Employee benefitsin Indonesia

Private medical insurance on top of national health insurance is a core part of salaried packages in Indonesia. In the 2024 Indonesia Health and Benefits Study of more than 470 companies across 24 industries, 94% provided inpatient benefits for employees and their families and 79% provided outpatient benefits.

Inpatient plans cover hospital room and board, general practitioner and specialist fees, surgery and related hospital costs, and are usually set up as either indemnity plans, which let employees choose any provider in the insurer's network within set limits, or managed-care plans, which route employees through a referral hierarchy of approved providers. Outpatient benefits cover doctor and specialist visits, medicines, physiotherapy and vaccines, either within one flexible annual limit ('as charged') or with separate limits per item ('inner limits'). Employers commonly extend cover to a spouse and children and often add maternity, dental and optical benefits, with limits set by job grade.

Cover is arranged and funded under the employer's policy, which sets whether employees contribute for themselves or for dependants.

Dental cover in Indonesia is usually provided as an optional benefit attached to an employer's group medical plan, with an annual limit for check-ups, fillings, extractions and sometimes orthodontic treatment that can vary by job grade. Dental benefits are within the scope of employer health benefit surveys, but no public prevalence rate is available.

Some Indonesian employers reimburse eye examinations, spectacle frames and lenses or contact lenses, within a periodic limit that can vary by job grade, either through a group medical rider or as a reimbursement policy. Optical benefits fall within the scope of employer health benefit surveys in Indonesia, but no public prevalence rate exists.

Workplace mental health support is less developed in Indonesia than elsewhere in Asia. In the Mercer Global Talent Trends study for 2023, 14% of organisations in Indonesia provided on-demand access to virtual mental healthcare, against 26% across Asia, and 36% were working to destigmatise mental health and encourage self-care. Employers that do provide support typically use an employee assistance programme (EAP), a confidential counselling service for employees and sometimes family members, or digital wellbeing apps.

Some employers offer wellness programmes, sports facilities, or subsidised gym memberships. One guide reports gym membership support of around IDR 300,000 to IDR 500,000 a month, taxable when paid in cash. In a 2023 survey, 45% of organisations in Indonesia said they designed work with wellbeing in mind, for example through no-meeting days.

Death Insurance (Jaminan Kematian), run by BPJS Ketenagakerjaan, Indonesia's employment social security body, pays the family when an active member dies from causes not related to work. The employer pays the whole contribution of 0.30% of monthly wages.

Heirs receive a death benefit of IDR 20,000,000, a lump-sum periodic benefit of IDR 12,000,000 and funeral costs of IDR 10,000,000, a total of IDR 42,000,000. Where the member had contributed for at least three years, education scholarships are paid each year for up to two children, from IDR 1,500,000 a year at kindergarten and primary level up to IDR 12,000,000 a year for university, until the child reaches 23, marries or starts work. Deaths caused by work accidents are compensated instead under work accident insurance.

Work Accident Insurance (Jaminan Kecelakaan Kerja), run by BPJS Ketenagakerjaan, Indonesia's employment social security body, covers injuries and occupational diseases arising from work, including commuting accidents. It is funded entirely by the employer at 0.24% to 1.74% of monthly wages according to the workplace risk class; office work falls in the lowest class. Since 2025, 0.14 percentage points of each rate is redirected to fund job-loss security, without changing the total the employer pays.

Benefits include medical treatment without a cost ceiling as medically needed (first-class public hospital room or equivalent), home care up to IDR 20,000,000 for up to a year, transport costs, and temporary incapacity pay of 100% of wages for the first 12 months and 50% thereafter until recovery. Permanent total disability pays a lump sum of 70% x 80 x monthly wages, and death from a work accident pays 60% x 80 x monthly wages plus IDR 10,000,000 funeral costs and a IDR 12,000,000 lump-sum periodic benefit. Scholarships are paid for up to two children, and a return-to-work programme supports rehabilitation.

