Are there mandatory allowances in Indonesia?

In Indonesia, there are no mandatory allowances that employers are legally required to provide. However, allowances can be a part of the compensation package offered by employers, and they typically include various types of financial support for employees. Here’s an overview of the allowances that may be offered, including the general practices and limits.


Mandatory Allowances

  • None Required by Law: Indonesia does not have any legally mandated allowances that employers must provide. This means that allowances such as housing or leave allowances are not compulsory and are at the discretion of the employer.


Optional Allowances

While not required by law, employers may choose to offer fixed allowances as part of their compensation packages. These allowances are often included to attract and retain talent and to support employees in their daily lives. If provided, the total amount of these allowances cannot exceed 25% of the employee’s total compensation. Common optional allowances include:

  • Housing Allowance: This allowance helps cover the costs of renting or maintaining a residence. It is often provided to employees who need to relocate for their job or who do not receive company-provided housing.

  • Leave Allowance: Also known as a leave or vacation allowance, this benefit is intended to support employees financially during their time off. It helps cover expenses incurred while on leave, ensuring that employees can take their annual leave without financial strain.

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