Full Employment Contract Template for Indonesia

A Full Employment Contract is a comprehensive legal agreement that establishes a permanent employment relationship between an employer and employee in Indonesia. This document serves as the foundation for all employment terms and conditions, ensuring compliance with Indonesian labor laws while protecting the rights and obligations of both parties. Unlike fixed-term contracts, full employment contracts create indefinite-duration employment relationships that provide greater job security and comprehensive benefits.

When do you need this document?

You need a Full Employment Contract when hiring permanent staff for indefinite-term positions in Indonesia. This includes scenarios such as recruiting full-time employees for core business functions, promoting temporary workers to permanent status, or establishing long-term employment relationships for specialized roles. The contract is essential for any position that requires ongoing employment without a predetermined end date, ensuring compliance with Indonesian manpower regulations that favor permanent employment arrangements over temporary contracts.

Key legal considerations

Several critical legal elements must be included in your Full Employment Contract to ensure compliance with Indonesian law. The agreement must specify the employee's basic salary, which cannot fall below the regional minimum wage, along with mandatory allowances and benefits. Social security enrollment through BPJS Ketenagakerjaan and BPJS Kesehatan is compulsory and must be clearly outlined. The contract should define working hours, which typically cannot exceed 40 hours per week or 8 hours per day, and specify overtime compensation rates. Include provisions for annual leave, religious holiday allowances (THR), and sick leave entitlements as mandated by law. Termination procedures must follow strict legal requirements, including proper notice periods and severance calculations. The probationary period, if applicable, cannot exceed three months for most positions.

Legal requirements in Indonesia

Indonesian employment law imposes specific mandatory requirements that your Full Employment Contract must address. Under Law No. 13 of 2003 on Manpower, as amended by Law No. 11 of 2020, the contract must be written in Indonesian language and include complete identification of both parties. Workplace safety provisions must comply with Law No. 1 of 1970 on Work Safety, requiring employers to provide safe working conditions and necessary safety equipment. The contract must specify the employee's position, duties, and reporting structure clearly. Salary components including basic pay, fixed allowances, and variable allowances must be detailed separately. Social security contributions for work accident insurance, old-age savings, pension, and health insurance are mandatory and must be calculated according to current BPJS rates. Religious holiday allowance calculations and payment schedules must follow Minister of Manpower Regulation No. 6 of 2016. The agreement should also address intellectual property rights, confidentiality obligations, and non-compete restrictions within legal limits established by Indonesian courts.