To hire local staff in Bali through your PT PMA, you need a written employment contract (PKWT for fixed-term or PKWTT for permanent), register employees with BPJS (social security), withhold PPh 21 (income tax), and comply with Bali's minimum wage — currently approximately IDR 3.1 million per month (2026). Indonesian labour law strongly protects employees, so understanding termination rules before hiring is essential.
Before you hire: what you need
Your PT PMA must be fully registered before employing staff. Specifically:
- Active NIB (business identification number)
- NPWP Perusahaan (company tax number)
- BPJS Ketenagakerjaan registration (employment social security)
- BPJS Kesehatan registration (health social security)
Your accountant or HR agent can set up BPJS registrations — typically included in standard accounting packages.
Types of employment contracts
Indonesian labour law recognises two contract types:
PKWT (fixed-term contract)
- For specific projects or temporary work
- Maximum duration: 5 years (including renewals)
- Must be written in Indonesian (Bahasa Indonesia)
- Automatically converts to PKWTT if extended beyond the limit
- No probation period allowed
PKWTT (permanent contract)
- For ongoing, core business roles
- No end date — employment continues until resignation or lawful termination
- May include a probation period of up to 3 months
- Stronger termination protections for the employee
Which to use: most foreign business owners start with PKWT contracts for their first hires. This provides flexibility while you assess fit. For core team members you intend to keep long-term, PKWTT is more appropriate and expected by experienced candidates.
Compensation
Minimum wage
Bali's provincial minimum wage (UMP) for 2026 is approximately IDR 3.1 million per month. However, different kabupaten (regencies) may have slightly different rates:
| Area | Approximate UMK 2026 |
|---|---|
| Badung (Canggu, Seminyak, Nusa Dua) | IDR 3.3 million |
| Denpasar | IDR 3.2 million |
| Gianyar (Ubud) | IDR 3.0 million |
| Tabanan | IDR 2.9 million |
In practice: for roles requiring English skills, digital literacy, or specialised experience, market rates are significantly above minimum wage:
| Role | Typical monthly salary (IDR) |
|---|---|
| Administrative assistant | 4–6 million |
| Social media manager | 5–8 million |
| Graphic designer | 5–10 million |
| Accountant (junior) | 6–10 million |
| Developer (junior) | 8–15 million |
| Operations manager | 8–15 million |
| Senior professional | 12–25 million |
THR (holiday bonus)
Indonesian law requires employers to pay THR (Tunjangan Hari Raya) — a religious holiday bonus equal to one month's salary. This is paid before major religious holidays (for most employees, before Eid al-Fitr / Lebaran).
- Full-time employees with 12+ months: 1 full month's salary
- Employees with less than 12 months: proportional to months worked
- Payment timing: at least 7 days before the holiday
THR is not optional. Failure to pay is a labour law violation.
Overtime
Standard working hours are 40 hours per week (8 hours/day for 5-day week, or 7 hours/day for 6-day week). Overtime rates:
- First hour: 1.5x hourly rate
- Subsequent hours: 2x hourly rate
- Holiday overtime: 2x for first 8 hours, 3x thereafter
Social security (BPJS)
All employees must be enrolled in two BPJS programs:
BPJS Ketenagakerjaan (employment)
| Component | Employer % | Employee % |
|---|---|---|
| Workplace accident (JKK) | 0.24–1.74% | — |
| Death benefit (JKM) | 0.30% | — |
| Old age savings (JHT) | 3.70% | 2.00% |
| Pension (JP) | 2.00% | 1.00% |
| Job loss guarantee (JKP) | 0.46% | — |
BPJS Kesehatan (health)
| Rate | |
|---|---|
| Employer contribution | 4% of salary |
| Employee contribution | 1% of salary |
Total employer burden: approximately 11–13% on top of gross salary.
Your accountant withholds employee contributions from salary and pays both employer and employee shares to BPJS monthly.
Tax withholding (PPh 21)
As an employer, you must withhold PPh 21 (income tax) from employee salaries and remit it to the tax office. Rates follow the progressive personal income tax brackets (5–35%).
For employees earning around minimum wage, the effective tax rate is minimal or zero (the non-taxable threshold, PTKP, is IDR 54 million/year for single employees). Higher-paid staff will have meaningful withholding.
Your accountant handles PPh 21 calculation and filing as part of standard monthly payroll processing.
Cultural expectations
Working relationships
Indonesian workplace culture differs from European norms in important ways:
- Hierarchy matters. Employees generally won't contradict a boss directly. Create explicit channels for feedback and concerns.
- Indirect communication. "Yes" sometimes means "I understand" rather than "I agree." Ask open questions to verify understanding.
- Religious observance. Accommodate prayer times (5 daily for Muslim employees) and religious holidays. Bali has additional Hindu ceremonies (Nyepi, Galungan, Kuningan) where many employees take leave.
- Family obligations. Extended family events (weddings, funerals, ceremonies) are significant. Flexibility around leave for family matters builds loyalty.
Leave entitlements
| Leave type | Entitlement |
|---|---|
| Annual leave | 12 days per year (after 12 months) |
| Sick leave | Paid (with medical note), up to 12 months |
| Maternity leave | 3 months (1.5 before + 1.5 after birth), fully paid |
| Paternity leave | 2 days |
| Bereavement | 1–2 days |
| Marriage | 3 days |
Termination rules
Indonesian labour law is strongly pro-employee on termination. You cannot fire someone at will.
Lawful termination requires:
- Documented performance warnings (typically 3)
- Mediation attempt (bipartite negotiation)
- If unresolved: Labour Court (Pengadilan Hubungan Industrial)
Severance pay
Terminated employees are entitled to severance based on years of service:
| Years of service | Severance (months of salary) |
|---|---|
| Less than 1 year | 1 month |
| 1–2 years | 2 months |
| 2–3 years | 3 months |
| 3–4 years | 4 months |
| 4+ years | Continues scaling |
Plus additional payments for long service and compensation for unused leave. Total termination cost can be significant — plan accordingly.
Best practice: invest in hiring carefully and managing performance consistently. Termination in Indonesia is expensive and time-consuming.
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View PlansFrequently Asked Questions
Can I hire staff informally without a contract?+
Strongly discouraged. Without a written contract, the employment is automatically considered permanent (PKWTT), giving the employee maximum protection. Verbal agreements also leave you exposed in disputes. Always use written contracts — they protect both parties.
Do I need to hire Indonesian staff to maintain my PT PMA?+
There is no strict minimum number of local employees for a PT PMA. However, your RPTKA (foreign worker utilisation plan) must demonstrate a plan for Indonesian staff development. In practice, most PT PMAs have at least one Indonesian employee for administrative and compliance support.
Can I use freelancers instead of employees?+
Yes, for genuine project-based work. But Indonesian labour authorities may reclassify a freelancer as an employee if the working relationship shows hallmarks of employment (fixed hours, exclusive work, ongoing instructions). Misclassification carries penalties. Structure freelance arrangements carefully.
What is the cheapest way to handle payroll?+
Most small PT PMAs include payroll processing in their accounting package at no extra charge for 1–5 employees. Stand-alone payroll services cost IDR 500,000–1 million per employee per month. For larger teams, dedicated HR software (Talenta, Gadjian) starts at around IDR 20,000 per employee per month.