Empower Your Workplace with Legal Confidence

Employment contracts must be in writing and should clearly outline both employer’s and employee’s rights and obligations, including job responsibilities, working hours, salary, benefits, and the duration of employment. The contract should comply with Indonesian Manpower Law No. 13 of 2003, as amended by the Job Creation Law.

There are two types of employment contracts: Fixed-term contracts (Perjanjian Kerja Waktu Tertentu or PKWT) and Indefinite-term contracts (Perjanjian Kerja Waktu Tidak Tertentu or PKWTT). Fixed-term contracts are used for specific time periods or projects, while indefinite-term contracts are open-ended.

Company Regulations is internal rules established by the employer to govern the rights and obligations of both parties. They provide structure on issues such as working conditions, disciplinary actions, leave policies, and other employment terms. The regulations must align with the legal framework and be reviewed every two years. This regulation must be registered and approved by the Indonesian Ministry of Manpower.

A CLA is a negotiated agreement between the employer and a registered labor union, outlining terms of employment for the union members. It covers salaries, benefits, dispute resolution mechanisms, and working conditions. CLAs must be registered with the Ministry of Manpower.

Mutual agreements between employers and employees to terminate an employment relationship must be documented in writing and signed by both parties. It is a voluntary process, and the employer typically offers compensation or severance payments in line with government regulations.

Labor disputes are typically resolved through bipartite negotiations, mediation, and tripartite through Local Manpower institution. If these measures fail, disputes may be escalated to the Industrial Relations Court.

Yes, probationary periods are allowed under Indonesian labor law but can only last up to three months. During this time, the employment contract must clearly state the probationary nature of the work and the expectations for successful completion.

Employees who are terminated are entitled to severance pay, long-service pay (if applicable), compensation rights, and other benefits as mandated by Government Regulation No. 35 of 2021. The amount depends on the reason for termination and the employee’s length of service.