🇮🇩 Hiring in Indonesia

💡 Everything you need to know to hire and manage employees in Indonesia through Toku. Toku handles payroll processing, tax withholding, social contributions, and statutory compliance. This guide covers what you need to plan costs and manage your team.

At a Glance

Onboarding a New Hire

Plan for 7-10 business days between submitting a new hire and their start date. Toku registers the employee with BPJS health insurance and BPJS employment social security before they start; your new hire just needs to provide their NPWP (tax ID) and KTP (national ID).

Submit your new hire through the Toku platform and we take it from there: local employment agreement, statutory registrations, and payroll setup. See Onboard Contributors as a Client Admin in Toku for the step-by-step process, and the Country Readiness Live Tracker for lead times across all countries.

Employer Costs

On top of each employee's gross salary, you pay the following employer contributions:

On top of these contributions, the Religious Holiday Allowance (THR) is mandatory: one month's salary per year for employees with 12 months of service (pro-rated below that), paid at least seven days before the employee's religious holiday. Counting the THR, total cost of employment is roughly 118-120% of gross salary.

Employees contribute 1% to BPJS health, 2% to old age savings, and 1% to pension, plus progressive income tax withheld monthly. These come out of gross salary, not on top of your costs. Toku calculates and remits all of the above.

Compensation & Payroll

Toku runs one payroll per month in Indonesia, paid in IDR, and employees receive a payslip each cycle. Minimum wages are set at the provincial and city level and vary widely: Jakarta's 2026 minimum is IDR 5,729,876 per month. The THR is the key extra pay event of the year; Toku schedules it against each employee's religious holiday so the statutory deadline is always met.

Employment Contracts & Probation

• Toku issues a compliant local employment agreement for every hire, drafted in Bahasa Indonesia as the law requires (a bilingual version is provided, with the Indonesian text prevailing).
• Indefinite-term contracts (PKWTT) are the default. Fixed-term contracts (PKWT) are only allowed for genuinely temporary work and are capped at five years; overstepping converts them to permanent status.
• Probation is capped at 3 months by statute and is only permitted on indefinite-term contracts. During probation, employment can be ended with 7 days' notice.

Working Hours

The standard working week is 40 hours, structured as 8 hours over 5 days or 7 hours over 6 days. Overtime requires the employee's written consent, is capped at 4 hours per day and 18 per week, and must be paid in cash: 150% for the first hour and 200% after that, with higher multiples (up to 400%) for rest day and holiday work. Managerial roles can be exempt from overtime provisions.

Leave Entitlements

Annual leave expires six months after it accrues unless otherwise agreed. Unlike many countries, most leave in Indonesia is employer-funded, including maternity leave, so factor this into planning.

Public Holidays (2026)

Indonesia observes 17 national public holidays in 2026, reflecting its multi-religious calendar, plus 8 government-designated collective leave days (cuti bersama) adjacent to major holidays. Islamic holiday dates are approximate and can shift by a day based on moon sighting.

Benefits: Required vs. Common Extras

Statutory (included in employer costs above): BPJS health insurance, BPJS employment social security (old age savings, pension, work accident, and death insurance), the THR allowance, and statutory leave.

Toku offers fully sponsored international health coverage through Remote Health. See Remote Health, Your Global Insurance Plan for coverage details and enrollment.

Common extras in the Indonesian market include private health insurance (broader hospital access than BPJS), meal and transportation allowances, mobile phone allowances, life insurance, and training subsidies. Toku can advise on the cost impact of any extras you want to offer.

Ending Employment

Indonesia has one of the most protective severance regimes in Southeast Asia: termination is legally a last resort, requires 14 working days' written notice with a severance calculation attached, and disputes escalate through mediation to the Industrial Relations Court, so involve Toku early, before any termination conversation happens. For the process, see How to Terminate an Employee or Contractor.

Statutory severance scales from 1 month's salary (under 1 year of service) up to a maximum of 9 months (8+ years), plus a long service award of 2 to 10 months' salary for employees with 3 or more years of service, plus compensation for unused leave and other rights. The multiplier on the severance component varies with the reason for termination (for example, 0.5x for efficiency measures following losses, 1.75x for retirement), so total exit costs can be substantial: Toku will calculate the exact package for any scenario before you commit.

Hiring Someone from Overseas?

Every foreign national needs an employer-sponsored work permit and limited stay permit (KITAS), starting with a foreign manpower plan (RPTKA) that shows the role requires expertise not available locally; candidates generally need at least five years of relevant experience. Sponsorship also carries a USD 100 per month foreign worker levy and a knowledge transfer counterpart requirement, and processing takes roughly 4 to 8 weeks. Talk to Toku before extending an offer to a candidate who needs sponsorship.

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Last verified July 2026. This guide is for general information and doesn't constitute legal or tax advice. Your Toku account manager can confirm specifics for your situation.