Nestled in Southeast Asia, Indonesia is a nature-lover’s paradise.
From coral reefs to ancient temples to cascading volcanic slopes, Indonesia’s breathtaking natural beauty and ecosystem — paired with a low cost of living and cultural richness — makes the country an attractive place to live and visit.
Indonesia presents a wealth of opportunities for employers to recruit international talent. A growing, young, and tech-savvy remote workforce provides a dynamic and cost-effective talent pool of Indonesians seeking job opportunities, including remote jobs. The country is also popular with digital nomads.
Here's what you need to know about hiring remote workers in Indonesia.
Advantages of Hiring in Indonesia
Indonesia, Southeast Asia’s largest economy with a GDP exceeding $1 trillion, is home to a culturally diverse and youthful population with a median age of just over 30 years old.
A thriving entrepreneurial environment, significant investments in technological infrastructure, and a supportive environment for startups have boosted Indonesia’s tech sector in recent years.
Key details to know about Indonesia include:
- Language: Indonesian
- Currency: Indonesian Rupiah (IDR)
- Capital City: Jakarta
- Population: 275 Million
- Cost of Living Rank: 105th
Indonesia is Home to Skilled Tech Workers
As the sole G20 member in Southeast Asia, Indonesia is a regionally influential market and home to a wealth of skilled remote tech talent.
Hubs for innovation, tech, and entrepreneurship are on the rise in cities such as Jakarta and Bandung — helping to further grow a flourishing tech ecosystem.
Indonesians are in-demand for international companies recruiting for positions such as:
- Software engineer
- Data science and analytics
- Creative design
- Customer service and support
- Digital marketing
Employment Laws: Hiring Compliantly in Indonesia
Employment Contracts
Employment contracts in Indonesia are required and classified as either fixed-term or indefinite. Fixed-term contracts are known as Perjanjian Kerja Waktu Tertentu (PKWT) and can last up to two years. Indefinite contracts are known as Perjanjian Kerja Waktu Tidak Tertentu (PKWTT) and have no specified end date.
Working Hours & Pay
The standard workweek in Indonesia is 40 hours.
Minimum wage varies by location. Overtime cannot exceed three hours in a day or 14 hours in a week and is paid at a rate determined by the employee’s type of regular compensation.
Tunjangan Hari Raya
The Tunjangan Hari Raya (THR) is a mandatory holiday bonus paid by Indonesian employers at least one week before an employee’s observed religious holiday. The specific timing on when the bonus is awarded depends on the employee’s religion.
The recognized religious holidays for THR payments are:
- Eid-al-Fitr for Muslims
- Christmas for Catholics and Protestants (considered two different religions in Indonesia)
- Nyepi for Hindus
- Vesak for Buddhists
- Chinese New Year for Confucianists
Probation Periods
Fixed-term contracts exclude probation periods. Indefinite-term contracts have a maximum probation period of three months and can’t be extended.
Employer Taxes
Employers in Indonesia are responsible for various payroll taxes based on percentages of an employee’s salary, including:
- 0.24% to 1.74% for Work Accident Insurance
- 3.7% for old age insurance
- 0.3% for death insurance
- 2% for pension
- 4% for health insurance
Termination Process & Severance Pay
Employees must be given written notice at least 14 days before their employment ends. Employers must notify the Ministry of Manpower of all terminations, and the department will review all contested terminations.
Severance pay ranges from one month to nine months based on years of service.
Paid Leave Laws in Indonesia
Vacation and Holiday
After one year of employment, employees in Indonesia receive a minimum of 12 days of annual leave. At least six days must be taken consecutively. There are also various paid national holidays that employers must observe.
Sick Leave
Employees are eligible for paid sick leave as follows:
- Months 1-4: Full pay
- Months 5-8: 75% of their salary
- Months 9-12: 50% of their salary
The employee must provide medical documentation of their illness. If the illness lasts longer than one year, employees receive 25% of their salary for as long as they remain employed.
Maternity Leave & Paternity Leave
Pregnant employees are entitled to three months of paid maternity leave, which can be extended for an additional three months under specific circumstances. Fathers are entitled to two days of leave for the birth of their child.
Why Digital Nomads Love Indonesia
Introduced in 2024, the KITAS E33G, or Remote Worker VISA, offers a one-year temporary residence permit. Before the launch of the digital nomad visa, visitors could stay for a maximum of 60 days.
The visa’s flexibility allows digital nomads and freelancers to explore the archipelago’s diverse islands, from the bustling streets of Jakarta to Bali’s beaches, as long as they’re working for an international employer.
Strong internet connections and WiFi signals in multiple cities make remote working easy for digital nomads. Access to co-working spaces, cafes, and a robust expat community helps new digital nomads integrate into the local community.
It’s a win-win: remote employees can enjoy a healthy work-life balance in a country widely considered a top destination for digital nomads, while their extended stays help boost the local economy.
Hiring Contractors in Indonesia
Skilled Indonesian citizens and the growing influx of digital nomads drawn to Indonesia’s status as a hot spot for remote work offer many appealing opportunities for global businesses seeking international contractors.
This diverse workforce provides flexibility, cost savings, and access to specialized expertise.
Navigating the Indonesian labor market, however, requires careful consideration of potential risks, particularly the risk of misclassification. Misclassifying employees as independent contractors can lead to legal repercussions, financial penalties, and damage to your company’s reputation.
To mitigate this risk and ensure compliance with Indonesian employment regulations, it’s best to clearly define the nature of the working relationship, create detailed contractual agreements, and understand the specific criteria that differentiate employees from contractors in Indonesia.
The easiest way to accomplish this is with an expert partner.
Hire Remote Workers in Indonesia with RemoFirst
As an Employer of Record (EOR), RemoFirst assists companies compliantly hire full-time employees and contractors in more than 180 countries, including Indonesia.
Businesses that partner with an EOR don’t have to navigate the complex local labor laws and regulations. Instead, the EOR ensures full compliance with hiring and classifying workers, paying payroll taxes, and more.
Book a demo today to learn more.
