How to hire remote employees in

Indonesia

Indonesia is a great place to hire remote talent. But if you don’t already have a physical presence there, hiring and paying your talent in Indonesia can get complicated. In the next five minutes, we’ll teach you how you can hire remotely in Indonesia—without paying thousands in legal fees and getting caught up in legal red tape:

Country snapshot

CURRENCY
Indonesian Rupiah (IDR)
EMPLOYER TAXES
10.00% - 11.74%
PAYROLL FREQUENCY
Monthly
OFFICIAL LANGUAGE
Lingua Franca, Jawa

What to know before you hire in 

Indonesia

Laws about hiring are complicated, and the same is true in Indonesia. But there are ways to sidestep the headaches—if your company hasn’t already established a physical presence in Indonesia, you have two real options when it comes to hiring. We’ll detail both below.

If you want to successfully hire in 

Indonesia

, you have two options:

Hire talent as contractors

Laws about hiring contractors are significantly more simple in 

Indonesia

. Onboarding talent takes days, not weeks or months. Both you, the company, and your talent have more flexibility. And in many cases, since you’re remote, the talent you’re hiring is better classified as a contractor, anyway. Of course, it’s not possible in every case, but it’s what we built Panther for.

Hire talent as employees

This is the long route. You can either establish a physical presence with an entity and register as an employer, or you can use an Employer-of-Record (EOR) solution. Odds are, you’ll find using an EOR to be the easier route. Still, using an EOR in 

Indonesia

 is expensive—it can often be $500 per month per employee—and sometimes prone to lengthy onboarding times.

Why hire independent contractors in 

Indonesia

Hiring contractors is normally the easier, faster, more flexible choice—but don’t just take it from us. Below are the specific benefits and drawbacks to hiring contractors in 

Indonesia

.

It’s the fastest way to hire globally

Hiring employees takes months, at the minimum. When you hire with Panther’s locally-generated contracts, it’s a matter of days or weeks. This means you can hire the best talent, fast, without losing them to a hellish procession of paperwork.

It’s a lot cheaper

It costs just $0 to sign up for Panther, then $49 per month to hire your contractors with Panther. If you hired employees manually (or did contracting on your own), you’d likely be on the hook for thousands of dollars each month. Setting up an entity alone can cost tens of thousands of dollars.

It’s more flexible for you & your team

Hiring contractors in 

Indonesia

 means you’re generally not on the hook for things like health insurance and paid time off. This makes hiring flexible for you, and it gives your talent more options.

It’s less risky than hiring employees

Hiring employees is a bigger commitment, and generally puts you at a bigger risk for legal fees. When you hire contractors overseas, your biggest risk is misclassification—but even then, misclassification penalties are often minimal and just require you to pay off any compensation that the person would have been owed as an employee.

Some people want to be employees

The contractor life isn’t for everyone—some people want the security that being an employee often appears to provide. Though it’s rare, this does happen, and it’s one disadvantage of manage an all-contractor team.

You might not have as much control over your talent

Most countries’ contractor-employer relationship laws stipulate that the employer can’t set fixed working hours, among other things. These laws give contractors more freedom over how and when they do their work than an employee would have. In reality, however, most contractors are willing & able to work on the company’s schedule—it’s a matter of setting expectations beforehand.

How can I pay people in 

Indonesia

?

If you’re hiring contractors in 

Indonesia

, you can pay them with Panther in a single click. You won’t need to worry about complicated wire transfers, fees, or currency conversions. We’ll take care of it all. Just make a click and your contractor will get paid in their currency of choice. This is a valuable bonus for talent in countries where the local currency is particularly weak—most people appreciate the ability to receive their payment in stronger currencies.

Hiring and paying your team in 

Indonesia

Hire and pay with Panther

Pay everyone with a single click
Get great currency conversion rates
Pay $0 in platform fees
Run payroll in seconds
Let Panther automatically create & store invoices
Let Panther automatically write locally-compliant contracts
Let Panther automatically file local tax documents

Hire and pay without Panther

Pay all your contractors individually
Do all currency conversions yourself
Shoulder the burden of platform fees
Spend hours each month making payments
Manually track & store invoices
Manually write & sign contracts
Manually file relevant tax documents

Let Panther save you from hiring headaches.