Indonesia's employment social security system is run by BPJS Ketenagakerjaan, the Social Security Administering Body for Employment. Employers must register every employee and pay monthly contributions into five programmes:

- Work Accident Insurance (Jaminan Kecelakaan Kerja): employer pays 0.24% to 1.74% of monthly wages depending on the workplace risk class (0.24% very low, 0.54% low, 0.89% medium, 1.27% high, 1.74% very high).
- Death Insurance (Jaminan Kematian): employer pays 0.30%.
- Old-Age Savings (Jaminan Hari Tua): employer 3.7% and employee 2%, with no wage ceiling.
- Pension (Jaminan Pensiun): employer 2% and employee 1%, on wages up to IDR 11,086,300 a month from March 2026.
- Job Loss Security (Jaminan Kehilangan Pekerjaan): no extra charge to employer or employee; the 0.36% of wages is funded by the central government (0.22%) and by redirecting 0.14 percentage points of the work-accident contribution.

For an office-based employer in the lowest risk class the employer pays about 6.24% of wages into these programmes, and the employee 3%. Contributions are paid monthly. Micro and small businesses must enrol staff at least in work accident, old-age savings and death insurance.

Old-Age Savings (Jaminan Hari Tua) is a compulsory individual savings account managed by BPJS Ketenagakerjaan, Indonesia's employment social security body. Each month the employer contributes 3.7% and the employee 2% of monthly wages, with no wage ceiling. The balance earns investment returns.

The full balance is paid as a lump sum when the member reaches age 56, resigns or is dismissed and is no longer working anywhere, leaves Indonesia permanently, becomes totally and permanently disabled, or dies (to heirs). After at least 10 years of membership a member may withdraw once, before retirement, up to 10% of the balance to prepare for retirement or up to 30% towards home ownership. Employees may make voluntary top-up contributions.

The Pension programme (Jaminan Pensiun), run by BPJS Ketenagakerjaan, Indonesia's employment social security body, pays a monthly pension after retirement age, a disability pension, and survivors' pensions to a widow or widower, up to two children (until 23, marriage or employment) or a parent. Members with fewer than 15 years of contributions receive a lump sum of their contributions plus returns instead of a monthly pension.

Employers contribute 2% and employees 1% of monthly wages. Contributions are calculated on wages up to a ceiling that BPJS Ketenagakerjaan raises each March by the previous year's growth in gross domestic product: IDR 10,547,400 from March 2025 and IDR 11,086,300 from March 2026. At the 2026 ceiling the maximum monthly contribution is about IDR 221,726 from the employer and IDR 110,863 from the employee. Monthly pensions paid in 2026 range from IDR 411,400 to IDR 4,932,300.

Job Loss Security (Jaminan Kehilangan Pekerjaan) supports employees who are dismissed and are looking for new work. It pays cash of 60% of the last reported monthly wage for up to six months, calculated on wages up to IDR 5,000,000, so the maximum is IDR 3,000,000 a month. Members also get labour-market information and job training through the Ministry of Manpower.

To qualify, the employee must have at least 12 months of contributions within the 24 calendar months before dismissal and be registered in the national health insurance and employment social security programmes. Neither employer nor employee pays an extra premium: the 0.36% of wages is funded by the central government (0.22%) and by redirecting part of the employer's work-accident contribution (0.14%). Resignation, retirement, death and permanent disability do not trigger the benefit.

Employees on a fixed-term employment contract (perjanjian kerja waktu tertentu) receive compensation money (uang kompensasi) when the contract ends, provided they have worked at least one continuous month. Twelve continuous months earns one month of wages; shorter or longer periods are pro-rated as months of service divided by 12 times one month's wages. For example, a 30-month contract earns 2.5 months of wages. The wage base is base pay plus fixed allowances.

If a contract is extended, compensation for the original term is paid when it ends and a further payment follows the extension. If either party ends a fixed-term contract early, the employer still pays compensation for the period actually worked. Foreign workers on fixed-term contracts are excluded, and micro and small businesses agree the amount with employees.

