Bilingual contracts are common for foreign employees. Contract must be signed in the Indonesian language.Here are the requirements for the fixed-term contract (PKWT): fixed-term contract (PKWT)įixed-term contracts are signed for a specific amount of time. Types of employment contracts in Indonesia Temporary i.e. Examples include labor strikes and lock-outs. Company Regulations must always comply with the Indonesian Manpower Law.Ĭlauses within the PP are typically referred to when settling industrial disputes – disagreements between management and employees that fall outside their terms of employment. In addition to employment contracts, companies must also have Peraturan Perusahaan (PP) This is the internal regulations of a company, understood and legally binding to both the company and its employees. 4# Introduce company regulations ( Peraturan Perusahaan (PP) ) We will introduce the types of employment contracts in Indonesia later in this article. Employment contracts are legally binding and must adhere to the Indonesian Manpower Law. When hiring an employee in Indonesia, you must specify what type of employment contract you are offering. We suggest to always use gross salary – it’s much easier to calculate since the net salary depends on a lot of factors such as their previous income during the calendar year. It’s important to specify whether the offered salary includes taxes (gross salary) or it’s the salary that the employee will take home (net salary). Position (title, division, direct supervisor).
The standard elements of an offer letter in Indonesia are the following: While the offer letter is not legally regulated, it sets clear expectations to both parties and is the basis for the employment contract. Once you have agreed to hire a candidate, the offer is formalized with an offer letter. However, our experience shows that the cost of bad hiring is significantly higher than spending a few extra weeks making sure you know who you are hiring, especially for senior positions.īackground check will verify all of the information about the candidate, guaranteeing there were no false claims and, even worse, that there is no criminal history.Įmerhub’s personal background check services provide an extremely thorough screening for potential candidates, covering the areas of employment history, education, references, criminal records and more. There are two reasons employee background checks are skipped – either to save time or not to spend money on it. The process of hiring employees in Indonesia 1# Conduct employee background checkĬonducting employee background checks is not a legal requirement in Indonesia and it’s often overlooked. In this article, we will provide updated information on these laws and with special focus on the topics of recruitment, employment contracts, benefit packages and termination. In 2020, Indonesia introduced Omnibus Law, which includes several revisions to The Manpower Law. The Manpower Labour Law can and does change frequently, and employers must be familiar with current regulations and how they affect hiring practices. The workforce is regulated by the Indonesian Manpower Law, which protects the rights and interests of both workers and employers.
Healthcare and social security program (BPJS).Employment benefits packages in Indonesia.Types of employment contracts in Indonesia.The process of hiring employees in Indonesia.