Sign up today for $0

If you want to hire employees in 

Indonesia

If you’ve read up until this point, you’ll know that it’s easier, cheaper, and more flexible to hire contractors in Indonesia than employees. Still, there are valid reasons why you might want to hire employees instead. The content below is for you—we’ll cover employer taxes and obligations in Indonesia.

Taxes in 

Indonesia

Employer tax

Employer Contributions

  • 10.00% - 11.74%

Individual tax

Leave

Paid Time Off (PTO)

  • Employees in Indonesia are entitled to receive 12 days of annual leave after they have worked for the same employer for 12 months consecutively. While they are on annual leave, employees receive full payment based on their regular daily payment.
  • Employers must take at least 6 days of leave. If employees do not use their annual leave, it expires 6 months after the date they were supposed to take it.  Employees and employers may agree upon monetary compensation for unused annual leave.

Public Holidays

16 public holidays.

Sick Days

When employees are sick or injured, they are entitled to paid sick leave, provided they show a medical confirmation of their ill-health. Employees can also have long-term sick leave lasting for longer than 1 year. A doctor should recommend such leave in writing.

Payment to employees on prolonged sick leave is as follows:

  • 100% in the first four months
  • 75% in the second four months
  •  50% the third four months
  • 25% of wages until termination

Maternity Leave

Pregnant employees are eligible to take 3 months of paid maternity leave. 1.5 months of this leave is taken in the prenatal period, the other 1.5 months are taken after childbirth. During their maternity leave, employees receive their full salary. Female employees who miscarry are entitled to a 1.5-month rest period if it is recommended by a doctor.

Employers also should provide conditions to breastfeeding mothers in their workplaces.

Paternity Leave

New fathers are entitled to 2 days’ leave for the birth of their child or a miscarriage.

Parental Leave

Employees are entitled to paid child leave in the following circumstances:

2 days paid leave for the circumcision of the employee’s child.
2 days paid leave for the Baptism of the employee’s child.
2 days paid leave for the marriage of the employee’s child.
2 days paid leave for the death of the employee’s child.

Other Leave

None.

Marriage Leave

None.

Bereavement Leave

2 days paid leave is given for the death of a worker’s spouse, child, child-in-law, parent, or parent-in-law.

Termination

Termination Process

Before an employee can be terminated, the employer must make a genuine effort to avoid the termination by negotiating with the employee and/or the employee’s labor union to find accommodation such as a change in working hours, improved working methods, or coaching.

If termination cannot be avoided, the employer must explain the reasons for termination clearly in writing to the employee and/or the employee’s labor union.

If the employee believes the termination is unjust, the decision can be challenged in the Labor Court, which will give the final ruling.

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 misbehavior. 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.

Notice Period

There is no law that specifies notice periods for an employee’s dismissal from work. In practice, a 30-day notice is given to the employee to terminate his or her employment contract.

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 

Probation Period

3-month probationary periods are permitted for employees on indefinite-term contracts if it has been agreed upon in writing between both parties. An employer cannot impose a probationary period on an employee on a fixed-term contract.

Employee requirements in 

Indonesia

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. 

Overtime

An employee cannot be forced to work overtime against his or her will and must agree to work longer hours. Employees are not permitted to work more than 4 extra hours a day and 18 extra hours per week.   If employees work overtime during weekdays, they receive 150% of their hourly wage for the first overtime hour. For every subsequent overtime hour, they receive wages paid at 200% of 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 workweek, their overtime pay is calculated as follows: 

1-7 hours – 200% their hourly wage
8th hour – 300% their hourly wage
9-10 hours – 400% their hourly wage 

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

1-5 hours – 200% their hourly wage
6th hour – 300% their hourly wage
7-8 hours – 400% their hourly wage  

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

1-8 hours – 200% their hourly wage
9th hour – 300% their hourly wage
10-11 hours – 400% their hourly wage   

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

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