Important things you should know about payroll system in indonesia

Important Things You Should Know About
Payroll System in Indonesia
Jakarta, June 2017

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For further info, visit: www.cekindo.com.
email to: info@cekindo.com, phone: 021-80660999
Payroll System in Indonesia
It is always a challenge for any foreign investors to keep up with
the accounting regulations in Indonesia, most importantly the one
related to payroll regulations. There are so many details that you have to
incorporate in your reports.
Thus, since payroll system is one of the most important things in
business operations, it is crucial to consider fair distribution of
employee’s wages or salaries – and other benefits that they receive from
working in your company – so that the company’s payroll system can
finally have a positive impacts toward the employee’. At the end it will
impact the overall company’s performance.

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• The typical working hours are 40 hours per week or 8 hours a day.
• Receive regional minimum wage, which is vary according to province,
district, and sector.
• Receive social security (BPJS for the employee/ BPJS Ketenagakerjaan),
which includes work accident insurance, life insurance benefit, and old age
benefit (pension) as well as BPJS health care program.
• Receive statutory absence or payment when the employee do not take the
annual leave, maternity leave, sickness, and personal leave based on the
regulations.
• Receive religious holiday allowance (THR/Tunjangan Hari Raya) based on
the regulations.
• Receive overtime rates.
#1. Employee’ Basic Rights

#2. Incentives
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Incentives is the amount of the financial reward that the employees
receive, apart from the regular wage or salary that they commonly receive.
Incentive is given according to the employees’ performances. It can be
given in the form of individual incentive or group incentive.
The most common incentives given by the employer is overtime
benefit (the amount of money that the employees get when they perform
extra working hour(s)).
Incentive can also be given for the individual or teams who can
reach a certain target set by the company.

#3. Social Security (BPJS
Ketenagakerjaan)
6For further info, visit: www.cekindo.com.
Given to the employees to protect their security while working in the
company and when they reach the pension time.
The calculation:
• Occupational accident/work accident insurance, which is 0.24% -
1.74% of the monthly salary, paid entirely by the company.
• Death benefit/life insurance, which is 0.3% of the monthly salary,
paid entirely by the company.
• Pension/old age insurance, which is 5.7% of the monthly salary ,
paid by both the company (3.7%) and the employee (2%). The
pension/ old age insurance can be withdrawn when the
employees reach 55 years old or at any time after the employees
quit working. The employee’ involvement in this social security or
BPJS Ketenagakerjaan must be at least 5 years.

#4. Health Insurance (BPJS
Kesehatan)
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The health insurance for employees must be paid by both the
employees and the employer. The maximum amount of
money that should be paid by the employer is 4% of the
maximum salary of IDR 4,000,000, and the minimum amount
that should be paid by the employer is 1% of the employee’s
UMR (minimum regional wage). Usually, the employee will
receive the benefit of class/type 2, but depending on the
company policy, some workers (especially the high level
management position) will get an upgraded class.

The company should report their taxes in monthly and annual basis.
Monthly tax report:
• Corporate income tax art 25 (PPh 25) - Should
be paid on the 15th of the following month at
the latest, submitted to tax office on the 20th of
the following month at the latest.
• Employee Withholding Tax art 21 (PPh 21) -
Should be paid on the 10th of the following
month at the latest, submitted to tax office on
the 20th of the following month at the latest.
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#5. Tax Reporting

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Annual taxes:
• Corporate Income tax - Should be paid before filing the tax return
and must be filed at the latest in the end of the fourth month after
the book year ends, which is in April.
• Individual Income tax - should be paid before filing the tax return
and filed at the latest in the end of the third month after the book
year ends, which is in March
#5. Tax Reporting
Any late payment and reporting will cause you to receive
penalty that you must pay to the tax office. To avoid the penalty,
it is important to consider paying the tax on time.

Employee need to follow the certain regulations when they
want to have a leave. However, every company has to give
opportunities for its employees to take the following leaves with the
obligation t keep paying their wages/salaries, based on the regulations.
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#6. Leave Regulation

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ANNUAL LEAVE
The annual leave is taken with the total of 12 days. The
company has the right to allow or postpone the employee’s
ability t take the annual leave. The postponement can be done
for a maximum of six month. Based on the Indonesian law, there
is not any certain regulation, which states the compensation that
the employee might get if he/she does not take this annual leave.
However, this issue can be put in the employment
agreement. During the annual leave, the company has to pay the
employees the amount of wages or salaries agreed.

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MATERNITY LEAVE
The maternity leave is given for the period of 3 months, and is
usually taken 1.5 months prior the deliver and 1.5 months after
the delivery. During the maternity leave, the company must give
full wages to the employees. The length of the maternity leave
can be extended if there is a recommendation from the doctor.

13For further info, visit: www.cekindo.com.
SICKNESS
A leave due to sickness shouldn’t reduce the number of annual leave. The
amount of wages that should be paid when the employee leave because of
sickness is as follow:
• During the first 4 months of absence, the company should give 100% of the
wages.
• During the second 4 months, the company should give 75% of the wages.
• During the third 4 months, the company should give 50% of the wages.
• For the subsequent months, the company should give 25% of the wages.
• Menstrual leave (for female workers), the workers are paid full if they
cannot perform their duties in the 1st and 2nd days of menstruation.

