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Indonesia: Pay and benefits

Original and updating authors: Richard Cornwallis, Lia Alizia and Candace Anastassia Limbong, Makarim & Taira S.
Updating author: Hendrik Alfian Pasaribu, Makarim & Taira S.

Summary

  • Wages are defined as the employee's entitlement, expressed in the form of money, received as compensation from the employer for work and/or services performed. (See General)
  • Various statutory rules apply to the form and frequency of payment of wages. (See Payment of wages)
  • In principle, except for income tax and statutory social security contributions, an employer may make deductions from an employee's wages only where this is authorised in writing by the employee. (See Deductions)
  • Male and female employees have a right to equal pay for equal work. (See Equal pay)
  • There is no single national minimum wage, and statutory minimum wage rates are set at provincial and local level. (See Minimum wages)
  • The statutory social security system provides for "old-age security" benefits and a pension benefits scheme. (See Old-age security insurance and pensions)
  • Employers must withhold employees' income tax at source, and employers and employees must pay statutory social security contributions. (See Income tax and social security)
  • If an employee is absent from work owing to sickness, the employer is obliged to pay the employee his or her full wages for the first four months of absence, then a certain proportion of his or her wages for at least a further eight months. (See Pay for employees not at work)
  • Employers must pay employees a "religious holiday allowance", set at one month's wages for employees with at least one year's service, on the occasion of one religious festival per year. (See Religious holiday allowance)