1 Year Contract Employment Template for Indonesia

A 1 Year Contract Employment agreement is a legally binding document that establishes a fixed-term employment relationship between an employer and employee in Indonesia for exactly one year. This contract type, known as PKWT (Perjanjian Kerja Waktu Tertentu) under Indonesian law, provides clear terms for temporary employment arrangements while ensuring compliance with national labor regulations.

When do you need this document?

You need this contract when hiring employees for specific projects, seasonal work, or temporary positions that have a defined duration. Indonesian law permits fixed-term contracts for work that is temporary in nature, such as completing a specific project, replacing an employee on leave, or handling increased workload during peak periods. This document is essential when you want to clearly define the employment relationship's start and end dates, avoiding the automatic conversion to permanent employment that occurs with indefinite contracts. It's particularly valuable for startups, consulting firms, and businesses with fluctuating workforce needs.

Key legal considerations

The contract must comply with strict Indonesian regulations regarding fixed-term employment. You must ensure the work is genuinely temporary and cannot be for core business activities that are ongoing in nature. The agreement must include mandatory social security provisions under BPJS Healthcare and BPJS Employment programs. You need to specify the exact job description, salary, working hours, and benefits clearly to avoid disputes. The contract should include appropriate probation periods (maximum 3 months), notice requirements, and termination procedures. You must also address overtime compensation, annual leave entitlements, and severance pay calculations according to Indonesian standards.

Legal requirements in Indonesia

Under Law No. 13 of 2003 on Manpower and Minister of Manpower Regulation No. 100 of 2004, your contract must be in writing and include specific mandatory elements. You must register the contract with local manpower authorities within 7 days of signing. The agreement cannot exceed certain duration limits and renewal restrictions apply. You're required to provide statutory benefits including minimum wage compliance, religious holiday allowances (THR), and social security enrollment. The contract must specify that it automatically expires at the end of the term without requiring notice, unless renewed according to legal procedures. You must also ensure compliance with Indonesian working time regulations, which limit regular working hours to 8 hours per day or 40 hours per week.