Indonesian Rupiah
Date Format

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0.24% - 1.74% - Work Accident
3.70% - Old Age
0.30% - Death
2.00% - Pension
4.00% - Health
2.00% - Old Age
1.00% - Pension
1.00% - Health
5.00% - Up to 50,000,00
15.00% - 50M - 250M
25.00% - 250M - 500M
30.00% - Over 500M

Minimum Wage


Minimum wages vary from region to region, with the lowest being 1.6 million in Jawa Tengah and the highest being 3.94 million in Jakarta. To find your regions current minimum wage, us the following formula: 

(Minimum Wage Old Year x {Annual National Inflation Rate + Annual National GDP Growth Rate}) 

Minimum wage will increase by 8.5% in 2020 

Working Hours


The working hours are arranged as follows: 

  • Employees with 6 workdays a week work 7 hours a day and 40 hours a week. 
  • Employees with 5 workdays a week work 8 hours per day and 40 hours a week.  

These working hours rules do not apply to certain businesses and are usually regulated with a Ministerial decision.


Employees are not permitted to work more than 3 extra hours a day and 14 extra hours per week.  

The Labour Law and Overtime Regulations require employers to meet the following conditions: 

  • Employers must write a written order for the performance of overtime hours. 
  • Employee, on his or her part, should write the written consent to work extra hours. 
  • Employers must pay overtime wages; 
  • Employers must provide suitable conditions of resting for employees working extra time. 
  • Employers should provide drinks and food to employees who work extra 3 or more hours.  

The calculation of overtime payment is based on the employee’s monthly wage – basic wage and fixed allowances. The calculation of overtime wage is done according to the following considerations: 

  • If employees work overtime during weekdays, they receive one and a half times of their hourly wage for the first overtime hour. For every subsequent overtime hour, they receive wages paid at two times the hourly wage.  
  • If employees work overtime on a weekly rest day or any public holiday falling on a weekly rest day while working a six-day work week, their overtime payment is calculated as follows: 



The first seven hours 

Two times the hourly wage 

The eighth hour 

Three times the hourly wage 

The ninth and tenth hour 

Four times the hourly wage 


  • If employees work overtime on a weekly rest day landing on a weekday when working a six-day work week, their overtime payment is calculated as follows: 



The first five hours 

Two times the hourly wage 

The sixth hour 

Three times the hourly wage 

The seventh and eight hours 

Four times the hourly wage 


  • If employees perform overtime work on a weekly rest day or a public holiday working a five-day work week, their overtime payment is calculated in this way: 



The first eight hours 

Two times the hourly wage 

The ninth hour 

Three times the hourly wage 

The tenth and eleventh hours 

Four times the hourly wage 

 Employees who hold high-level positions and whose working time cannot be restricted by hours are not eligible to receive overtime payment. 



10% standard rate.

Mandatory Benefits

Pension Fund

Pension age currently is 56 years old and retirement is not required to receive pension. An employee needs to have contributed towards the pension fund for 180 months to receive periodical pension benefits. Employees who have contributed less than 15 years receive a lump sum payment. This is built by the provident fund and social insurance. 

  • Employer – 

Social insurance -1% gross monthly earning 

Provident Fund – 2% gross monthly earnings 

  • Employer –  

Social Insurance – 2% gross monthly earnings 

Provident Fund – 3.7% gross monthly earnings

Social Security

Social Security includes contributions to health care, work accidents, procident fund, and death benefit.

Employers' maximum total contribution is 11.74% of workers wages. Employees contribution equals 4% of their monthly saalry. The salary cap for contributions is IDR 7,703,500.

Health Insurance

Health insurance is compulsory, and contributions are made by the employee and employer through social securities. These cover sickness, maternity leave and workman’s compensation 

  • Employer – 4% (private sector) and 3% (public sector) of monthly covered payroll. 
  • Employee – 1% (private sector) and 2% (public sector) of monthly covered earnings. An additional 1% of monthly covered earnings for each family member and other covered dependents. 
Unemployment Insurance

Indonesia doesn’t have unemployment benefits.


Payroll Frequency

Wages may be paid weekly, bi-weekly, or monthly.

Payroll Cycle

Wages may be paid weekly, bi-weekly, or monthly but should at least be made by the end of the month. It is common to be paid between the 5th and 15th of each month.  


Termination Process

Indonesian Labour Law does not contain an article on termination. Yet employers cannot just dismiss their employees at will. To do so, they need to get approval from the IRC. To obtain this approval, the employer should file a lawsuit, unless he or she reaches an agreement with the employee by signing a mutual termination. This agreement should be registered with IRC to be valid.  

Nor does the Labour Law provide protection for employees. Yet it disallows to dismiss employees for the following reasons: 

  • The employee gets married.
  • The employee is absent because of illness for less than 12 months. 
  • The employee is an active member of a trade union. 

The reasons for which employees can be discharged from work are as follows: 

  • The employee violates the employment agreement. 
  • The employee is imprisoned. 
  • The employee is ill for more than 12 months. 
  • The employee is absent from work for more than 5 days without a valid reason, provided he or she has been notified twice.
  • The employee has reached retirement age. 

Not all reasons for employees’ dismissal should be related to their misbehaviour. The employer can discharge employees for several business-related reasons: 

  • There can be a change of the company’s status, its merger with another business, or acquisition of its ownership. 
  • The employer becomes insolvent.
  • The employer has suffered continuous losses for two years consecutively as proven by financial reports.

The employer is closing the business permanently. 

Advance Notice

Employees are expected to provide a written termination letter and one months notice.

Severance Pay

Employees who are discharged from their job are entitled to receive a payment of:

  • Less than 1 year of employment – 1-month wage
  • 1 year or more, but less than two years – 2 months wage
  • 2 Years or more but less than 3 years – 3 months wage
  • 3 years of more, but less than four years – 4 months wage
  • 4 years or more, but less than 5 – 5 months wage
  • 5 years or more, but less than 6 – 6 months wage
  • 6 years or more, but less than 7 – 7 months wage
  • 7 years or more, but less than 8 – 8 months wage
  • 8 years or more – 9 months wage