When employment ends through dismissal, Indonesian law requires the employer to pay up to three components, calculated on base wages plus fixed allowances:

- Severance pay (uang pesangon): 1 month of wages for under one year of service, rising by one month for each completed year to 9 months at eight years or more.
- Long-service pay (uang penghargaan masa kerja): from 3 years of service, 2 months of wages, rising to 10 months at 24 years or more.
- Compensation of rights (uang penggantian hak): untaken annual leave that has not lapsed, return travel to the place of hire for the employee and family, and anything else in the contract, company regulations or collective agreement.

The reason for dismissal sets a multiplier on severance pay. Examples under Government Regulation 35 of 2021: merger, takeover, efficiency to prevent losses, closure not caused by losses, or employer misconduct, 1 times; efficiency because of losses, closure after two years of losses, bankruptcy, closure by force majeure, or dismissal after three warning letters, 0.5 times; force majeure without closure 0.75 times; retirement 1.75 times; long-term illness or work-injury disability beyond 12 months, or death (paid to heirs), 2 times. Long-service pay is paid at 1 times in these cases. Resignation, serious misconduct and unexplained absence of five working days give only compensation of rights and separation pay (uang pisah) set by the contract, company regulations or collective agreement. Micro and small businesses agree amounts with their employees. Employer contributions to a voluntary pension fund may be offset against these amounts.

For example, a dismissal for efficiency to prevent losses after 5 years and 4 months of service costs at least 6 months of severance pay, 2 months of long-service pay, and compensation of rights.

Beyond the statutory death insurance from employment social security, some employers buy group term life insurance that pays a lump sum, often a multiple of annual salary, if an employee dies in service, sometimes with permanent disability cover. Life and accident insurance are among employer benefits covered by Indonesian benefit surveys, and guides list life insurance as a supplemental or expected benefit, but no public prevalence or typical multiple is published. Premiums paid by the employer are generally taxable income for the employee when paid to a private insurer.

Some employers add group personal accident insurance, paying a lump sum for accidental death or disablement at any time, on top of statutory work accident insurance, which covers only work-related accidents. Accident insurance appears among benefits in Indonesian employer surveys and guides, without a published prevalence.

On top of the statutory old-age savings and pension programmes, some employers contribute to a voluntary pension plan, either an employer pension fund (dana pensiun pemberi kerja) or a financial-institution pension fund (dana pensiun lembaga keuangan) run by a bank or insurer. Contribution levels are set by the plan rules. Under Government Regulation 35 of 2021, an employer's contributions to such a plan can be counted towards its severance, long-service and separation pay obligations on termination, with the employer paying any shortfall, so many plans are designed partly to pre-fund severance.

Employees earn at least 12 working days of paid annual leave after 12 continuous months with the same employer. The contract, company regulations or collective agreement set how leave is scheduled, whether it may be split, and how long untaken leave remains available.

The government also designates collective leave days (cuti bersama) around major holidays each year. Under the annual joint ministerial decree these days are deducted from annual leave, and private employers decide whether to observe them. There are eight collective leave days in both 2026 and 2027. On termination, untaken annual leave that has not lapsed is paid out as part of the compensation of rights. Pay during annual leave is full wages.

An employee who cannot work because of illness, supported by a doctor's certificate, keeps receiving wages from the employer. There is no fixed annual number of sick days. For long illness, pay steps down in four-month blocks: 100% of wages for the first four months, 75% for the next four, 50% for the following four, and 25% from month 13 until the employer ends the employment.

An employer may not dismiss an employee for illness lasting up to 12 continuous months. Beyond 12 months, employment may be ended and the employee receives twice the severance table, long-service pay and compensation of rights. Work-related injuries and diseases are paid through work accident insurance rather than employer sick pay. Sick days are not deducted from annual leave, and company regulations often set reporting and certificate rules.

