Employers in Indonesia can deduct wages during agreed unpaid leave, provided the arrangement complies with Indonesian employment law. The same general principles apply to Indonesian and foreign employees, although contractual benefits and payroll obligations may differ.
When Can Employers Deduct Salary for Unpaid Leave?
Employees may request unpaid leave, subject to the employer’s agreement and applicable employment arrangements. The agreed leave period and payment terms should be documented.
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Certain absences, including qualifying illnesses and family events, carry statutory wage entitlements and cannot automatically be treated as unpaid leave.
How to Calculate Salary During Unpaid Leave
Employers should identify which salary components are subject to deduction, including whether fixed allowances, expatriate housing benefits, and overseas salary payments continue during unpaid leave.
Calculating the Salary Deduction
Unpaid leave deduction = Daily wage rate × Number of unpaid leave days
Remaining gross salary = Applicable monthly wage − Unpaid leave deduction
Indonesian wage regulations use divisors of 21 for a five-day working week and 25 for a six-day working week when calculating daily wages. For monthly salaried employees taking unpaid leave, the deduction method should follow the applicable employment arrangements and comply with Indonesian law.
Calculating Unpaid Leave for a Monthly Salaried Employee
Consider an employee earning IDR 15 million (USD 900) per month who takes three days of agreed unpaid leave.
The employee works a five-day week, and the company’s payroll arrangements specify a 21-day divisor for unpaid-leave deductions.
| Calculation | Amount |
| Monthly salary | IDR 15,000,000 (USD 900) |
| Agreed divisor | 21 days |
| Daily wage | IDR 714,286 (USD 42.86) |
| Unpaid leave | 3 days |
| Salary deduction | IDR 2,142,857 (USD 128.57) |
| Remaining gross salary | IDR 12,857,143 (USD 771.43) |
How Does Unpaid Leave Affect Tax and BPJS Contributions?
Income Tax (PPh 21)
For employees subject to Indonesia’s monthly effective tax rate (TER) system, employers generally calculate PPh 21 withholding using the applicable rate and taxable gross income for the month. Separate reconciliation rules apply in the employee’s final tax period.
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Foreign employees who qualify as Indonesian resident taxpayers are generally subject to PPh 21, while non-residents may be subject to PPh 26, depending on their circumstances and applicable tax treaties.
BPJS Contributions
Reduced earnings during unpaid leave do not automatically result in proportional reductions in BPJS Kesehatan or BPJS Ketenagakerjaan contributions. Employers must apply the relevant contribution bases and wage ceilings.
Foreign employees working in Indonesia for at least six months are generally required to participate in BPJS, subject to the applicable program requirements.
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Unpaid leave can affect salary calculations, tax withholding, and social security contributions. Contact MAP Resources Indonesia at info@mapresourcesindonesia.com for assistance managing payroll.
