Find your employer of record in Indonesia

Essentially, companies in Indonesia often provide employees with meals allowances and commuting expenses. Besides, they can also get gym membership allowance and internet allowance.

In summary, if you are a foreign citizen from one of the 169 countries with a visa exemption, such as the United States or Canada, you can enter the country only with a Visa Telex (visa index 312).

However, you will need a Notification from the Ministry of Manpower to work in an Indonesian company. After that, you can apply for an Indonesian visa.

Types of Visas

Essentially, foreign employees who want to work in Indonesian payroll outsourcing companies can apply for one of two types of Visas:

• Izin Tinggal Terbatas (VITAS): A limited-stay permit visa for a foreign national first period in the country.
• Izin Tinggal Terbatas or Electronic ITAS (e-ITAS): It allows foreign nationals to stay and open a bank account in Indonesia. Most importantly, it also allows them to apply for permanent residence after three years of living in the country.
• Kartu Izin Tinggal Tetap (KITAP): It is the permanent residence permit that employees can apply for if they stay in the country holding an ITAS for three years or more.

In short, the standard rate of VAT is 11.00% in Indonesia.

Termination Process

In summary, experts in Employer of Record in Indonesia can tell you that employment laws demand employers to make a genuine effort to retain their employees. Above all, it involves negotiating with them and with the employees’ labor union to find options that allow for avoiding termination.

However, there are cases where a termination cannot be avoided. When they occur, employers must explain the reasons for termination in writing to the employees and their labor unions. Moreover, they also can challenge such termination in the Labor Court if they consider it to be unjust.

On the other hand, employers of PEO services in Indonesia can dismiss their employees because of one of the following causes:

• A violation of the employment agreement.
• The employee’s imprisonment.
• An employee’s illness that is longer than 12 months.
• The employee’s absent from work for more than 5 days without valid reasons. Above all, it involves the employer must notify him or her twice.
• An employee’s retirement age.
• A change in the company status.
• The employer’s insolvency.
• An employer’s continuous losses for two consecutive years. Most importantly, he or she must prove it by submitting financial reports.
• A business’ permanent closure.

Notice Period

Indeed, despite not having an official notice period in employment laws, most companies in Indonesia use a 30 days’ notice period. Nonetheless, they can use longer periods if the employment contract allows it. 

Severance Pay

Undoubtedly, unlike notice period, severance pay is mandatory in Indonesia. Therefore, a company’s outsourcing payroll team must determine it depending on the employee’s length of service. For example, employees with less than a year of employment can get a severance pay of 1-month wage.

Furthermore, once employees begin their second year of employment, they can add a 1-month wage for every year in their length of service. Hence, remember this if you want to hire employees in Indonesia.

Probation Period

Regularly, most companies in Indonesia set a performance evaluation for new employees during their first three months. Nonetheless, it is not established by any employment laws or regulations of a professional employer organization.

Paid Time Offs

In essence, outsourcing payroll in Indonesia involves giving employees paid time off according to their employment contract. Most importantly, it must be at least 12 days of paid annual leave per year after one full year of employment.

Moreover, employees of companies that provide EOR in Indonesia can enjoy one month of leave in their seventh and eighth year of service with the same employer.

Public Holidays

There are 16 national holidays throughout the year.

Vacation Holidays

There are 12 vacation holidays throughout the year.

Sick Days

Unequivocally, when employees in Indonesia are sick or injured, they can get paid sick leave. However, they must provide medical confirmation of their ill health. Moreover, they also can have long-term sick leave for more than 1 year if their doctor recommends it in writing.

Most importantly, during their paid sick leave, employees will receive from their HR and payroll outsourcing team the following payments:

• 100% of their regular wage in the first four months.
• 75% for the next four months.
• 50% of their regular wage in the third four months.
• 25% of their wages until paid sick leave termination.