A female employee who experiences pain during menstruation and informs her employer is not required to work on the first and second days of her period, and the employer must continue to pay her wages for those days. How the right is exercised, for example notification and any medical evidence, is set in the contract, company regulations or collective agreement.

Employees receive paid days off for specific family events: 3 days for their own marriage; 2 days for a child's marriage, a child's circumcision or a child's baptism; 2 days when their wife gives birth or miscarries; 2 days for the death of a spouse, parent, parent-in-law, child or child-in-law; and 1 day for the death of another member of the same household. Wages are also paid while an employee performs worship required by their religion and while carrying out duties to the state.

There is no statutory paid or unpaid carer's leave to look after a sick relative; some employers provide it in company regulations. The contract, company regulations or collective agreement set notice and evidence requirements.

Long-service leave is no longer a statutory entitlement for most employers in Indonesia. Under the Manpower Law as amended by the Job Creation law, certain companies may grant long leave (istirahat panjang) and, where they do, the contract, company regulations or collective agreement set its length and conditions.

Before the 2020 reform the law required two months of long leave, taken as one month in each of the seventh and eighth years after six years of continuous service. Many established employers kept this pattern in their company regulations or collective agreements, so employees should check their own terms.

The legal minimum is 12 working days after a year of service, but some employers give more, for example by increasing leave with seniority or job grade or by granting leave from the first year. One employer-of-record guide describes 15 to 22 days as enhanced market practice. Because collective leave days set by the government are deducted from annual leave, employers that do not observe collective leave, or that grant it on top of annual leave, effectively provide more usable leave.

A pregnant employee is entitled to at least three months of maternity leave, normally taken as one and a half months before and one and a half months after the birth, as estimated by a doctor or midwife. Under the Maternal and Child Welfare Law (Law 4 of 2024) leave can be extended by up to three further months, to six months in total, where a doctor certifies that the mother or baby has a health problem or complication.

The employer pays maternity pay directly; there is no social insurance maternity benefit for wages. Full wages are paid for the first three months and for a fourth month of extended leave; months five and six are paid at 75% of wages. A miscarriage entitles the employee to one and a half months of paid rest or the period set by a doctor or midwife. An employee may not be dismissed for pregnancy, birth, miscarriage, taking maternity leave or breastfeeding, and must be given the opportunity and facilities to breastfeed or express milk during working hours.

Medical costs of pregnancy and birth are covered by national health insurance.

A husband may take two days of paid leave when his wife gives birth or miscarries. Under the Maternal and Child Welfare Law (Law 4 of 2024), birth leave of two days can be extended by up to three more days, or longer by agreement with the employer, and the husband must be given sufficient time to support his wife and child where either has health complications, or the mother or baby dies.

The first two days are paid at full wages by the employer under the Manpower Law. The law does not state the pay rate for the additional days, so employers set it in company regulations or the employment contract.

Indonesian law has no general parental leave and no statutory adoption leave for private-sector employees. New parents rely on maternity leave for birth mothers, spouse support leave for fathers, and two days of paid special leave for a child's circumcision or baptism. Employers can grant adoption or extended parental leave through the contract, company regulations or collective agreement, and some do so on the same terms as birth leave.

Some employers support working parents with childcare subsidies, on-site or partner daycare, or education allowances for employees' children, typically as grade-based fringe benefits. The Maternal and Child Welfare Law (Law 4 of 2024) gives working mothers a right to affordable childcare access and lactation facilities at work, but does not require employers to fund childcare. No data on how many employers provide childcare support were found.

Indonesia requires employers to pay a Religious Holiday Allowance, THR (Tunjangan Hari Raya Keagamaan), once a year before each employee's main religious holiday: Eid al-Fitr for Muslims, Christmas for Christians, Nyepi for Hindus, Vesak for Buddhists, and Chinese New Year for Confucians. It is the country's only statutory annual bonus; there is no separate legal 13th or 14th-month salary.

