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Drafting an Indonesia Employment Contract the Right Way

Plan to open your own business, but don’t know how to prepare employment contracts in Indonesia? Indonesia is a vast land, filled with plenty of opportunities for businesses. With over 267 million consumers, Indonesia has proven itself to have a valuable economic potential. Now it’s the perfect time for you to begin your business ventures. But first, learn the art of drafting employment contracts in Indonesia.

3E Accounting will prepare your employment contracts to fit according to your needs.


What is an Employment Contract?

Developing a well-written employment contract is one of the most critical things to do when it comes to employees in running a business. An employment contract is a legal document that states the mutual obligations of the employer and employee and keeps both parties in check. The agreement, which is usually signed after the job offer letter, sets down predetermined terms and conditions on which both parties have agreed upon.


Is an Employment Contract Important?

Yes, an employment contract is extremely important. An employment contract is a substantial document produced to lay firm ground rules between an employer and employee. Everything work-related is discussed in the employment contract. It also bonds the parties involved to carry out their duties and responsibilities properly. If one party or another breaches the contract, they will be held accountable by law and could face hefty penalties. This reduces the liability, risks and mitigates misconducts from striking in a business. In short, having an employment contract safeguards your business by proving security. Therefore, drafting an employment contract in Indonesia is of the essence.


What Should I Include in my Employment Contract?

Your employment contract has to contain ground rules that have been predetermined and agreed to by both parties. When drafting employment contracts in Indonesia, double-check to include:

  • Employer and employee’s full names
  • Position
  • Job scope
  • Commencement date
  • Remuneration
  • Overtime
  • Working hours
  • Holiday and vacation policies
  • Location of work
  • Sick leaves
  • Duration of notice before the resignation


What Constitutes an Employment Contract in Indonesia?

The first thing to know about drafting an employment contract in Indonesia is their fixed and an indefinite employment term. Your company will fall into either one, depending on a few things such as duration of work and probation period. Fixed-term employment is a temporary employment contract must require a written employment contract, may not include probation, and cannot exceed more than two years. However, under the circumstances, extending the contract up to a year is allowed. You are also required to prepare the contract in Bahasa Indonesia and English.

On the other hand, an indefinite employment term is a permanent type of employment contract, which usually includes probation of three months. An indefinite term is done by verbal agreements, followed by an offer letter. The termination for this type of contract is also much more complicated than the fixed contract.

The last step is to consult 3E Accounting. Drafting an employment contract involves plentiful research. We can help you with that. Our team is made up of the best in their business professionals to help you in drafting employment contracts in Indonesia. You can put your worries at ease; our firm will prepare your employment contracts to fit according to your needs. Contact us now to start drafting your Indonesia Employment Contract today!

Drafting Employment Contracts in Indonesia