Recruitment & Payroll System in Indonesia

Employment contracts and payroll are important things in a company. The company that was founded certainly requires professional staff to carry out management within the company.
The success of a company and good management is very influential with the employees they have.
The company has standards set for each prospective employee, where all employees will be given an employment contract by the company. In general, there are two types of employment contracts, temporary employment contracts (PKWT) and permanent employment contracts (PKWTT). In making employment contracts, companies must follow the standards set by the Ministry of Manpower of the Republic of Indonesia. Here glance information about Recruitment & Payroll System in Indonesia.

Indoned Consultancy can assist you in your company’s about Recruitment & Payroll System in Indonesia accurately and on time. Please contact us for more detailed information.

Types of Employment Contract in Indonesia

An employment contract or employment agreement is an agreement in written or oral form that is made to bind the relationship between the worker or labourer with the employee, for a specified period of time or an indefinite period of time. Article 60 of Law No. 13/2013 regulates that the employment agreement for an indefinite term may require a probation period. This period can be no longer than 3 (three) years and during this probation period it is prohibited to pay wages less than the applicable minimum wage.

The contract will be considered valid if both parties agree without coercion.

In accordance with Article 52 Paragraph 1 of the Manpower Act No.13 / 2003, which states that employment agreements must be made on the basis of:

1. The contract has been agreed and signed by both parties.
2. Names of employers and employees.
3. Work location.
4. Working period.
5. The date started work.
6. Salary and payment date.
7. The right to annual leave, holidays and childbirth.
8. Time of notification when you want to resign.
9. Job position and description.
10. Working hours.
11. Overtime pay.
12. Yearly bonus.

Temporary Employment Contract:

Temporary employment contracts, namely: Employment contracts made by companies with certain work periods such as 3 months, 6 months and can be extended for up to 2 years.
The work agreement can be extended for a maximum period of 1 year in accordance with the provisions of the Labour Law Article 58 paragraph 2.

Permanent Employment Contract:

Agreements between workers and employers who want to establish permanent employment relations
a work contract prepared by the company with combat regulations and the period of work are not determined until the employee resigns.

Based on Article 1 number 2 of the Decree of
the Minister of Manpower and Transmigration of the Republic of Indonesia Number KEP. 100 / MEN / VI / 2004 concerning Provisions for Implementing Specific Time Work Agreements (“Kepmenakertrans 100/2004”).

Termination of Employment (Termination)

Under Article 151of Law No.13/2003, the employer and the employee must make all efforts to prevent Termination of the employment agreement. If despite all efforts, negotiation fails to result in any agreement, the employer may only terminate the agreement after receiving a decision from the institute for the settlement of industrial relation disputes (ISRID).

Under Article 154 of Law No.13/2003, the decision of ISRID is not required if:

1. The employee is still on probation period and the Termination has been stipulated in writing;
2. The mentioned employee makes an application for resignation in writing on his or her own will with no indication of being pressured or intimidated by the employer to do so or the employment relationship is expired;
3. Employee who has reached the retirement age as stipulated under employment agreement, company’s regulation, collective work agreements and laws and regulations;
4. Employee dies.

Under Article 155 of Law No.13/2003, any Termination mentioned above conducted without the decision of ISRID is considered null and void. Then, both employer and the employee shall conduct their obligations until issuance of ISRID’s decision.

If all efforts have been made and the Termination is inevitable, the employer is obliged to pay the severance pay and or employment reward pay and unusable compensation pay.

Employment contracts must be made legally because they involve labour law in force in Indonesia.
Indoned Consultancy can help you to find employee candidates for various levels of management levels, ranging from lower-level management, middle-level management, and top-level management. We will also look for employee candidates in accordance with the specifications and qualifications that suit the business needs of our clients. Contact us for more information.

Payroll Services

Payroll is a company payroll administration system for employees or employees more easily. The payroll system facilitates the routine work of the Human Resources Department’s staff every month in calculating the salary that must be paid and calculated based on basic salary, transport allowances, meal allowances, and overtime pay. The process of calculating employee salaries manually will of course take a lot of time, especially if the company has hundreds to thousands of employees. Therefore, with the existence of a payroll system the process of calculating employee salaries will be easier and more practical. There are several differences for calculating salaries for permanent and non-permanent employees.

Because a company’s payroll system is very important we, Indoned Consultancy provides payroll services to help facilitate your company. With our team who are experts in their fields we will provide services:

1. Payroll calculations in detail and on time.
2. Analysing employee productivity to calculate bonuses or overtime.
3. Establish the latest regulations in each presentation process in accordance with the applicable Employment contract.
4. Monthly tax calculation.
5. Funds transfer report.
6. Salary slip.
7. Payment of salaries, taxes, and the BPJS.
8. Annual audit for salaries.

Based on the work agreement of employees with the employer can be divided into two, namely permanent employees and temporary employees. The difference between permanent employees and temporary employees is basically not only in terms of the amount of salary received. But also from how to calculate the amount of income or salary. The process of calculating salaries for permanent employees and non-permanent employees is not the same. Employee salary calculations are usually based on years of service, position, and whether the employee is included in the category of permanent or casual employees with daily or monthly salaries.


The information provided here is based on our long experience. The process or requirement may vary depending on the specific facts and conditions. Besides, the law and regulations in Indonesia subject to frequent changes. Please contact us as your consultant to get an up to date information and accurate advice. More Information click here and You can also follow our social media accounts to see the latest information posts. please click on the following links: Facebook, Instagram, Linkedin, and Twitter.

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