Employees with 12 or more continuous months of service receive one month's wages, normally base pay plus fixed allowances. Those with at least one but under 12 months receive a pro-rated amount: months of service divided by 12 times one month's wages. Permanent and fixed-term employees qualify; for daily-paid workers and piece-rate workers the monthly wage is averaged over the preceding months. Employers whose contract, company regulations, collective agreement or custom sets a higher amount must pay that amount.

THR must be paid in full, not in instalments, no later than seven days before the holiday. Late payment attracts a 5% fine on top of the allowance plus administrative sanctions, and THR is taxed as regular employment income.

Beyond the statutory religious holiday allowance, some Indonesian employers pay discretionary or performance bonuses linked to individual and company results, and some operate profit-sharing. Eligibility, targets and amounts are set by the employment contract, company regulations or bonus plan, and bonuses are taxed as employment income through income-tax withholding. No public survey of bonus prevalence or size for Indonesia was found.

Indonesian technology companies and multinational employers can grant equity through employee stock ownership plans (ESOPs) or stock option plans, with vesting schedules set by the plan. Where awards are made, the plan rules set vesting, exercise and leaver treatment, and the benefit is generally taxed as employment income when the employee receives or exercises it. No representative data on how many employers offer equity in Indonesia were found.

Meal allowances are a widespread part of Indonesian pay packages, paid as a fixed monthly allowance, a daily attendance-based allowance, meal vouchers, or free meals at a canteen. Employers set the amount; one guide reports around IDR 100,000 to IDR 190,000 a month as a typical allowance, though amounts vary widely by employer, city and grade. Cash meal allowances are taxable income. Separately, employers must provide food and drink of at least 1,400 kilocalories to employees working four or more hours of overtime.

Whether an allowance counts towards fixed wages matters: fixed allowances paid regardless of attendance are included in the wage base for severance, overtime and the religious holiday allowance, while attendance-based allowances are not.

Transport allowances to cover commuting are widely paid in Indonesia, as a monthly cash allowance, a daily attendance-based amount, fuel and toll reimbursement, or employer shuttle services. One guide reports commuting support of around IDR 2,000,000 to IDR 3,000,000 a month; actual amounts vary widely, and larger allowances are more typical for mid-level and senior staff. Cash allowances are taxable income and, if fixed regardless of attendance, form part of the wage base for severance and the religious holiday allowance.

Company cars, car allowances, and fuel, toll and maintenance reimbursement are provided by some employers, usually to managers and to sales or field roles, under company policy. There are no legal rules requiring these benefits. Private use of a company car can be a taxable benefit in kind.

Employers normally supply laptops and other work equipment. Some employers with remote or hybrid staff also give a home-office setup budget or reimburse furniture and equipment. Because most Indonesian employees are required to attend the office on fixed days, home-office stipends are less widespread than in markets with more remote work.

Some employers pay a monthly internet or mobile phone allowance or provide a company phone plan, especially for remote, hybrid, sales and field staff. One guide reports internet allowances of around IDR 200,000 to IDR 500,000 a month; amounts depend on role and policy. Cash allowances are taxable income.

Flexible working is less widespread in Indonesia than in many markets. In the Mercer Global Talent Trends study for 2023, 31% of organisations in Indonesia offered flexible working options to all employees, compared with 56% globally, and 43% did not plan to offer work flexibility in future. A 2025 workplace survey found that 87% of Indonesian office employees are required to work a fixed number of days in the office, above the Asia-Pacific average of 71%.

Where flexibility exists it usually takes the form of hybrid schedules, flexible start and finish times, or remote work for specific roles, set by company policy. Indonesian law has no statutory right to request flexible working; Government Regulation 35 of 2021 allows shorter or flexible working-time arrangements, including work outside the workplace, in sectors and jobs with those characteristics.

Some employers in Indonesia provide structured learning and development support beyond on-the-job training. Support can include technical and professional certifications, business English courses, conference attendance, and tuition assistance, sometimes tied to a service commitment (ikatan dinas) requiring repayment if the employee leaves early. Employers of foreign workers must also train Indonesian companion workers.