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PERSONAL LEAVES
The terms of personal leaves are also regulated. There are some
conditions in which employee’ personal leaves should be paid,
including:
• Worker’s marriage (3 days),
• Worker’s child’s marriage (2 days),
• Worker’s child’s baptism (2 days),
• Worker’s wife giving birth or having a miscarriage (2 days),
• The death of the worker’s close family members (spouse, child, in-laws, or
parents) (2 days),
• And the death of worker’s extended family (1 day)

CONCLUSION
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The very detailed regulation on payroll system must be understood by
the company, especially foreign company in Indonesia. Although it is very
overwhelming information, having someone in your department who can
manage the whole things is very crucial. Otherwise, you can also hire a third
party to perform everything on your behalf so that you can take care of this
payroll system more efficiently and effectively.

References:
• http://gpa-global.org/wp-content/uploads/2017/02/indonesia-2017-HBNW.pdf
• https://www.cloudpay.net/resources/understanding-payroll-in-indonesia-what-global-
companies-need-to-know-about-indonesias-payroll-system
• https://dwiiba.wordpress.com/sistem-kompensasi/
• https://www.activpayroll.com/global-insights/indonesia
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Our Vision
To be leading consulting firm of business services
to clients expanding and operating in Indonesia.
Our Mission
To provide full-range of market-entry and
corporate services to enable our clients to focus
on their core business and activities in Indonesia
and beyond.
PT. Cekindo Bisnis Grup is a
leading consulting firm of
Market-Entry and Corporate
secretarial services to clients
expanding and operating in
Indonesia and further to
Southeast Asia.
Our Values
Client-focused
Excellence performance
Knowledgable locally
Integrity moral
Normative operations standards
Delivered on-time
One stop services provider
Company Profile

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Our main services:
Business Set
Up
Business
Process
Outsourcing
Local
Representation
 Company
Registration
 License & Product
Registration
 Market Research
& Analysis
 Local Partner
Selection
 Trade Mission
 Land & Property
Ownership
 Recruitment & HR
Establishment
 Payroll
Management
 Accounting & Tax
Reporting
 Visa & Work
Permit
 Mystery Shopping
 Local Distributor
& Partner
 Buying Agent
 Office Space
Cekindo Services

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Senior Advisor
Prof. Dr. Rahardi Ramelan
Relevant Experience
Mr. Ramelan is currently Senior Advisor at PT Cekindo Bisnis Grup. Hi is a Research Professor at the Agency for the
Assessment and Application of Technology. The honorary degree of Doctor Honoris Causa from Monash
University, Australia and Northeastern University Boston.
 Minister of State for Research and Technology of the Republic of
Indonesia and Chairman of the Agency for Assessment and Application of
Technology (BPPT) in the Seventh Development Cabinet of the Republic
of Indonesia.
 Minister of Industry and Trade in the Development Reforms Cabinet of
the Republic of Indonesia and Chairman of National Logistic Agency.
 Deputy Chairman for Industrial Analysis and Vice Chairman of the
National Development Planning Agency of the Republic of Indonesia
 Several management positions and responsibilities related to Indonesian
Aviation industry, the Weapon industry.
Prof. Dr. Rahardi Ramelan
Profile Overview

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Principal Consultant
Michal Wasserbauer
Michal is currently Principal Consultant at PT Cekindo Bisnis Grup. He has more than 5 year‘s experience in the
Corporate Market research, Strategy and Evaluation Expansions, Business Consultancy, and Preparation of
Business Feasibility Studies. He has worked for various industries, namely Grocery and Marchandise Retail,
Energy, Medical Device, Heavy and Automation Industries.
+6281282300584 |  michal.wasserbauer@cekindo.com
Michal Wasserbauer
 Market opportunities valuation
 Investment analysis
 Performance management
 Feasibility studies
 Strategy planning
 Stakeholder management
 Marketing consultancy
Profile Overview
Relevant Experience
Relevant Skills
 Multinational grocery and general merchandise retailer: Capital
Investment Appraisals
 World‘s largest student and recent graduates-run organisation:
Financial Controller
 International consultation company: Market Expansion Consultant

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Principal Consultant
Nurmia Agustina
Nurmia is currently Principal Consultant at PT Cekindo Bisnis Grup. She has wide experience in the areas of Business
Development, Legal Corporate Restrictions, Business Consulting, Project Management, Market Development &
Entry Strategy, Sales & Distribution, Management Strategy, Recruitment, Visa & Work Permit, and Change
Management. She has worked for various industries, namely Energy & Resources, Telecommunication, Retail,
Pharmaceutical & Medical, Financing, Non-Profit, IT and Heavy Industries.
+628119691987 | nurmia.agustina@cekindo.com
 International Management company: Management & Legal
consultant
 Chamber of Commercial: Head of Business Processing Section
Nurmia Dwi Agustina
 Corporate law
 Outsourcing processes
 Company formation
 Acquisitions
 Project Management
 Competitive Analysis
 Business Planning
 Risk Management
 Talent Management Strategy
 Recruitment
 Visa & Work Permit
 Change Management
Relevant Experience
Relevant Skills
Profile Overview

PT. Cekindo Bisnis Grup
Grand Slipi Tower 9th floor
Jl. Letjend. S. Parman Kav 22-24
Jakarta - 11480
Indonesia
 info@cekindo.com
 +6221 80660900

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