- Job title or role
- Work location
- Salary and payment details
- Employment terms, rights, obligations
- Start date, agreement details
To ensure clarity, trust, and smooth employment, well-structured contracts are vital. Gloroots' Indonesian PEO and EOR solutions can handle contract creation for you.
This might sound overwhelming, but it doesn't have to be. Gloroots eliminates these barriers for you. With Gloroots' Employer of Record offering, hiring and managing employees globally is a piece of cake.
Get an overview of what you need to know when hiring in Indonesia. Contact us.
Working Hours
The total working hours must not exceed 40 hours in a single week. Employers are required to provide a rest period of at least half an hour to employees on working days after they have worked for four consecutive hours.
Do note, that these working hour regulations may not be applicable to certain businesses. Work with a compliance expert or an EOR to get the best out of Indonesian talent and to stay compliant with local working hours regulations
Overtime:
Employees are eligible for overtime compensation if they work over 7 hours daily. Employees must receive compensation for working on weekends and public holidays.
Overtime pay is calculated at 1.5 times the regular hourly wage for the initial hour and doubles for every two hours thereafter.
Minimum Wage:
The minimum wage requirement in Indonesia varies across regions, with Central Java setting it at 1,798,979 IDR and DKI Jakarta at 4,416,186 IDR, among others. Additionally, Indonesia has implemented labor law reforms, including the introduction of an hourly wage for part-time workers through Government Regulation 36 of 2021.
To determine the hourly wage for part-time workers, a formula is applied: the monthly wage is divided by 126. Similarly, the daily wage can be calculated by dividing the monthly wage by 25 for a six-day workweek or by 21 for a five-day workweek.
While employers and employees have the flexibility to negotiate their agreement, it is important to ensure that the final salary adheres to the minimum calculation provided by the aforementioned formulas.
Public holidays
Indonesia observes 14 days of public holidays every year.
Annual Leave:
In Indonesia, paid leave entitlement is specified in the employment contract, typically granting employees a minimum of 12 days of paid annual leave per year once they have completed one full year of employment. Additionally, employees who have worked continuously for six years with the same employer are entitled to one month of leave in their seventh year of service and another month of leave in their eighth year of service.
Maternity Leave and Paternity Leave
Female employees in Indonesia receive three months of fully paid maternity leave before the estimated due date and an additional one and a half months of leave after giving birth.
The maternity leave is compensated at 100.00% of the regular salary rate.
Paid Sick Leaves:
In the event of illness or injury, employees in Indonesia are eligible for paid sick leave upon presenting a medical certificate. Long-term sick leave, lasting for more than one year, may be recommended by a doctor in writing.
INCOME TAX
Compensation for employees on extended sick leave is structured as follows:
This ensures that employees on prolonged sick leave receive appropriate financial support throughout their recovery period.
Tax
Separation
Termination Process:
Terminating an employee should be carried out meticulously in Indonesia.
Before letting go of an employee, employers must try to find solutions and agreements, like adjusting schedules or giving extra training. If firing the employee becomes necessary, the reasons for the decision should be clearly explained in writing. If the employee thinks the firing is unfair, they can challenge it in the Labor Court.
Employees can be fired for different reasons, like breaking the work agreement, being imprisoned, being sick for more than a year, or not coming to work without a good reason. It's important to know that not all reasons are about the employee's behavior. Employers might also have valid business-related reasons, like company changes, merging with another company, financial issues, or closing down the business permanently.
Notice Period:
Typically, notice periods in Indonesia are set at 30 days, although employers have the option to stipulate longer notice periods in the employment contract.
Severance Pay:
In Indonesia, the entitlement to severance pay is determined based on the employee's length of service:
Probation Periods:
The probation period for permanent employees in Indonesia is set at three months.