Indefinite Contract Template for Indonesia

An indefinite contract is a permanent employment agreement that establishes an ongoing working relationship between an employer and employee without a predetermined end date. Under Indonesian law, this type of contract provides greater job security for employees and is the preferred employment structure for most permanent positions within organizations.

When do you need this document?

You need an indefinite contract when hiring employees for permanent positions in your Indonesian business operations. This document is essential when establishing long-term employment relationships for core business functions, management roles, or any position where you require ongoing commitment from skilled workers. Unlike fixed-term contracts (PKWT) which are limited to specific circumstances and maximum durations, indefinite contracts are suitable for regular business operations and provide employees with greater job security and career development opportunities.

Key legal considerations

Several critical legal elements must be addressed in your indefinite contract. The probation period cannot exceed three months for any position and must be clearly stated in the agreement. Working hours must comply with Indonesian standards of 40 hours per week with proper overtime compensation arrangements. The contract must specify salary details, statutory benefits including social security (BPJS) enrollment, annual leave entitlements, and sick leave provisions. Termination clauses should align with Indonesian labor law requirements, including proper notice periods and severance calculations. Additionally, the agreement should address confidentiality obligations, intellectual property rights, and any non-compete restrictions within legal limits.

Legal requirements in Indonesia

Indonesian employment law under Law No. 13 of 2003 on Manpower (as amended by Law No. 11 of 2020) mandates specific requirements for indefinite contracts. The agreement must be written in Indonesian language and include mandatory clauses covering working conditions, compensation, benefits, and termination procedures. Employers must ensure compliance with minimum wage regulations, provide mandatory social security coverage through BPJS Ketenagakerjaan and BPJS Kesehatan, and maintain workplace safety standards under Law No. 1 of 1970. The contract must respect maximum working hours, mandatory rest periods, and annual leave entitlements as prescribed by Government Regulation No. 35 of 2021. Proper registration with local manpower authorities may be required depending on your business location and industry sector.