Housing or rent allowances are paid by some employers, mainly to senior staff, employees relocated to another city, and expatriates, as a monthly stipend or employer-leased accommodation. Indonesian law does not require housing support for local or foreign employees. Fixed housing allowances form part of the wage base for severance and the religious holiday allowance.

An employment relationship exists in Indonesia when work is performed under an agreement containing three elements: work, wages and instruction (perintah) from the employer. Where these are present, the person is an employee covered by the Manpower Law, social security, minimum wage, working time, leave, the religious holiday allowance and severance, whatever the contract is called. Genuine independent contractors work under civil-law service agreements, control how and when they work, use their own tools, can serve several clients and invoice for results.

Factors that point to employment include fixed regular pay, set working hours and place, day-to-day supervision, integration into the core business and exclusivity. Misclassification exposes the business to back-payment of social security contributions, holiday allowances, leave and severance, tax reassessment of the income-tax withholding, and penalties: failing to pay severance or minimum wages is a criminal offence carrying one to four years' imprisonment and/or fines of IDR 100 million to IDR 400 million. Employers may not discriminate on grounds including religion, ethnicity, race, sex, political views or disability.

Indonesia distinguishes permanent employment (perjanjian kerja waktu tidak tertentu) from fixed-term employment (perjanjian kerja waktu tertentu). A permanent contract may be oral, but the employer must then issue an appointment letter stating the employee's name and address, start date, type of work and wage. A fixed-term contract must be written in Indonesian using the Latin alphabet; a bilingual version is allowed, with Indonesian prevailing.

Fixed-term contracts are allowed only for work that is temporary, expected to finish within a limited time, seasonal, linked to a new product or activity, or variable in nature, never for permanent work. A time-based fixed-term contract, including extensions, may last at most five years in total, and the employee is owed end-of-contract compensation. A fixed-term contract that breaks these rules becomes a permanent contract by law, as Indonesian courts have applied in disputes over repeatedly extended contracts.

The Manpower Protection Law passed by the House of Representatives on 6 October 2026 would limit fixed-term contracts to two years with up to two one-year extensions, but the Ministry of Manpower states it takes effect one year after promulgation; the five-year limit applies on 18 October 2026.

Indonesia has no single national minimum wage. Each provincial governor must set a provincial minimum wage (upah minimum provinsi) every year and may set higher city or regency minimum wages (upah minimum kabupaten/kota); where a city or regency rate exists, it replaces the provincial rate for that area. New rates are announced by late December and take effect on 1 January.

For 2026 the annual adjustment follows Government Regulation 49 of 2025: inflation plus economic growth multiplied by an index (alpha) of 0.50 to 0.90 chosen by the regional wage council, applied to the current minimum. Provincial rates for 2026 range from about IDR 2.3 million a month in Central Java and West Java to IDR 5,729,876 in Jakarta, and industrial cities around Jakarta exceed IDR 5.9 million.

Sectoral minimum wages returned after Constitutional Court Decision 168/PUU-XXI/2023 (31 October 2024), which reversed their removal by the Job Creation law. Governors must now set provincial sectoral minimum wages and may set city or regency sectoral rates, for specific five-digit business categories with more than one medium or large company and distinctive work risks; sectoral rates must exceed the general minimum. Jakarta's 2026 sectoral decree covers, for example, software publishing and internet service providers.

Minimum wages bind employees with under one year of service. For longer-serving staff, employers must set and apply a proportional wage structure and scale based on grade, position, length of service, education and competence. Micro and small businesses may agree lower wages with their employees, and paying below the applicable minimum is a criminal offence (one to four years' imprisonment and/or a fine of IDR 100 million to IDR 400 million).

