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hether you are an employer managing a growing team or an employee entering a new role, understanding Indonesia’s employment law is essential for maintaining fair, lawful, and productive working relationships. Indonesia’s labor framework is designed to balance the rights and responsibilities of both parties, with strong protections for workers and clear obligations for employers.
This guide offers an overview of the key aspects of employment law in Indonesia, including contracts, termination, wages, social security, and dispute resolution.
Legal Framework of Employment in Indonesia
Employment in Indonesia is primarily regulated by:
Types of Employment Contracts
There are two main types of employment agreements under Indonesian law:
PKWT (Perjanjian Kerja Waktu Tertentu) – Fixed-Term Contract
PKWTT (Perjanjian Kerja Waktu Tidak Tertentu) – Indefinite-Term (Permanent) Contract
📄 All employment contracts must be in Bahasa Indonesia or dual-language (if one party is foreign), and registered in the online system of the Ministry of Manpower (for PKWT).
Employee Rights
Employees in Indonesia are entitled to the following legal protections:
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Minimum wage (UMR/UMP) based on regional standards
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Overtime pay for hours exceeding 40/week (with limits)
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Paid leave: annual leave, public holidays, sick leave, maternity/paternity leave
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Social security: BPJS Kesehatan (health) and BPJS Ketenagakerjaan (employment)
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Safe and healthy working environment
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Severance package upon lawful termination
✅ Employers are required to register all employees with BPJS and comply with wage standards.
Employer Obligations
Employers must:
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Provide a clear employment contract
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Pay wages regularly and on time
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Register the company and workers with BPJS
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Report manpower data and comply with labor audits
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Follow procedures in case of termination or resignation
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Prevent discrimination or harassment in the workplace
Termination of Employment
Termination is regulated strictly under PP No. 35/2021. Employers must provide:
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Written notice with valid reason (business closure, redundancy, poor performance, etc.)
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Compensation package, including:
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Severance pay
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Long service pay (if applicable)
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Compensation for unused leave, housing, etc.
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Mediation or negotiation if dispute arises
In some cases, approval from the Industrial Relations Court may be required.
Dispute Resolution
Labor disputes can be resolved through:
⚠️ Both employees and employers are encouraged to maintain proper documentation and follow procedure to avoid legal consequences.
At AUFAR & Co Law Office, we assist both employers and employees in:
