Simple Consulting Agreement Template for Indonesia

A Simple Consulting Agreement is a legally binding contract that governs the relationship between consultants and clients in Indonesia. This document ensures that your consulting arrangement complies with Indonesian law while protecting the interests of both parties. Under Indonesian legal framework, it's crucial to distinguish consulting relationships from employment to avoid unintended legal obligations under manpower regulations.

When do you need this document?

You need a Simple Consulting Agreement whenever you're hiring external expertise for specific projects or ongoing advisory services. This includes engaging management consultants for business strategy, technical experts for system implementations, or professional advisors for compliance matters. The agreement is particularly important when working with foreign consultants, as it helps establish the legal framework while ensuring compliance with Indonesian regulations. SMEs and state-owned enterprises frequently use these agreements to access specialized knowledge without expanding their permanent workforce. The document is also essential when the consulting relationship involves sensitive information, intellectual property, or substantial financial commitments.

Key legal considerations

Your consulting agreement must clearly define the scope of services to avoid disputes and ensure deliverables are measurable. Payment terms should specify rates, invoicing procedures, and VAT obligations under Law No. 42 of 2009, as consulting services are generally subject to value-added tax in Indonesia. Intellectual property clauses are critical, particularly when consultants will create or access proprietary information during their engagement. Confidentiality provisions should protect sensitive business information while allowing consultants to perform their duties effectively. Termination clauses must outline conditions for ending the relationship early and procedures for handling work-in-progress. Include liability limitations to protect both parties from excessive claims while maintaining accountability for professional standards.

Legal requirements in Indonesia

Under Law No. 24 of 2009, agreements involving Indonesian parties must be drafted in Indonesian language, though bilingual versions are permitted for international arrangements. The Indonesian Civil Code governs contract formation, requiring clear offer, acceptance, and consideration. Law No. 13 of 2003 on Manpower distinguishes between employees and independent contractors, making it essential that your agreement clearly establishes an independent consulting relationship rather than disguised employment. For foreign consultants, ensure compliance with immigration and work permit requirements under applicable regulations. Government Regulation No. 35 of 2021 provides additional guidance on distinguishing consulting arrangements from employment relationships. VAT registration and collection obligations must be addressed when consulting fees exceed specified thresholds. Consider dispute resolution mechanisms that comply with Indonesian civil procedure, including options for arbitration under Indonesian arbitration law.