Hiring in Indonesia: Routes, Contracts and Employer Duties
Hiring in Indonesia starts with who employs: your own company, an employer of record or a contractor. Then the contract, BPJS, PPh 21 and THR.
References (11)
- UU No. 13 Tahun 2003 on Manpower, as amended by UU No. 6 Tahun 2023. Article 1(15) defines the employment relationship. Articles 5 and 6 cover equal opportunity. Articles 57 and 59 cover the fixed-term contract, and Article 60 covers probation. Article 88E covers the minimum wage. Article 42(4) covers foreign workers. Article 108 covers company regulations.
- Constitutional Court decision No. 168/PUU-XXI/2023, 31 October 2024. It requires a fixed-term contract to be written in Indonesian, and allows a foreign worker to be employed for a fixed term only.
- PP No. 35 Tahun 2021. Article 14(1) requires a fixed-term contract to be registered within three working days of signing.
- UU No. 24 Tahun 2011 on BPJS. Article 15(1) requires the employer to register its employees.
- PP No. 28 Tahun 2025. Article 206(5)(c) registers the business with BPJS through its NIB.
- PP No. 45 Tahun 2015. Article 4(2) requires a new employee to be registered within 30 days of starting work.
- PMK No. 81 Tahun 2024. Article 94(2)(c) sets payment of withheld PPh 21 by the 15th. Article 171(1)(c) sets the monthly return by the 20th.
- Permenaker No. 6 Tahun 2016. Article 2(1) gives THR from one month of service. Article 5(4) requires payment at least seven days before the holiday.
- UU No. 7 Tahun 1981, Article 7(1), and Permenaker No. 18 Tahun 2017, Article 5(3), as amended by Permenaker No. 4 Tahun 2019. Together they require the annual manpower report.
- Permenaker No. 28 Tahun 2014. Article 7(1) names the office that ratifies company regulations.
- PP No. 34 Tahun 2021. Articles 3(1)–(2) and 9 cover who may employ a foreign worker. Article 4(1) covers the fixed-term rule. Articles 6(1), 14(6) and 19(1) cover the plan for foreign workers (RPTKA), its link to the work visa and the exemptions.
Hiring in Indonesia starts with one question: who is the employer? To employ someone here you need an Indonesian employer, which is either your own company or an employer of record (EOR) that employs the person for you. A genuine independent contractor is a third arrangement, and is not employment at all. Whichever route you take, the employer’s duties below follow the person. With an employer of record, MAM carries them.
Three routes to hiring in Indonesia
Each route puts the employer’s duties in a different place.
Your own company
A company in Indonesia, including a foreign-owned company (PT PMA, Penanaman Modal Asing), employs its staff directly and carries every employer duty itself. Our comparison of an employer of record and your own company shows when that is worth it.
Employer of record
MAM is the legal employer and holds the employment, while you direct the work day to day. No Indonesian company of your own is needed to start, and our note on whether an employer of record is legal explains why it works.
Independent contractor
Indonesian law looks past what a contract is called: an employment relationship is one with work, wages and orders (UU 13/2003, Article 1(15)). A genuine contractor invoices a fee and decides how the work is done, as our note on engaging contractors from abroad explains.
What every employer must do
These duties follow whoever employs the person. Under an employer of record, they sit with MAM.
Before and at signing
- Equal opportunity. Every job-seeker has an equal opportunity to work, and every employee equal treatment, without discrimination (UU 13/2003, Articles 5 and 6). Ask for the skills and experience the role needs; our guide to equal employment rules covers adverts and pay.
- The contract. A fixed-term contract (PKWT, perjanjian kerja waktu tertentu) is only for work that will end. Otherwise it is a permanent contract (PKWTT, perjanjian kerja waktu tidak tertentu), and the nature of the work decides which applies (Article 59, as amended by UU 6/2023). The employer writes a PKWT in Indonesian (Article 57(1)) and registers it with the Ministry of Manpower within three working days of signing (PP 35/2021, Article 14(1)). More on choosing between PKWT and PKWTT.
- Probation. Probation is allowed only in a permanent contract, for up to three months, and only where it is written into the contract or letter of appointment (UU 13/2003, Article 60(1)).
- Minimum wage. The provincial minimum wage is a starting wage for employees with less than a year’s service at the company (Article 88E, as amended by UU 6/2023). See how the minimum wage is set each year for the current figures.
In the first month, then every month
- BPJS. The employer registers every employee with both state social security bodies (BPJS, Badan Penyelenggara Jaminan Sosial): BPJS Kesehatan for health, and BPJS Ketenagakerjaan for employment cover (UU 24/2011, Article 15(1)). Each new employee is registered within 30 days of starting (PP 45/2015, Article 4(2)). Our page on BPJS contribution rates shows what is paid.
- PPh 21. The employer withholds employee income tax (PPh 21, Pajak Penghasilan Pasal 21) from each month’s pay. It pays the tax by the 15th of the following month and files the monthly return by the 20th (PMK 81/2024, Articles 94(2)(c) and 171(1)(c)). The monthly withholding tables for PPh 21 show the withholding, and the compliance calendar carries both dates.
Every year, and as the team grows
- THR. Every employee with one month’s continuous service is owed the religious holiday allowance (THR, Tunjangan Hari Raya), paid at least seven days before the holiday (Permenaker 6/2016, Articles 2(1) and 5(4)). Our holiday allowance rules and the THR calculator work out the amount.
- The manpower report. Employers file an annual manpower report (WLKP, wajib lapor ketenagakerjaan) with the Ministry of Manpower online (UU 7/1981, Article 7(1); Permenaker 18/2017, Article 5(3)). Who files the WLKP report, and when, is explained separately.
- Company regulations. From ten employees, a company needs written company regulations (peraturan perusahaan), ratified by the manpower office, unless it has a collective labour agreement (UU 13/2003, Article 108; Permenaker 28/2014, Article 7(1)). Read about company regulations and their renewal.
Written on 5 October 2026
The Constitutional Court, in decision 168/PUU-XXI/2023 of 31 October 2024, gave the legislature two years to pass a new manpower law. This page states the law in force on 5 October 2026, and we will re-read it the week a new law is promulgated.
Hiring someone who is not Indonesian
A foreign worker may be employed by a company or a representative office, but never by an individual or a one-person company (PT Perorangan) (PP 34/2021, Articles 3(1)–(2) and 9). The contract must be fixed-term and for a specific position (UU 13/2003, Article 42(4), as amended; PP 34/2021, Article 4(1)). Unless an exemption applies, such as for a director or commissioner with a shareholding, the employer needs an approved plan for foreign workers (RPTKA, Rencana Penggunaan Tenaga Kerja Asing) (PP 34/2021, Articles 6(1) and 19(1)). The approved plan also leads to the work visa and stay permit (Article 14(6)). Under an employer of record, MAM is that employer and holds the RPTKA. The steps are in our guide to employing a foreign national, and work permits and stay permits (KITAS) are a service of their own.
What MAM takes care of
With an employer of record, MAM as the legal employer holds the employment contract, runs payroll with PPh 21 and BPJS, administers THR, handles the WLKP report, and takes care of onboarding and offboarding. With your own company, our payroll service runs the monthly gross-to-net calculation, BPJS, PPh 21 withholding, payslips, THR and the WLKP report. HR consulting drafts your employment agreements and company regulations, and registers the company and its people with BPJS. Finding and choosing the people stays with you; employing and paying them is what we take care of.