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Hire and manage employees in Indonesia

As your Employer of Record (EOR) in Indonesia, we’d help you expand by hiring employees and running their payroll without establishing a local branch office or subsidiary.
Last updated:
February 4, 2026
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Quick facts

Indonesia's economy is one of the largest in Southeast Asia, heavily relying on manufacturing, services, and natural resources. The country has a diverse workforce and a mix of traditional and modern labor practices. Below are key employment specifics to consider when hiring or working in Indonesia.

Employment Contracts

In Indonesia, employment contracts are typically classified into two types:

  1. Fixed-term employment contract: This type of contract is temporary and can last for up to two years, with an option to extend for an additional 12 months. After a 30-day grace period, the contract can be renewed once for another two years
  2. Indefinite-term employment contract: This is the most common contract, offering ongoing employment until either the employee resigns or is terminated by the employer

Probation Period

The probation period for indefinite-term employment contracts is typically up to three months. Fixed-term contracts do not include a probation period, making the termination process simpler.

Working Hours

Standard working hours are either 7 hours per day for a 6-day workweek, or 8 hours per day for a 5-day workweek, with a maximum of 40 hours per week. Overtime is compensated based on the employee's monthly wage:

  • 1.5 times the normal hourly rate for the first hour
  • 2 times the normal rate for subsequent hours

Vacation Days

Employees are entitled to 12 days of annual leave after completing 12 consecutive months of work. If not taken within the year, these days are forfeited. Additional leave includes 3 days for the employee’s marriage and 2 days for the marriage of a child.

Sick Leave

Sick leave is paid as follows:

  • 100% of wages for the first 4 months
  • 50% of wages for the next 4 months
  • 25% for subsequent months until employment termination

Wages and Salary Payment

Salaries are generally paid weekly, bi-weekly, or monthly, but must be paid by the end of the month. The minimum wage varies by province, for example:

  • DKI Jakarta: IDR 4,416,186
  • Papua: IDR 3,516,700

Public Holidays

14 public holidays in Indonesia include:

  • January 1: New Year's Day
  • May 1: Labour Day
  • August 17: Independence Day
  • December 25: Christmas Day

Additionally, Islamic holidays like Idul Fitri and Idul Adha are widely observed.

Employer Taxes

Employers contribute to social security, including:

  • Accident benefit: 0.24% to 1.74% depending on the industry
  • Life insurance benefit: 0.3%
  • Old-age benefit: 3.7%
  • Pension benefit: 2%

The maximum salary for certain contributions is capped at IDR 8,512,400 per month, with varying rates.

Employee Taxes

Employees are taxed based on their income, with individual rates as follows:

  • Up to IDR 50 million: 5% tax
  • Above IDR 50 million to IDR 250 million: 15%
  • Above IDR 250 million to IDR 500 million: 25%
  • Above IDR 500 million: 30%

In addition, employees contribute to social security programs like health care (1%), pension (1%), and old-age benefit (2%).

Notice Period

A 30-day notice period is required to terminate an employment contract in Indonesia, as governed by the Labour Law.

Termination and Severance Pay

Severance pay varies depending on the contract type:

  • Indefinite-term employees are entitled to severance pay, long service pay, and compensation for rights.
  • Fixed-term employees are not entitled to severance or long service pay. If terminated before the contract ends, the employer must pay the employee’s salary until the end of the contract period.
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What is International EOR and PEO?

International EOR (Employer of Record) and PEO (Professional Employer Organization) are services that enable businesses to compliantly hire, manage, and pay employees in foreign countries without the need for establishing a legal entity. EOR acts as the legal employer while PEO co-employs workers, handling administrative tasks such as payroll, taxes, and benefits.

Does Acvian handle time record submissions?

Acvian does not handle time record submissions directly. It is the client’s responsibility to track and submit employee work hours. However, Acvian can offer guidance and best practices to ensure efficient time tracking and compliance with local labor laws.

How can employees view their payroll details?

Employees can view their payroll details through the monthly payslips they receive and also via our Acvian platform. These payslips contain information on earnings, deductions, taxes, and net pay, giving employees a clear overview of their monthly payroll. Please note that in some countries, employers are restricted from viewing payslips due to data protection regulations, and only employees can share their payslips. For more details on these regulations, please contact our specialists.

How Acvian handles payroll disputes?

Acvian addresses payroll disputes promptly, working closely with both the client and the employee to investigate and resolve any issues.

Does Acvian require advanced monthly payments of salaries and service?

