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Written Agreements

Indefinite work agreements can be made either orally or in writing. However, a work agreement for a fixed period must be concluded in writing in the Indonesian language (with the Latin alphabet). The Indonesian wording will prevail if the contract is bilingual.

The Indonesia labor law requires the written employment contract to include at least the following information:

• The name, address, and line of business
• The name, age, sex and address of the employee
• The occupation or the type of job
• The place where the job will be carried out
• The amount of wages and how they shall be paid
• Job requirements stating the rights and obligations of the employer and the employee
• The date at which the work agreement starts and the period during which it is effective
• The date and the place where the work contract is made
• The signatures of the parties of the work agreement

Oral Agreements

The labor code in Indonesia recognizes oral contracts only for employment for an unspecified term, based on an agreement between both the parties. The employer is required to provide a letter of employment to the employee, which must contain the following information:

• The name and address of the employee
• The date of commencement of employment
• The type of job or work that the employee is supposed to do
• The amount of wage that the employee is entitled to

Implied Agreements

Contracts arise by agreement or by law. Usually, for the conclusion of a contract, all that is required are the consent, capacity, and object of the parties. However, a party's actions can create a contract by force of law. A person can become an employee by acting as one so long as the employer does not object once it is known to them. If the employer benefits from the labor of another, without an agreement, the employer must compensate the employee and an employment contract will be implied.

The regular workweek is 40 hours, and employees who work over 40 hours a week are eligible for overtime. Employers can distribute the 40 working hours in a week in the following ways:

• No more than 7 hours a day for 6 working days in a week, or
• No more than 8 hours per day for a 5-day week

The employee can work overtime if they agree to do so. This agreement must be made in writing. The maximum amount of overtime the employee is allowed to make is 4 hours a day and 18 hours a week. The employee is entitled to a rest of 1 day after 6-day working week and 2 days after a 5-day working week.

The following holidays are recognized as public holidays in Indonesia in 2025:

• New Year’s Day - January 1
• Chinese New Year - date subject to change annually
• Isra Miraj - date subject to change annually
• Day of Silence (Hari Raya Nyepi) - date subject to change annually
• Good Friday - date subject to change annually
• Labor Day - May 1
• Waisak Day - date subject to change annually
• Ascension Day of Jesus Christ - date subject to change annually
• Pancasila Day - June 1
• Lebaran Holiday - date varies annually
• Hari Raya Id-ul-Fitri - date varies annually
• Independence Day - August 17
• Id-ul-Adha - date subject to change annually
• Islamic New Year - date subject to change annually
• Christmas Day - December 25

Employers may require their employees to work during formal public holidays if the nature of their job calls for continuous, uninterrupted operation or if it is stipulated in their employment contract. Employees who work on formal public holidays are entitled to overtime pay.

A work agreement for a specified period (i.e., a fixed-term employment contract) cannot stipulate a probation period. If any fixed-term contract includes a probationary period, the latter is considered null and void by the law.

In case of employment for an unspecified length of time (i.e., an indefinite employment contract), the labor code limits the probationary period to a maximum of 3 months. It cannot be renewed or extended. During the probationary period, the employer has to pay at least the minimum wage to the employee. However, an employer has the right to terminate employment without notice or severance during the probationary period.

Notice Period

Indonesian labor regulations require employers, workers and laborers, trade and labor unions, and the government to make every effort to prevent the termination of an employment relationship.

An employer wishing to terminate an employee must give at least 14 days' written notice. This period is shortened to 7 days if the employee works under an indefinite employment contract during the probationary period. An employee who wishes to terminate the employment relationship must give 30 days notice in writing to the employer.

Severance Benefits

Severance benefit entitlements in Indonesia vary according to any applicable employment agreement provisions, applicable company regulations, applicable collective bargaining agreement, time of service, and the situation regarding the termination.

Statutory severance pay is determined as follows:

• 1 months' wage for less than 1 year of employment
• 2 months' wage for 1 to 2 years of employment
• 3 months' wage for 2 to 3 years of employment
• 4 months' wage for 3 to 4 years of employment
• 5 months' wage for 4 to 5 years of employment
• 6 months' wage for 5 to 6 years of employment
• 7 months' wage for 6 to 7 years of employment
• 8 months' wage for 7 to 8 years of employment
• 9 months' wage for 8 or more years of employment

The calculation of the sum of money paid as the long-term service benefit is determined by the number of years of employment. It ranges from 2 months of wages for individuals with 3 to 6 years of services to 10 months of wages for employees who worked 24 years or more.

