Employer of record in Indonesia: costs and rules

Indonesian rules that change what you pay

Indonesia's social security has five employer lines with different bases. Work accident insurance (JKK) runs from 0.24% to 1.74% depending on job risk; death benefit (JKM) is 0.3%; old-age savings (JHT) 3.7%; pension (JP) 2% on pay up to a cap of IDR 10,547,400 a month, which expatriates do not have to join. Health care through BPJS Kesehatan is 4%, also capped. Employees pay 4% in total.

• THR is mandatory. One month's wages after 12 months of continuous service, pro rata from one month, under Permenaker 6/2016 and PP 36/2021.
• Minimum wages are set by province and city. The 2026 provincial minimum (UMP) runs from IDR 2,317,601 a month in Jawa Barat to IDR 5,729,876 in DKI Jakarta, up 6.17%. City and regency rates (UMK) can be higher.
• Probation only on permanent contracts: up to 3 months, and not allowed in fixed-term (PKWT) contracts (Manpower Act s.60(1) and s.58, as amended by Law 6/2023).
• Pay at least monthly, with payments no more than one month apart (PP 36/2021).

Employment costs and rules in Indonesia

What an EOR charges to employ someone in Indonesia

Costing an IDR 60 million a month hire

USD 40,000 at the ECB cross rate is IDR 721,239,847 a year, or IDR 60,103,321 a month, about 10.5 times the Jakarta minimum wage.

Arithmetic per month: 0.24% + 0.3% + 3.7% = 4.24% x 60,103,321 = 2,548,381, plus JP of 2% x 10,547,400 = 210,948, for 2,759,329, or 4.59%. A year of contributions is IDR 33,111,946. Not included yet: BPJS Kesehatan health care at 4% up to a cap we have not confirmed, any higher JKK risk class, a 2026 change to the JP cap. The fee at $199 is IDR 43,058,019 a year, at $399 IDR 86,332,410 and at $699 IDR 151,243,996. Model other salaries with the international cost calculator.

Termination is the big liability

Indonesia has no notice scale by length of service. The employer must give written notice of the termination and its reasons at least 14 working days before it takes effect (GR 35/2021 s.37). Severance (pesangon) starts at 1 month's wages under a year of service and rises 1 month per full year to 9 months after 8 years (GR 35/2021 s.40(2)), with long-service pay and compensation of rights added and multipliers that depend on the ground. After 3 full years, pesangon alone is 4 months: IDR 240,413,282 on this salary. Ask your EOR how it reserves for this.

Your own company or an EOR

Your own Indonesian company has to register with both BPJS agencies and run THR and severance itself. Weigh that against the fee with our EOR versus entity guide.

Indonesian contractors

Contractors avoid BPJS, THR and pesangon, which is exactly what a dispute would put back on the table if the role looks like employment. Keep contractors on defined deliverables, pay them through a contractor management platform, or use a contractor of record.

Which EOR to choose in Indonesia

An Indonesia quote should name the BPJS Kesehatan cap it uses, the JKK risk class for your role and the month THR will be paid. If any of those is missing, the total is not final. Multiplier leads our scores at 79 and Oyster is second at 64 (how we score).

Compare them in the EOR ranking, with background in the Deel, Remote and Oyster reviews, and see Indonesia beside Malaysia and Vietnam in the cost index.