Types of Employee Benefits in Indonesia That HR Must Know

Employee benefits in Indonesia are an essential part of the compensation package beyond salaries that companies provide to their employees.

While wages are paid for the hours worked, benefits are given to help retain employees in the company. These benefits come in various forms, like family allowances, position-based perks, and meal allowances based on attendance.

Benefits can be a significant draw for potential candidates when deciding where to work, alongside the offered salary.

Some people might not fully grasp what employee benefits entail.

Before diving deeper into the topic of employee benefits in Indonesia, let's define what they are. In essence, employee benefits refer to additional income beyond the basic salary that employees receive periodically. Simply put, benefits are non-wage earnings provided by the company.

Because they are non-wage income, benefits are subject to specific regulations and policies that can vary between companies.

This aspect is crucial for HR teams aiming to attract potential candidates to join their company.

Employee benefits are categorized into fixed and variable benefits. Fixed benefits are regular payments given alongside salaries. On the other hand, variable benefits are incentives provided by companies to boost employee motivation and morale.

Basic Salary

The foundational pay employees receive for their work. Usually BPS (Badan Pusat Statistik), a Non-Ministerial Government Institution responsible for providing national and regional scale data and statistical information, create annual Indonesia minimum wage based on province, city, and regency.

Position Allowance Based on Employee Responsibilities

Position allowance is given to employees who hold a specific position in a company and is based on their job responsibilities. It can be said that this allowance is based on the structural level of the organization and it should be noted that the position allowance is given in the form of money to the employee.

In Indonesia, there are two types of allowances:

Functional Allowance

Given to employees with specialized skills in specific fields like healthcare, engineering, education, or finance. It recognizes certifications, advanced education, or relevant work experience.

Structural Allowance

Provided to employees in management or administrative roles to enhance their qualifications and leadership abilities within the company.

Family Allowance, Only for Those with Families

Family allowance is given to permanent employees who have children and families. Therefore, this type of employee benefit in Indonesia is usually family allowance will be given to 1 wife and maximum 2 children.

Housing Allowance for Employees

A type of allowance given to employees who do not live in company-owned housing. It should be noted that this housing allowance is also provided in the form of money to the employees.

In Indonesia, whether you are a civil servant (ASN), private sector employee, or self-employed worker, there will be a 3% deduction for the Housing Savings Fund (Tapera). For employees, the Tapera contribution is split with the employer paying 0.5% and the employee paying 2.5%. Self-employed workers will have the full 3% deducted from their earnings.

Transportation Allowance to Support Employee Mobility

Falling into the category of non-fixed allowances, transportation allowance is given to cover commuting expenses or business trip using reimbursement. This allowance aims to ease the transportation burden of employees.

Internet Data Allowance to Facilitate Communication

This one, also a non-fixed allowance, is the communication allowance. This is a common employee benefit provided by companies in Indonesia. The purpose of the communication allowance is to support coordination and communication needs in carrying out work among employees or with external parties.

Welfare Allowance Based on Employee Performance

Welfare allowance is given to specific employees based on their performance, duties, and responsibilities related to the smooth operation of the company's activities.

Tunjangan Hari Raya (THR) Regulated by Law

Commonly known as THR, is a well-known type of employee allowance. This is one of the mandatory employee benefits in Indonesia, regulated by labor laws: Peraturan Menteri Ketenagakerjaan (Permenaker) No.6 Tahun 2016 tentang Tunjangan Hari Raya Keagamaan bagi Pekerja/ Buruh di Perusahaan (Permenaker No.6/2016).

The holiday allowance (THR) is given annually by companies based on employees' religious holidays. It must be paid at least seven days before the holiday to enhance employees' welfare and purchasing power, helping them meet their own and their families' needs during the holiday season.

Health Allowance to Maintain Work Productivity

The health of employees and their families is a priority for companies. Therefore, companies usually provide health allowances to maintain work productivity.

Indonesia has a health program called BPJS Kesehatan, which is a government health insurance program providing essential healthcare, medications, and vaccines for all.

General Allowance for Appreciation

As the name suggests, general allowance is given to employees who do not hold a position as a form of appreciation for their work.

Bonuses can be structured in various ways depending on the company's policies and practices. Here's a general breakdown:

Monthly Bonus

Given monthly based on achieving specific targets or goals. Amounts can vary widely based on performance metrics.

Quarterly Bonus

Given every three months, these bonuses are often larger than monthly ones. They're awarded based on team or individual achievements, departmental goals, or overall company performance.

Yearly Bonus

These are the largest bonuses, given annually or at year-end. They're usually tied to overall company performance and individual contributions throughout the year.

Lunch Allowance Usually Given Per Attendance

The last is the lunch allowance, which is provided by the company based on employee attendance.

Lunch allowance is given only to employees who are present; absent employees forfeit it. Companies can also consider travel allowances, which increase productivity, reduce stress, and attract potential candidates.

Life and Accident Insurance

Helps protect employees and their families during tough times, providing financial support in case of accidents or loss of life. Usually cover with BPJS Ketenagakerjaan/Jamsostek with Jaminan Kecelakaan Kerja.

Training and Development Programs

Opportunities for employees to grow and learn new skills, making them more capable and confident in their roles. Usually provided by company or third party where employees can reimburse for course fees.

Employee Facilities

These are the little extras at work, like parking spots, dining areas, and places to unwind, making the work environment more enjoyable and helping everyone perform their best.

Pension Fund

After years of hard work, employees can retire with peace of mind, knowing they'll still have income to rely on. Covered by BPJS or Jamsostek with Jaminan Hari Tua.

Work Flexibility

Some companies offer flexible work options, such as remote work, work from home options in a month, or adjustable working hours, to promote better work-life balance.

Recruit top Southeast Asian talent effortlessly with Epicareer for Employers.

Discover deeper insights:

• Indonesia's Working Hours and Overtime Regulations

• Hiring Employees in Indonesia: Employment Laws and Regulations

• Payroll System in Indonesia: Rules, Regulations, and Compliance

• Indonesian Employees Working Hours According to Business Type

• Leave Application Guide for Singapore Employers Hiring Indonesian Employees

Access the Career Guide for all your HR resource needs.