Finding the right approach to hiring in Indonesia is key for companies looking to expand in Southeast Asia’s largest economy.
With its vast talent pool, growing industries, and dynamic regulations, Indonesia offers great potential, if you understand how to navigate the local hiring process.
Abhitech simplifies this journey by offering professional Employer of Record (EOR) solutions that handle employment, payroll, and compliance on your behalf.
Local Hiring Overview in Indonesia
Indonesia’s labor market is diverse and rapidly developing. The workforce spans across industries such as manufacturing, oil & gas, digital technology, and services.
With over 140 million workers, companies have access to a wide range of skills and experiences.
However, local hiring in Indonesia also comes with unique cultural and regulatory considerations.
Understanding local labor expectations, communication styles, and recruitment norms is essential. Companies that align with these aspects tend to attract and retain employees more successfully.
To stay competitive, employers should tailor job offers to local standards, balancing fair wages, mandatory benefits, and clear career progression.
Employment Regulations Simplified
Indonesia’s employment regulations are governed primarily by Law No. 6 of 2023 (UU No. 6 Tahun 2023), along with several government regulations and presidential decrees.
Key aspects to understand include:
- Employment Contracts: Can be either permanent (PKWTT) or fixed-term (PKWT). Contract terms and renewals must follow strict rules.
- Probation Period: Typically up to 3 months for permanent employees.
- Working Hours: Standard working hours are 40 per week, either 7 hours per day (6-day workweek) or 8 hours per day (5-day workweek).
- Overtime: Requires employee consent and must be compensated according to statutory rates.
- Termination: Must follow proper procedures and compensation calculations under Indonesian labor law.
Navigating employment regulations in Indonesia is crucial, not just for maintaining compliance, but also for avoiding significant legal risks, financial penalties, and operational disruptions.
Salary Guide for Common Roles in Indonesia
Salary levels in Indonesia differ widely depending on the region, industry, and size of the company.
Minimum wages are legally determined at two levels: the Provincial Minimum Wage (UMP) and the City/Regency Minimum Wage (UMK), which employers must not undercut.
Below is an overview of typical monthly gross salaries in major metropolitan centers, such as DKI Jakarta, as a starting point for budget planning:
- Administrative Staff: IDR 5,000,000-IDR 8,000,000
- Mid-level Marketing/Sales: IDR 8,000,000-IDR 15,000,000
- Experienced Software Developer: IDR 15,000,000-IDR 30,000,000+
- Managerial Roles: IDR 20,000,000-IDR 50,000,000+
It is important to note that these figures are general estimates and are subject to fluctuation based on specific industry expertise, educational background, and relevant language proficiency.
To attract top talent, many competitive employers offer other benefits beyond the mandatory requirements, such as health insurance, performance bonuses, and professional training and development programs.
Hiring Options for Foreign Companies
Foreign companies planning for hiring in Indonesia generally consider two primary market entry and employment options:
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Set Up a Local Entity (PT PMA)
Establishing a foreign-owned company allows full hiring control but involves lengthy registration, tax setup, and compliance processes.
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Partner with an Employer of Record (EOR)
Through an EOR like Abhitech, businesses can legally employ workers in Indonesia without setting up a local entity.
The EOR becomes the legal employer, managing contracts, payroll, taxes, and benefits, while you manage day-to-day operations.
This second option provides speed, flexibility, and compliance assurance, ideal for testing markets or managing remote teams.
Why EOR is the Simplest Way to Hire
For companies exploring hiring in Indonesia, using an Employer of Record is often the most efficient path. It allows you to:
- Speed to Market: It eliminates the six-to-twelve-month timeline typically required for local entity setup. You can hire an employee in a matter of days or weeks.
- Risk Mitigation: The EOR takes on the legal liability for compliance with Indonesian labor law, social security, and tax regulations.
- Simplified Administration: It removes the burden of managing local payroll, statutory contributions, and preparing employment contracts in compliance with local law. This allows the foreign company to focus purely on strategic growth and core business operations.
Hire Legally in Indonesia with Abhitech as Your EOR
Choosing a reliable local partner is essential for successful local hiring in Indonesia.
Abhitech supports your hiring needs as a compliant Employer of Record.
As your EOR partner, Abhitech simplifies your expansion into Indonesia by managing every aspect of local employment, contracts, payroll, tax, and compliance.
This solution enables foreign companies to hire the best Indonesian talent quickly and confidently, minimizing exposure to non-compliance risks and administrative overhead.
Discover more about Indonesia’s hiring regulations on our Blog, or contact our team to discuss the best solutions for your business needs.
FAQ About Hiring in Indonesia
1. Can I hire Indonesian employees without a local company?
Yes. You can hire employees in Indonesia without setting up a local entity by partnering with an Employer of Record (EOR) such as Abhitech. The EOR legally employs staff on your behalf, managing compliance, payroll, and contracts.
2. How long does hiring through an EOR typically take?
Hiring through an EOR can be completed in as little as 1–2 weeks, depending on role complexity and documentation. This is significantly faster than establishing a local legal entity, which may take months.
3. Is THR mandatory for all employees?
Yes. THR (Tunjangan Hari Raya) or religious holiday allowance is a mandatory payment given once a year before major religious holidays, typically equal to one month’s basic salary.
4. What benefits are legally required for local employees?
Mandatory benefits in Indonesia include BPJS Ketenagakerjaan (social security), BPJS Kesehatan (health insurance), and THR. Employers must also comply with overtime pay, annual leave, and severance pay regulations where applicable.
