Allowances in Indonesia: Fixed, Non-Fixed and What Each Changes
Allowances in Indonesia are fixed or non-fixed. See how each affects the 75% basic wage rule, minimum wage, BPJS, overtime, severance and tax.
References (10)
- UU No. 27 Tahun 2026 on Manpower Protection, in force 28 October 2026, revoking UU No. 13 Tahun 2003. Article 150 sets the 75% rule for the basic wage. The explanatory notes to Article 116(3) define a fixed allowance. Article 140(2) and (3) set what the minimum wage is measured against. Article 234(1) sets the wage base for severance pay and long-service pay. Article 310 keeps the implementing regulations in force where they do not conflict with it.
- PP No. 36 Tahun 2021 on Wages, as amended by PP No. 51 Tahun 2023 and PP No. 49 Tahun 2025. Article 7 and its explanatory notes set the parts of a wage and repeat the 75% rule. Article 8 lists non-wage income.
- PP No. 35 Tahun 2021. Article 32 sets the wage base for overtime.
- Permenaker No. 6 Tahun 2016. Article 3(2) defines one month’s wage for the religious holiday allowance.
- Perpres No. 82 Tahun 2018. Article 33(3) sets the wage base for health contributions for private-sector employees.
- PP No. 44 Tahun 2015. Article 19(2) sets the wage base for work accident and death benefit contributions.
- PP No. 46 Tahun 2015. Article 17(2) sets the wage base for old-age savings contributions.
- PP No. 45 Tahun 2015. Article 29(1) sets the wage base for pension contributions.
- PMK No. 168 Tahun 2023. Article 5(2) and (3) list the income of a permanent employee that is subject to withholding.
- Minister of Manpower Circular No. SE-07/MEN/1990, 2 August 1990. Guidance on grouping the parts of a wage. It is not a regulation.
Allowances in Indonesia come in two kinds, and the kind decides which calculations an allowance enters. A fixed allowance (tunjangan tetap) is a fixed amount paid at fixed times, not tied to attendance or to reaching a particular performance. It joins the basic wage in the base for the minimum wage, the religious holiday allowance (THR), BPJS contributions (Indonesia’s state social security schemes) and severance pay. A non-fixed allowance (tunjangan tidak tetap) is one that does not meet that definition, for example because it moves with attendance or output. It counts for income tax and, in some pay structures, for overtime. The name of an allowance does not decide its kind; the way it is paid does.
What makes an allowance fixed
The definition sits in the explanatory notes to Article 116(3) of the new manpower law, UU 27/2026, in force since 28 October 2026. A fixed allowance is income on top of the basic wage. Its amount and its payment dates are both fixed, and it is not tied to attendance or to a particular work performance. That gives four tests: a fixed amount, paid at fixed times, independent of attendance, independent of performance.
That leaves three groups:
- Fixed allowance: a fixed amount paid at fixed times, whatever the attendance or output.
- Non-fixed allowance: any allowance that does not meet that definition, such as one that moves with attendance or output.
- Not wage at all: THR, bonuses, incentives and money paid in place of a work facility, which Government Regulation (PP) 36/2021 on wages, Article 8, classes as non-wage income.
PP 36/2021 (wages) and PP 35/2021 (working time) were made under the earlier manpower laws. They stay in force where they do not conflict with the new one (Article 310).
The 75% rule for the basic wage
Where pay includes fixed allowances, the basic wage must be at least 75% of the basic wage and fixed allowances added together (UU 27/2026, Article 150; PP 36/2021, Article 7(2) and (3)). The test is measured against basic wage plus fixed allowances, not against total pay. Non-fixed allowances sit outside it.
The parts of pay a company uses are set in the employment contract, the company regulations or a collective agreement (PP 36/2021, Article 7(4)). For certain senior positions, such as supervisors, managers and experts paid at least the wage ceiling used for pension contributions, PP 36/2021 lets those documents set the percentage (Article 7(5) and its explanatory notes).