Bali's 2026 city and regency minimum wages took effect on 1 January 2026: Badung Regency, which includes Kuta, Seminyak, Canggu and Nusa Dua, IDR 3,791,002.57 a month; Denpasar City IDR 3,499,878.78; Gianyar Regency IDR 3,316,798.48; and Tabanan Regency IDR 3,287,678.87. Other regencies use the provincial minimum wage of IDR 3,207,459. A higher sectoral minimum of IDR 3,828,912.60 applies in Badung to four- and five-star hotels. Rates apply to employees with less than one year of service.

Banten's 2026 city and regency minimum wages, which cover the Tangerang area west of Jakarta, took effect on 1 January 2026: Tangerang City IDR 5,399,405.69 a month, Tangerang Regency IDR 5,210,377, South Tangerang City IDR 5,247,870, Cilegon City IDR 5,469,922.59, Serang Regency IDR 5,178,521.19, and Serang City IDR 4,665,927.94. The provincial minimum wage is IDR 3,100,881.

The rates apply to employees with less than one year of service; for others the employer must apply a wage structure and scale. Paying below the applicable minimum is prohibited except for micro and small businesses that agree wages with their employees.

East Java's 2026 provincial minimum wage is IDR 2,446,880.68 a month, and city and regency rates apply where set. Surabaya City has the highest rate at IDR 5,288,796, followed by Gresik Regency at IDR 5,195,401 and Sidoarjo Regency at IDR 5,191,541. The rates took effect on 1 January 2026 for employees with less than one year of service, and employers already paying more may not reduce wages. Separate decrees set higher sectoral minimum wages for listed sectors in the province and in some cities and regencies.

West Java's 2026 provincial minimum wage is IDR 2,317,601 a month, but most employers in the province pay city or regency minimum wages, which are far higher in industrial and urban areas. From 1 January 2026: Bekasi City IDR 5,999,443, Bekasi Regency (including the Cikarang industrial area) IDR 5,938,885, Karawang Regency IDR 5,886,853, Depok City IDR 5,522,662, Bogor City IDR 5,437,203, and Bandung City IDR 4,737,678.

These rates apply to employees with less than one year of service; employers must use a wage structure and scale for longer-serving staff and may not reduce wages already above the minimum. Micro and small businesses are exempt from paying the full city or regency minimum.

Standard working time is 40 hours a week: either 8 hours a day over five days, with two rest days, or 7 hours a day over six days, with one rest day. Employees must have at least a 30-minute break after four consecutive hours. Certain sectors may use longer or shorter schedules set by ministerial rules.

Overtime requires a written or digital instruction from the employer and the employee's agreement, and is limited to 4 hours a day and 18 hours a week, not counting work on rest days or public holidays. The hourly rate is 1/173 of monthly wages. On working days the first overtime hour is paid at 1.5 times the hourly rate and each further hour at 2 times. On a rest day or public holiday in a five-day week, hours 1 to 8 are paid at 2 times, hour 9 at 3 times, and hours 10 to 12 at 4 times; in a six-day week, hours 1 to 7 are paid at 2 times, hour 8 at 3 times and hours 9 to 11 at 4 times. An employee working four or more overtime hours must be given food and drink of at least 1,400 kilocalories, which cannot be replaced by cash.

Employees in designated senior roles who think, plan or control the business, have unrestricted hours and higher pay may be excluded from overtime pay if the contract, company regulations or collective agreement says so; otherwise overtime must be paid.

A probation period is optional and may be used only in a permanent (indefinite-term) employment contract, for a maximum of three months. It cannot be extended, and wages during probation may not be below the applicable minimum wage. A fixed-term contract may not include probation; any probation clause in one is void and the period counts as service.

If the employer ends employment during probation it must give written notice at least 7 working days before the termination date. Dismissal during probation is one of the cases where bipartite negotiation is not required if the employee accepts.

Employers cannot dismiss at will. Indonesian law lists the permitted grounds, including mergers and takeovers, efficiency measures, closure, insolvency, serious or repeated breaches after three warning letters (each valid for up to six months), five working days of unexplained absence after two written summonses, prolonged illness over 12 months, retirement, and death. Dismissal is prohibited for illness of up to 12 months, pregnancy or breastfeeding, marriage, religious observance, union activity, or discrimination.