The wage components to be used for calculating the severance benefits and the service reward pay include the basic wage that the employee received and all forms of fixed allowances provided to employees and their families.

Minimum Wage

Per labor regulations on wages, the governor of each province stipulates a Provincial Minimum Wage. In 2024, 38 provinces have established a Provincial Minimum Wage. Wage levels range from IDR 2,169,348.55 (Indonesian rupiah) in Jawa Tengah to IDR 5,396,760.77 in Jakarta. Provincial Minimum Wage only applies if the Regency/City Minimum Wage is not established.

In Indonesia, the minimum wage is the lowest monthly wage, consisting of the basic wage and fixed allowance. It is calculated according to the formula stipulated in Government Regulation (GR) No. 78/2015: new minimum wage = current minimum wage + (current minimum wage x (inflation + % GDP annual increase during the year)).

Minimum wage only applies to:

• Single employee
• Employees who have a working period of up to 1 year
• Employees with permanent contract employment status and/or in a probation period

Employers are required to apply the pay scale structure for employees who are married and/or have more than a 1-year working period.

Overtime, Holiday & Vacation Pay

In Indonesia, any employee working more than 40 hours a week is entitled to be paid overtime. The employee must agree to work more than 40 hours a week and cannot be made to do so by the employer. Overtime hours cannot exceed 4 hours a day or 18 hours a week.

Employees working overtime on regular working days should be paid 1.5 times the hourly pay for the first hour of overtime worked, and 2 times the hourly pay for each additional hour work. Hourly wages are calculated by multiplying 1/173 by the monthly salary.

Employers must also pay overtime rates for overtime hours worked on weekly rest days and national holidays. If 40 hours of regular weekly work are implemented in five workdays, employers must pay the following overtime rates on weekly rest days and national holidays:

• For the first to the eighth hours of overtime worked twice the hourly rate of pay
• For the ninth hour of overtime worked, 3 times the hourly pay rate
• For the tenth to the eleventh hour worked, 4 times the hourly rate of pay

Employees are entitled to their regular salary during their annual paid leave. While taking long service leave, employees receive compensation equal to half of their monthly salary.

Visas

Indonesia issues visas for the following purposes:

• Single-Entry Visitor Visa (B211A) - issued to foreign citizens for tourism, family emergency, humanitarian reasons, business meetings, purchasing goods, conventions, government official visits, transit, sports, training and short courses, internship, etc. It is granted for 60 days or 180 days, depending on the purpose of visit.
• Single-Entry Visitor Visa (B211B) - granted to foreign citizens for emergency works in case of a natural disaster, to carry out work-ability testing to determine eligibility to work in a company, or to conduct audits, production quality control, or inspections at the company's branches in Indonesia. It is granted for 60 days or 180 days, depending on the purpose of visit.
• Single-Entry Visitor Visa (B211C) - granted to foreign nationals who visit Indonesian territory for journalism or film making. It is granted for upto 180 days' stay.
• Multiple-Entry Visitor Visa (D212) - granted to foreign nationals with a maximum visa validity period of 5 years. The visa can be used to stay in Indonesian for a maximum of 60 days each arrival. It is granted for business purposes, government official visits, meetings, purchasing goods, film making, etc.
• Temporary Stay Visa for Work (C312) - granted to foreign nationals as experts/specialists employed in Indonesia by their sponsors. It is granted for stay up to 2 years.
• Temporary Stay Visa for Study (C316)Student visas - a limited stay permit is issued to international students for a maximum of 2 years, extendable. They must have proof of admission to an institute in Indonesia, and proof of funds.
• Second Home visa - granted to foreign nationals to live in Indonesian territory for a period of 5 or 10 years, as investors, tourists or retirees. They must have a proof of fund in the form of an account owned by them or their sponsor with a value of at least IDR 2,000,000,000 (Indonesian rupiah).
• Remote Worker Temporary-Stay Visa (E33G) - granted to foreign nationals for up to 1 year with proof of income equal to at least USD 60,000 (United States dollar) annually.

Work Permits

An employer who intends to hire foreigners must first obtain an RPTKA (Rencana Penempatan Tenaga Kerja Asing, or Expatriate Placement Plan), which must include the number of foreign workers required, the period of work and the replacement plan with Indonesian employees.

After receiving approval of the RPTKA, the sponsor company can apply for a work permit (IMTA), which can be issued for work that is:

• Urgent/emergency (1 month)
• Temporary (2-6 months)
• Long-term (7-12 months)

Foreign nationals must also apply for a Limited/Temporary Stay Work Visa (VITAS) that allows a stay for up to 2 years and can be extended. They must submit a copy of their RPTKA and IMTA for this application.