Job Contract Agreement Template for Indonesia

What is a Job Contract Agreement?

The Job Contract Agreement serves as the primary document governing the employment relationship between companies and individuals in Indonesia. It is essential for establishing clear terms of employment while ensuring compliance with Indonesian labor laws, particularly Law No. 13 of 2003 on Manpower and its amendments under the Omnibus Law. This agreement should be used when hiring new employees, whether for permanent or fixed-term positions, and must include mandatory provisions regarding working conditions, compensation, benefits, and termination procedures as required by Indonesian regulations. The document provides legal protection for both parties and serves as a reference point for managing the employment relationship throughout its duration.

About the Job Contract Agreement

A Job Contract Agreement is a legally binding document that establishes the terms and conditions of employment between you as an employer and your employee in Indonesia. This contract serves as the foundation of the employment relationship and must comply with Indonesian labor laws to ensure both parties are protected and their rights are clearly defined.

When do you need this document?

You need a Job Contract Agreement whenever you hire a new employee in Indonesia, whether for a permanent position or a fixed-term contract. This includes hiring full-time staff, part-time workers, or temporary employees for specific projects. The document is essential when establishing employment relationships with Indonesian citizens or foreign workers who have obtained proper work permits. You also need this agreement when converting an existing informal work arrangement into a formal employment relationship, or when updating existing contracts to reflect changes in Indonesian labor law requirements.

Key legal considerations

Your Job Contract Agreement must include several mandatory provisions under Indonesian law. The contract must clearly specify the probation period, which cannot exceed three months for most positions, and define the employee's job responsibilities and working hours. You must include provisions for overtime compensation, annual leave entitlements, and mandatory benefits such as social security coverage. The agreement should address termination procedures, including notice periods and severance pay calculations as required by the Manpower Law. Additionally, you must ensure the contract complies with minimum wage requirements and includes provisions for workplace safety and health protections.

Legal requirements in Indonesia

Under Law No. 13 of 2003 on Manpower and the Omnibus Law amendments, your employment contract must be written in Indonesian language and signed by both parties. Fixed-term contracts cannot exceed two years initially and may only be renewed once for a maximum of one year. You must register the contract with local manpower authorities and ensure compliance with Government Regulation No. 35 of 2021 regarding contract terms. The agreement must include mandatory social security enrollment under Law No. 40 of 2004, covering health insurance, work accident insurance, and pension contributions. You are also required to provide workplace safety measures in accordance with Law No. 1 of 1970 on Work Safety and maintain proper employment records for government inspection purposes.