Managing Payroll & Recruitment in Indonesia: The Right Way

Managing payroll and recruitment in Indonesia requires a set of skills, competencies, and processes.

For many companies, the efforts and resources required to handle recruitment and payroll efficiently can be substantial. For that, more businesses opt for payroll and recruitment outsourcing providers to handle these functions to achieve cost-effective operations.

A third-party payroll and recruitment provider can help a company to increase revenue and cut costs, along with other benefits such as keeping pace with the latest technology and exceeding customer’s expectations.

In this article, you’ll see how you can manage payroll and recruitment ini Indonesia the right way with assistance from a specialist.

What to Include in Payroll Calculation in Indonesia

IDR 2.1 million to IDR 69.5 million is the salary range per month in Indonesia, with an average salary per month recorded at IDR 15.2 million.

There are several things to consider for Indonesia payroll calculation and non-compliance is possible when your internal HR team is not careful or does not have the expertise to do so.

• Work Hours: 40 hours is often the standard work hours per week for Indonesian employees
• Overtime: Each employee is limited to three-hour overtime per day. The overtime time rate is 1/173 of the monthly salary of an employee
• Allowances: Religious holiday allowance or Tunjangan Hari Raya shall be given to employees. This allowance is an extra income and shall be separated from their salaries
• Mandatory Insurances: All employees including foreigners working and living in Indonesia for over six months are required to take part in the BPJS Employment Program in Indonesia. This program consists of a healthcare BPJS and a social security BPJS that protect employees.

What to Prepare for Recruitment

An employment contract is essential for Indonesia’s payroll and recruitment. It is a document agreed by both an employee and an employer stating their rights, duties, and obligations.

Two common types of employment contract can be found in Indonesia:

1. Permanent Employment Contract

This contract is offered to full-time employees with permanent job positions in a company with a fixed amount of salary stated. It also often comes with a 3-month probation period and a more complex termination process.

2. Temporary Employment Contract

Temporary or seasonal workers usually get this type of contract from their employers. The validity of a temporary employment contract is often fewer than 2 years and is extendable for one time only.

Why It Is Best to Outsource Both Payroll and Recruitment

It is always ideal to outsource both Indonesia payroll and recruitment functions for the following benefits:

• You get to recruit top talent in the shortest time
• You and your staff can focus on core business activities to boost business growth
• You get the most advanced human resource technology for all your payroll and recruitment needs without any huge investments
• You save time and money without having your employees to handle the complicated and tedious HR chores, thus boosting their productivity
• HR experts from the third party can give you the best insights, suggestions, and strategies to achieve your business goals

Why Work with Cekindo

Human resources is an important component of business operation and employee wellbeing in all businesses.

A human resource outsourcing provider in Indonesia is responsible for managing Indonesia payroll, recruitment, termination and up-to-date compliance with local laws and legislation.

Cekindo is the expert when it comes to payroll, recruitment and HR consultancy. We tackle your business’ HR challenges your business encounters by delivering practical and flexible HR support; while remaining compliant with employment regulations and local labor laws.

Payroll and recruitment outsourcing is critical for your business success especially if you are just entering the Indonesian market.

If you would like to understand how Cekindo can support your business, complete our enquiry form below and we will get back to you fast.