Yes, Acvian requires advanced monthly payments for salaries and service to ensure timely and accurate payroll processing.

Can Acvian provide consultations regarding a labor and tax legislation?

Yes, Acvian can provide consultations regarding labor and tax legislation. Our team of experts is well-versed in local regulations and can offer guidance to help your business maintain compliance, reduce risk, and navigate the complexities of international employment and taxation laws.

Which benefits does Acvian provide?

Acvian provides a diverse range of benefits, including but not limited to:

  • Health insurance
  • Car leasing
  • Gym allowance
  • Per diem compensation
  • Maternity leave

We can customize and offer many kinds of benefits requested by the client, ensuring that your employees receive the support and perks that align with your company culture and local regulations.

Can Acvian provide private health insurance?

Acvian can provide private health insurance options as part of its comprehensive employee benefits package.

What would the monthly/yearly costs for the employee be?

The monthly/yearly costs for an ‘average’ package vary depending on the specific plan and location. See our estimated price packages here. Acvian’s team can provide detailed cost breakdowns based on your requirements.

Can Acvian help with entity set up?

While Acvian doesn’t directly provide entity set-up services, we can introduce you to local lawyers who specialize in this area to assist you with your needs. See also, when it's better to set the entity or use the EOR.

Offboarding: how it is handled?

Offboarding is managed by Acvian in a structured and compliant manner. We coordinate with your business to ensure all necessary documentation, exit interviews, and final payments are completed. Acvian also ensures adherence to local labor laws and regulations, including providing any required notice periods and managing the termination process.

When does business need it?

Businesses typically need EOR and PEO services when they:

  • Expand into new international markets.
  • Hire remote employees in foreign countries.
  • Seek to streamline global workforce management.
  • Aim to ensure compliance with local labor laws and regulations.
  • Want to reduce the time and cost of establishing legal entities abroad.

Is Acvian compliant with GDPR?

Yes, Acvian is fully compliant with GDPR regulations. We collect and process personal data in accordance with the law, ensuring that data is used only for general, allowed purposes such as marketing and other legitimate business activities.

Do you provide employment agreements?

Yes, Acvian provides both permanent and fixed-term employment contracts, with the possibility of extension. After the second extension, the contract becomes indefinite.

How do employees view their payroll?

Employees can view their payroll details through the monthly payslips they receive and also via the Acvian platform.

Where can Acvian supply EOR services?

Acvian can supply EOR services in over 180 countries, encompassing almost all European nations, the United States, and Canada, providing extensive coverage to support your business’s global expansion and workforce management needs. See our coverage here.

How does payroll work under EOR?

Under EOR, Acvian manages the payroll process by:

  • Acting as the legal employer of your foreign workforce.
  • Handling salary calculations, deductions, and disbursements.
  • Ensuring compliance with local tax and labor laws.
  • Managing payroll taxes, social contributions, and benefits.
  • Providing timely and accurate payroll processing for your employees.

Explore the details here.

Can you provide support for expatriate EOR workers?

Yes, Acvian provides comprehensive support for expatriate EOR workers, including:

  • Visa and work permit assistance.
  • Relocation and housing support.
  • Local registration and compliance.
  • Payroll and tax management.
  • Coordination of benefits and insurance coverage.

Explore in details here.

What are the details of expats support?

Expats support from Acvian encompasses a range of services designed to facilitate a smooth transition for employees working abroad. Key aspects include:

  • Assistance with visa and work permit applications, renewals, and compliance.
  • Support for relocation, including housing, schooling, and local registration.
  • Guidance on local tax regulations and filings.
  • Coordination of locally compliant benefits and insurance coverage.
  • Ongoing support for any changes or issues that may arise during the expatriate assignment.

What happens after onboarding?

After onboarding, Acvian maintains an ongoing relationship with your business and employees, ensuring smooth payroll processing, managing tax and regulatory compliance, handling benefits administration, and providing support for any changes or issues that may arise in the employment lifecycle. This allows you to focus on your core business operations while Acvian manages your international workforce.

How many days will it take for our personnel to be onboarded?

The onboarding process typically takes between 2 to 4 weeks, depending on the country and complexity of the employee’s situation. However, Acvian strives to expedite this process, ensuring a smooth and efficient transition for your personnel. See our story of the urgent employment project.

Does Acvian provide in-country support for employee inquiries or assistance requests?

Yes, Acvian provides in-country or regional support for employee inquiries and assistance requests. We have dedicated managers in the countries where we support your employees, ensuring prompt and knowledgeable assistance tailored to local regulations and practices.

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