Labour Contract Agreement Template for Indonesia

The Labour Contract Agreement serves as the primary document governing the employment relationship between companies and individuals in Indonesia. It is essential for establishing clear, legally compliant employment terms in accordance with Law No. 13 of 2003 on Manpower and the Job Creation Law (Omnibus Law). This agreement should be used when hiring new employees or formalizing existing employment relationships, whether for permanent or fixed-term positions. The document incorporates mandatory provisions required by Indonesian labor law, including working conditions, compensation structures, social security benefits, and termination procedures. It provides legal protection for both employers and employees while ensuring compliance with local labor regulations, tax requirements, and social security obligations.

1. Parties: Identification of the employer and employee, including their complete legal names, addresses, and positions

2. Background: Context of the employment relationship and purpose of the agreement

3. Definitions: Definitions of key terms used throughout the agreement

4. Position and Duties: Detailed description of the employee's role, responsibilities, and reporting structure

5. Term of Employment: Duration of employment, whether fixed-term or permanent, including start date and end date if applicable

6. Probation Period: Length and terms of the probationary period, if applicable under Indonesian law

7. Working Hours and Location: Standard working hours, work location, and potential requirements for overtime or travel

8. Compensation and Benefits: Base salary, allowances, bonuses, and other benefits including mandatory social security (BPJS)

9. Leave Entitlements: Annual leave, sick leave, religious holidays, and other permitted absences

10. Confidentiality: Protection of company confidential information and trade secrets

11. Intellectual Property: Ownership of work products and innovations created during employment

12. Non-Competition and Non-Solicitation: Restrictions on competitive activities during and after employment

13. Termination: Grounds and procedures for termination, notice periods, and severance requirements

14. Governing Law: Specification of Indonesian law as governing law and relevant jurisdictions

15. Dispute Resolution: Process for resolving employment-related disputes

16. Entire Agreement: Statement that the agreement represents the complete understanding between parties