Payroll Services in Indonesia

Employers register every employee with both social security agencies. BPJS Ketenagakerjaan covers old-age savings (JHT: 3.7% from the employer, 2% from the employee), the pension programme (JP: 2% and 1%), work accident insurance (JKK: 0.24% to 1.74% by risk group, 0.24% for office work) and death insurance (JKM: 0.3%). BPJS Kesehatan covers health insurance at 4% from the employer and 1% from the employee. Contributions are calculated on base salary plus fixed allowances.

The pension base is capped at IDR 11,086,300 a month from March 2026, up from IDR 10,547,400 in line with 2025 GDP growth, and the health base at IDR 12,000,000. Job loss insurance (JKP) costs the employer nothing extra: it is funded by the government and from the JKK contribution. Health contributions are due by the 10th of each month and BPJS Ketenagakerjaan contributions by the 15th of the following month, with a 2% fine for each month of delay.

Every employee with at least one month of service is entitled to a religious holiday allowance (THR) once a year: one month’s wages after 12 months of service, or a proportional amount (months of service divided by 12) before that. It must be paid in full, not in instalments, no later than seven days before the employee’s religious holiday, which for most employees is Eid al-Fitr. THR is taxable income but carries no BPJS contributions.

The standard working week is 40 hours: seven hours a day over six days or eight hours over five. Overtime is limited to four hours a day and 18 hours a week and is paid on an hourly rate of 1/173 of monthly wages: 1.5 times for the first hour on a working day and twice for each hour after that.

Employers withhold PPh 21 each month by applying an effective rate (TER) from government tables to gross monthly income. The table depends on the employee’s marital status and number of dependants, which also set the annual non-taxable allowance: IDR 54 million for a single taxpayer, plus IDR 4.5 million for a spouse and for each dependant, up to three. In December, or when employment ends, the employer recalculates the tax for the year on the progressive scale from 5% to 35% and withholds the difference.

Withheld tax is paid by the 15th of the following month and reported by the 20th through the Coretax system, where the employee’s national identity number (NIK) serves as the tax number. In 2026 the government covers the PPh 21 of employees earning up to IDR 10 million a month in footwear, textiles and clothing, furniture, leather goods and tourism, and employers pass the amount to the employee in cash.

For an office employee on IDR 10,000,000 a month, the employer pays IDR 1,024,000 a month in BPJS contributions. With the THR, the annual cost is IDR 142,288,000, 18.57% on top of 12 months’ salary. At IDR 15,000,000 a month the pension and health caps apply, monthly contributions are IDR 1,337,726 and the employer cost falls to 17.25%. At IDR 30,000,000 it is 14.91%.

Minimum wages are set every year by each province, and many cities and regencies set a higher local rate. For 2026 the provincial minimum ranges from IDR 2,317,601 in West Java to IDR 5,729,876 in Jakarta, which rose 6.17% under the formula in Government Regulation 49 of 2025. Salaries paid in Indonesia must be paid in rupiah.

Employees are entitled to 12 working days of paid annual leave after 12 months of continuous service. Maternity leave is at least three months and can be extended by up to three more with a medical certificate; pay is full for the first four months and 75% for the fifth and sixth. Permanent contracts can include a probation period of up to three months, and severance on dismissal depends on length of service and the reason for the termination.

On 6 October 2026 Parliament passed the Employment Protection Law (UU Pelindungan Ketenagakerjaan), 313 articles that take the labour rules out of the 2023 Job Creation Law, as the Constitutional Court ordered in 2024. It covers fixed-term contracts, outsourcing, wages, dismissal and severance, and takes effect once it is signed and promulgated; we will update this page as its rules and implementing regulations are published. Separately, the Constitutional Court ruled in September 2025 that Tapera housing savings can no longer be compulsory for private-sector employees.