Employment Contracts in Indonesia

Legal Updates
Employment Contracts in Indonesia
2 October 2018

By Fahrul S. Yusuf

In general, an employment agreement in Indonesia shall be entered into for either a fixed or an indefinite term.

Fixed-term employment agreements are subject to more strict requirements than indefinite-term employment agreements. A fixed-term employment agreement must be in writing and in the Indonesian language. The parties typically provide that the English version of a bilingual agreement will prevail in the event of a conflict or inconsistency. If not in writing, a fixed-term employment agreement is deemed an indefinite-term employment agreement. Additionally, a fixed-term employment agreement cannot include a probation period.

A fixed-term employment agreement that is based on a certain period of time (unlike seasonal contracts, etc.) may last for up to two years, and may be \"extended‚Äù once for a maximum period of one year. Then, after a grace period of at least 30 days, it can be \"renewed‚Äù one time for a maximum period of two years.

An indefinite-term employment agreement may provide for a probation period of up to three months. In the event an indefinite-term employment agreement is made verbally, the employer is required to provide a letter of appointment to the employee. The letter shall contain at least the following information: (i) the employee\'s name and address, (ii) the date the work commences, (iii) the type of work, and (iv) the employee\'s proposed wages.

Fixed-term contracts must be in writing and in the Indonesian language or in a bilingual format. Given new legislation governing the use of Indonesian language in contracts generally, we recommend that both fixed and permanent employment agreements be executed in Indonesian or in a bilingual Indonesian and English format. It is prudent to assume that in the event of a conflict or inconsistency, the Indonesian-language version shall prevail.

This publication is intended for informational purposes only and does not constitute legal advice. Any reliance on the material contained herein is at the user\'s own risk. You should contact a lawyer in your jurisdiction if you require legal advice. All SSEK publications are copyrighted and may not be reproduced without the express written consent of SSEK.

For More Information, Please Contact
Back to Indonesia Law Blog
Related Articles