What allowances in Indonesia change, rule by rule
Each row’s regulation is cited after the table.
| Basic wage | Fixed | Non-fixed | |
|---|---|---|---|
| Minimum wage | Yes | Yes | No |
| THR | Yes | Yes | No |
| BPJS | Yes | Yes | No |
| Overtime | Yes | Yes | Sometimes |
| Severance | Yes | Yes | No |
| Income tax | Yes | Yes | Yes |
THR, BPJS and severance pay all stop at basic wage plus fixed allowances. The religious holiday allowance is based on one month’s wage, meaning either a wage with no allowances or the basic wage including fixed allowances (Minister of Manpower Regulation (Permenaker) 6/2016, Article 3(2)). For private-sector employees, BPJS contributions are worked out on basic wage and fixed allowances (Presidential Regulation (Perpres) 82/2018, Article 33(3), for health; PP 44/2015, Article 19(2), PP 46/2015, Article 17(2), and PP 45/2015, Article 29(1), for the employment schemes). Severance and long-service pay use the same base (UU 27/2026, Article 234(1)).
The minimum wage is the lowest monthly wage, measured as a wage without allowances or as basic wage plus fixed allowances. Where pay is basic wage plus non-fixed allowances only, the basic wage alone must reach the minimum (UU 27/2026, Article 140(2) and (3)).
Where an employee also receives non-fixed allowances and basic wage plus fixed allowances come to less than 75% of the whole wage, PP 35/2021 sets the overtime base at 75% of the whole wage (Article 32(4)). Our guide to working hours and overtime covers the calculation.
Income tax takes both kinds. A permanent employee’s income for withholding includes all salary and every kind of allowance, under whatever name (Minister of Finance Regulation (PMK) 168/2023, Article 5(2) and (3)). The split therefore makes no difference to employee income tax (PPh 21).
One month’s pay, worked through
Take an employee on a basic wage of IDR 6,000,000, a fixed allowance of IDR 2,000,000, and a meal and transport allowance paid per day attended that comes to IDR 1,000,000 this month.
| Description | IDR |
|---|---|
| Basic wage 6,000,000 ÷ 8,000,000 = 75%, the minimum share | 6,000,000 |
| Fixed allowance paid every month, whatever the attendance | 2,000,000 |
| Basic wage plus fixed allowance base for THR, BPJS and severance | 8,000,000 |
| Non-fixed allowance meal and transport, per day attended | 1,000,000 |
| Whole pay for the month counts for income tax | 9,000,000 |
The basic wage is exactly 75% of the IDR 8,000,000, so the structure meets the rule. The IDR 1,000,000 of non-fixed allowance does not enter the base for THR, BPJS or severance. It counts for income tax.
How to classify an allowance in practice
Classify an allowance by how it is paid, not by what it is called.
- A meal or transport allowance paid as a flat monthly sum, whatever the attendance, is fixed.
- The same allowance paid per day attended is not fixed, because it is tied to attendance.
- An allowance tied to reaching a target is not fixed, even when it is paid every month.
Minister of Manpower Circular SE-07/MEN/1990 treats meal and transport allowances alike: they may be grouped as fixed where they are not tied to attendance and are received on a fixed basis, and as non-fixed where they are tied to attendance. It gives family, housing and regional allowances as examples of fixed ones. The circular is guidance, not a regulation; the legal definition is the one in the notes to Article 116(3).
So the question for each allowance is how the contract says it is paid.
What this means for you
Set out in the employment contract, the company regulations or the collective agreement which components make up the wage (PP 36/2021, Article 7(4)), and pay each allowance the way the document says. Once that is written down, allowances in Indonesia are routine to run: each one goes into the calculations it belongs to, month after month. Our payroll team processes each month’s pay, including allowances, as agreed with you. Our HR consulting team advises on how to split pay between basic wage and allowances, and drafts the documents that record it.