How do you hire staff in a PT PMA?

Indonesian labour costs look low until you add everything attached to them. The salary is the smallest part of the decision.

The minimum wage

Each regency sets its own minimum wage, the UMK, revised annually. Badung's is among the higher rates in Bali, reflecting the tourism economy, and the regencies differ meaningfully from one another.

Paying below the applicable UMK is not a negotiable arrangement even if the employee agrees, and it creates a liability that surfaces in any dispute.

What sits on top of the salary

BPJS Ketenagakerjaan — the employment social security scheme, covering work accident, death, old age and pension. Contributions are split between employer and employee, with the employer carrying the larger share.

BPJS Kesehatan — health insurance. Also split, employer-weighted.

THR — *Tunjangan Hari Raya*, the religious holiday allowance. One month's salary, paid annually before the relevant religious holiday, pro-rated for employees with less than twelve months' service. It is a legal obligation, not a bonus, and it is enforced with a specific deadline.

Overtime, calculated at prescribed rates, which villa operations with evening and weekend cover accumulate more of than owners expect.

Leave entitlements — annual leave and public holidays, of which Indonesia has many.

Together these commonly add twenty to thirty-five percent to the base salary. Budget on that basis, not on the headline wage.

Termination is the part that surprises people

This is where foreign employers get caught, consistently.

Indonesian labour law protects employees substantially. Dismissal requires a valid ground, a defined process, and — in most cases — severance, service appreciation pay and compensation for entitlements, calculated from length of service using statutory formulas.

For a long-serving employee this can amount to many months of salary. It is not discretionary, it is not negotiable down by agreement in advance, and a termination that does not follow the process can be reversed or result in a larger payment.

Practical consequences:

Hire carefully. Correcting a bad hire is expensive in a way it is not in Australia, the UK or most of Europe.

Use a proper written contract, with the role, term, salary, hours and grounds clearly defined.

Understand fixed-term versus permanent. Fixed-term contracts (PKWT) are permitted only for work that is genuinely temporary, seasonal or project-based, with limits on duration and renewal. Misusing them to avoid permanence converts the contract to permanent by operation of law, which is exactly the outcome you were trying to avoid.

Document performance issues contemporaneously. A dismissal defended on undocumented grounds does not go well.

Take advice before terminating, not after.

Villa staff specifically

A villa that rents typically needs a cleaner, a pool and garden service and often a security or night presence. Larger properties add a manager, cook and driver.

Two routes.

Employ directly. Cheaper per hour, and you carry the full employer obligations: BPJS, THR, overtime, leave, and the termination exposure. Through a PT PMA this is straightforward administratively. Personally, without a company, it is considerably murkier.

Contract through a management company or service provider. More expensive per hour, and the employment relationship and its obligations sit with them. For most foreign owners with one or two properties, this is the better trade.

The mistake to avoid is treating a long-standing, full-time, exclusively-engaged "contractor" as though they are not an employee. Indonesian law looks at the substance of the relationship, and a long-serving villa staff member who has worked exclusively for you for years is very likely an employee whatever the paperwork says.

Foreign employees

Employing a foreigner, including yourself as director, requires RPTKA approval — the foreign worker utilisation plan — and the corresponding immigration permit. Holding shares in your own company is not authorisation to work in it.

Certain positions are closed to foreign nationals entirely, and the company must demonstrate the role justifies a foreign hire. Enforcement here has tightened.