Human Resources & Employment

If your company needs to hire staff, there are several main issues to take into account in which AdvintA can be of assistance.

Employee categories

The Indonesian law categorizes employees into 3 main groups;

Permanent employees
Temporary staff
Foreign specialists

Different rights and obligations apply for each category.
Hiring qualified and suitable employees requires specific care and attention in recruitment and regulation.

We can help you in identifying the appropriate channels for your human resources (HR) needs for each of these categories.

After you have found your ideal candidate, we can draw up the employment contract for you, in compliance with the Indonesian labor law & social security regulations.

Human resource policy

Depending on the size and activity, your company may need to develop a HR policy.
In particular, if you employ 10 employees or more a company employment regulation should be in place, approved by the local Ministry of Manpower office.

An employment regulation scheme, i.e. HR policy should cover the following:
  • Rights & obligations of both employer and employee.
  • Employee working provisions.
  • Company work ethics.
  • Validity of terms & conditions.

AdvintA can compose or refine your human resource policies and employment contracts, suited to your company characteristics and compliant with the current regulations.

However, if your company is in need of highly skilled specialists or a large workforce, you should consider outsourcing the recruitment & selection process to a specialized employment agency to which we can refer you.

Employee rights

Besides minimum wages and maximum working hours, the rights of employees in Indonesia include days off on all recognized religious holidays and a yearly (religious) holiday allowance.

Employees in Indonesia are entitled to the following basic rights:
  • A 40-hour work week for full-time employees.
  • Overtime rates.
  • Minimum wage.
  • Paid leave periods re annual leave, maternity leave, sickness leave or personal leave.
  • Religious holiday allowance; called Tunjangan Hari Raya (THR).
  • Social security & health insurance scheme; called Badan Penyelenggara Jaminan Sosial (BPJS).

The table below provides a summarized overview of these employee rights:

Employee rights*

Working hours
  • Usually 8 hours per day for 5 days a week or 7 hours per day for 6 days a week.
  • Minimal 1 day off per week.
  • Work break of ½ an hour after a work period of 4 hours.
Overtime rate
  • Work overtime rates differ per industry sector.
  • Employees working on public holidays are also entitled to overtime pay.
  • Employee should agree with working overtime.
Minimum wage
  • Minimum labor wages differ per province, district and industry sector.
Annual leave
  • Vacation period of 12 days per year with continued salary payment.
  • Annual leave can be spread out over the year according to the guidelines.
  • Compensation as agreed in the employment contract if the employee does not take the annual leave.
Maternity leave
  • Period of 3 months for the mother with continued salary payment.
  • Period of 2 days paternal leave for the father.
  • Length of the maternity leave can be extended by written recommendation from the physician.
Sickness leave
  • Employee should provide evidence of type and duration of illness by submitting applicable statements of the attending physician.
  • During the first 4 months of absence, continued payment of 100% of the salary.
  • During the second 4 months of absence, payment of 75% of the salary.
  • During the third 4 months of absence, payment of 50% of the salary.
  • For the subsequent months, payment of 25% of the salary.
Personal leave
  • Employee’s marriage; 3 days paid.
  • Employee’s child marriage; 2 days paid.
  • Employee’s son circumcision; 2 days paid.
  • Employee’s child baptism; 2 days paid.
  • In case of the death of an employee’s close family member, being their spouse, child, parent, parents-in-law or in-laws; 2 days paid leave.
  • In case of the death of an employee’s extended family member; 1 day paid leave.
Religious holiday allowance
  • Financial allowance, entitled for all main religions
Insurance
  • Healthcare insurance (BPJS Kesehatan)
  • Social security insurance (BPJS Ketenagakerjaan)

*This information is not legally binding and may be subject to change

Employee administration and taxation

If you employ personnel, Indonesian regulation requires that the company sets up and implements a salary structure & salary scale policy according to the guidelines outlined by of the Ministry of Manpower.

The salary structure and scale is made up of wage ranges, including the nominal (minimal) wage range for each job class.

Besides the salary structure, companies should have a payroll policy in place with detailed information regarding:
  • Job description
  • Terms of employment
  • Education level
The company should pay and report their employee taxes on a monthly basis as follows:
  • The Employee Withholding Tax (PPh 21), which should be paid no later then on the 10th of the following month.
  • The Employee Tax Report, which should be submitted no later then on the 20th of the following month.

Besides the employee tax, the monthly prepaid Corporate Income Tax (PPh 25) should be paid on the 15th of the following month at the latest and must be submitted to the tax office on the 20th of the following month at the latest. To avoid a possible penalty or fine from the tax office, it is important to pay your taxes on time.

AdvintA can advise you about employee rights and obligations and assist you in setting up your basic payroll structure.

However, the larger your workforce, the more time it takes to process your payroll responsibilities. In that case, you should consider outsourcing the payroll processing to a specialist payroll agency, to which we can refer you.