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 needed to handle recruitment and payroll efficiently can be substantial. For this reason, more businesses opt for payroll and recruitment outsourcing providers to handle these functions, enabling them to achieve cost-effective operations.

A third-party payroll and recruitment provider can help a company increase revenue, cut costs, and reap other benefits, including staying current with the latest technology and exceeding customer expectations.

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

What to Include in Payroll Calculation in Indonesia

The salary range in Indonesia per month is IDR 2.1 million to IDR 69.5 million, with an average monthly salary of IDR 15.2 million. There are several factors to consider when calculating Indonesia payroll, and non-compliance is possible if your internal HR team is not careful or lacks the necessary expertise.

• Work Hours: 40 hours is often the standard work hours per week for Indonesian employees
• Overtime: Each employee is limited to three hours of overtime per day. The overtime time rate is 1/173 of an employee’s monthly salary.
• Allowances: Religious holiday allowance or Tunjangan Hari Raya shall be given to employees. This allowance is an additional income and shall be kept separate from their salaries.
• Mandatory Insurance: All employees, including foreigners working and living in Indonesia for over six months, are required to participate 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 upon by both an employee and an employer that states their rights, duties, and obligations. Two common types of employment contracts 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 salary amount 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 for 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 incurring significant investments.
• You save time and money by having your employees focus on their core responsibilities, thereby boosting their productivity.
• HR experts from a third-party organization can provide you with the best insights, suggestions, and strategies to achieve your business goals.

Why Work with InCorp

Human resources is an important component of business operations and employee well-being 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.

InCorp is an expert in payroll, recruitment, and HR consultancy. We address your business’s HR challenges by delivering practical and flexible HR support while ensuring compliance with employment regulations and local labor laws.

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

If you would like to understand how InCorp can support your business, please complete our enquiry form below, and we will respond promptly.