Indonesia

Hiring in Indonesia typically involves four approaches. Using HQ payroll is generally not viable due to local employment and visa requirements. Contractors can be engaged for genuinely independent work, but misclassification risks remain. Setting up a local entity allows direct employment but requires ongoing compliance. Many companies choose an Employer of Record to hire employees in Indonesia compliantly without establishing a local entity.

Generally, registering a company in Indonesia can take anywhere from a few days to a few weeks, depending on the complexity of the company structure and the completeness of the application.

However, the difficult part comes after the initial setup when payroll needs to be calculated and run every month, taxes filed, benefits extended, and changes in rules and regulations followed.

Contractors work well when the relationship is project-based and the person serves multiple clients. If an individual gives their full and undivided attention to your company in Indonesia, employment is the right structure under Indonesian law, covering entitlements like annual leave, sick leave, and BPJS social security. For project-based contractor engagements, Boundless’s Agent of Record (AOR) service handles classification, contracts, and payments compliantly in Indonesia.

HR compliance in Indonesia means your policies and procedures respect all applicable Indonesian employment laws and regulations. When you hire in Indonesia, this matters both to safeguard employee rights and to reduce employer risk. Compliance covers labour law, sick leave, annual leave (12 days), province-set minimum wage, tax credits, and the 40-hour working week. Following these is fundamental for running the business well.

As with every other country, there are certain costs associated with employing a worker in Indonesia that come on top of the gross salary you are offering.

An Employer of Record is the legal employer of the individual in Indonesia for government, tax, and employment purposes. Boundless provides a locally compliant contract, processes payroll, files employment taxes, and manages statutory benefits such as three months of maternity leave and BPJS social security enrolment. You remain responsible for sourcing workers, managing their day-to-day work, and funding payroll each cycle.

Boundless as the Employer of Record files all pertinent taxes and social security contributions as they relate to the compliant employment of an individual in their home country.

Boundless partners with employment lawyers and advisers in each country we operate in, including Indonesia. They ensure employment contracts and onboarding documents comply with the local jurisdiction. We hold detailed discussions on specific norms such as payroll, social protection, data protection, notice periods, and work-from-home regulations. When a sensitive issue arises, our internal team engages the relevant firm promptly.

The company remains responsible and informs employees of the day-to-day management of the people and teams employed through Boundless, including any disciplinary or performance issues. Boundless ensures compliance with Indonesia-specific procedures, practices, and labour laws while employing people and teams on behalf of the company.

Any new employee who is locally employed through an Employer of Record gets full employment rights and benefits as specified in Indonesian employment law. They get a locally compliant employment contract, statutory parental leave, annual leave, illness benefits, any relevant tax credits, and many more.

Both employers and employees in Indonesia contribute to social security on top of salary. Employers pay approximately 10-12% covering work accident protection, death insurance, old-age savings, healthcare, and pension. Employees pay around 5% across old-age savings, healthcare, and pension. Employees also pay progressive income tax of 5-35% depending on income. Use the salary breakdown calculator for exact figures.