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Rp (IDR)

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The Republic of Indonesia is an island country in Southeast Asia. It is the world’s largest Island nation spanning over 17,000 different islands. The official language is Indonesian, but there are more than 700 languages spoken across the country. Indonesia has a very strong industrial sector with petroleum, natural gas, mining and textiles at its core. Additionally, the service sector accounts for more than 40% of Indonesian Gross Domestic Product (GDP).

Employment contracts in Indonesia can be for a fixed or indefinite term. Employment contracts for an indefinite term can be verbal or written. If written, the agreement must include:

  • name and address of the employer,

  • name, age, address, and gender of the employee,

  • job title and job description,

  • place of work,

  • wages and how they will be paid,

  • start date of employment,

  • date of contract execution, and

  • signature of both parties.

If an employment contract for an indefinite term is verbal, the employer must provide the employee with a letter of appointment including:

  • name and address of the employee,

  • date the work is to start,

  • type of job or work, and

  • amount of wages.

Fixed-term contracts must be in writing and in Indonesian. If not executed in writing, the contract will be deemed to have an indefinite term. Fixed-term contracts cannot exceed two years in length. Extending a contract for one year is allowed. Employment contracts with no specified end date may include a probationary period of up to three months. There is no probationary period in a fixed-term contract.

Employees in Indonesia may work up to 40 hours a week over either five or six days. Daily hours are limited to seven hours a day for a six-day work week or eight hours a day for a five-day work week. Overtime in Indonesia is allowed but limited to three hours a day and 14 hours a week. Employees must provide written consent to work overtime and consent cannot be coerced or compelled.

Employers in Indonesia must provide sick leave to employees who are ill if they provide a doctor’s statement. The wages for sick leave are calculated by percentage based on the number of months of sick leave the employee takes. Female workers are entitled to paid leave on the first and second days of menstruation if they are ill and they cannot perform their work.

Female employees receive three months of fully paid maternity leave in Indonesia, with one and a half months taken before the birth and one and a half months taken after the birth. Leave may be extended if certified in writing by an obstetrician or midwife. In the event of a miscarriage, female employees are entitled to one and a half months of leave. Employers must provide special facilities for mothers to breastfeed during working hours. Male employees receive two days of paid paternity leave in Indonesia.

Employers in Indonesia must pay a mandatory bonus, known as Tunjangan Hari Raya (THR) or religious holiday bonus, to all employees with at least one month of service.

Employees in Indonesia receive paid annual leave of 12 days and this increases to a month after six years of service. The employee must work for at least a year to be eligible for their first 12 days of paid leave. Vacation leave can be carried over into the next year but must be used within six months from the time it is accrued. Employees also receive two days paid leave for a child's:

  • circumcision,

  • baptism,

  • marriage, or

  • death.

In Indonesia, the public holidays are:

  • New Year’s Day

  • Chinese New Year

  • Ascension Day of the Prophet Muhammad

  • Good Friday

  • Labor Day

  • Eid al-Fitr

  • Ascension Day of Jesus Christ

  • Pancasila Day

  • Idul Adha

  • Islamic New Year

  • Indonesian Independence Day

  • Birthday of the Prophet Muhammad

  • Christmas Day

Indonesia provides health insurance through a government insurance company, funded by employer and employee contributions.

An employment contract in Indonesia can be terminated at the end of the contract period (if for a fixed term), by the employer or by the employee. Employers are not required to provide notice before dismissing an employee. However, employers must negotiate the termination of employment with the labor union, if there is one, or the employee. If an agreement cannot be reached, the employer must get approval from the Industrial Relation Court (IRC). If a mutual termination agreement was signed, it needs to be filed with the IRC. IRC approval is not required if the employee is still on probation, provided that these terms were agreed to in writing. The probation period cannot exceed three months.

Employers in Indonesia can terminate an employment relationship for the following reasons:

  • violation of rules and regulations (including three warnings),

  • employer's insolvency,

  • employee reaches pension age of 55,

  • employee abandons position for five days, or

  • employee is incarcerated.

Employees in Indonesia cannot be terminated for:

  • race, religion, ethnicity, political beliefs, opinions, gender, color, physical conditions or marital status,

  • missing work due to an illness certified by a doctor for more than 12 consecutive months,

  • disability or illness caused by an occupational disease certified by a doctor where the recovery period cannot be determined,

  • missing work for religious reasons, or to fulfill obligations to the state,

  • missing work to get married,

  • being related by blood or marriage to another employee in the business (unless prohibited under a relevant labor contract or collective bargaining agreement),

  • becoming pregnant, having a miscarriage or nursing a child,

  • becoming a member of a labor union or participating in labor union activities either outside of work hours or during work hours with permission of the employer, or

  • reporting the employer to the authorities for committing a crime.

An employee who is wrongfully terminated for one of the above reasons must be rehired. When a termination has taken place, the employer is required to pay the separated employee severance and/or a sum of money as a reward for services rendered.

  • Local Laws & Regulations

    We understand that local laws and regulations change and sourcing an accurate reference guide is not easy. Our data is researched and verified by our team of local international Employment Attorneys, HR and Benefit Professionals and Tax Accountants through our Atlas team and consultants, to ensure information up-to-date and accurate.

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