The employer must first try to avoid dismissal. If it cannot, it gives the employee, and the union where the employee is a member, a written notice of the reasons at least 14 working days before the termination date, or 7 working days during probation. An employee who disagrees must reply in writing within 7 working days; the parties then negotiate bipartitely and, failing agreement, go through industrial relations dispute settlement, ending in the Industrial Relations Court. Since Constitutional Court Decision 168/PUU-XXI/2023, a disputed dismissal takes effect only once a final, binding decision is issued. Accepted dismissals are reported to the manpower office.

Employees who resign must give at least 30 days' written notice and keep working until the leaving date. On any termination the employer pays the wages owed plus severance pay, long-service pay and compensation of rights as applicable.

Employers withhold employee income tax (Pajak Penghasilan Pasal 21, PPh 21) every month. Since January 2024 monthly withholding uses an average effective rate (tarif efektif rata-rata) applied to gross monthly income, in three categories based on the employee's tax-free allowance status: category A for single with no or one dependant and married with no dependants, category B for single with two or three dependants and married with one or two, and category C for married with three dependants. For example, a category A employee earning up to IDR 5,400,000 gross a month has 0% withheld. In December, or the final month of employment, the employer recalculates the year's tax with the progressive rates and the annual non-taxable allowance, and withholds the difference.

Annual progressive rates on taxable income are 5% up to IDR 60 million, 15% to IDR 250 million, 25% to IDR 500 million, 30% to IDR 5 billion and 35% above. Taxable income is gross pay minus a job-expense deduction, employee pension and old-age savings contributions, and the non-taxable allowance (penghasilan tidak kena pajak): IDR 54,000,000 for the taxpayer, IDR 4,500,000 for a spouse, and IDR 4,500,000 for each dependant up to three. Non-residents pay a flat 20% on Indonesian-source income, and taxpayers without a tax number pay 20% more.

The religious holiday allowance and bonuses are taxed as regular employment income. Benefits paid in cash are taxable; the tax treatment of benefits in kind depends on the type and value of the benefit.

An employer with at least 10 employees must issue company regulations (peraturan perusahaan) setting out the rights and obligations of both sides, working conditions and workplace rules, prepared after consulting employee representatives and approved by the Ministry of Manpower or regional manpower office. Company regulations last at most two years and must then be renewed. Where a trade union exists and asks to negotiate, the employer must bargain over a collective labour agreement (perjanjian kerja bersama), which replaces the company regulations once agreed.

Many statutory benefits are implemented through these documents, including scheduling of annual leave, long leave, separation pay on resignation, overtime exemptions for senior roles and menstrual-leave procedures, so their terms are central to understanding an employee's package. Employees have the right to form and join unions, and industrial disputes go through bipartite negotiation, mediation or conciliation, and the Industrial Relations Court.

A foreign national can work in Indonesia only for a local legal entity that sponsors them, in a specific position and for a set period, and may not hold a human-resources position. The employer must first obtain approval of a foreign worker utilisation plan (rencana penggunaan tenaga kerja asing) from the Ministry of Manpower through its online system, appoint an Indonesian companion worker for knowledge transfer and provide Indonesian-language training. Directors or commissioners with qualifying shareholdings and, for limited periods, roles at technology start-ups, vocational training, business visits and research are exempt from the plan requirement.

Employers pay a foreign worker compensation fund (dana kompensasi penggunaan tenaga kerja asing) of USD 100 per position per person per month, paid in advance; a worker employed for less than a month still costs a full month. Government bodies, foreign missions, international organisations, social and religious institutions, and certain education roles are exempt. After the plan is approved, the worker obtains a work visa and a limited stay permit (izin tinggal terbatas) through the Directorate General of Immigration's e-visa system, typically valid for up to a year and renewable. Foreign employees working more than six months must join national social security; shorter assignments need private insurance from an Indonesian insurer.