Employment contract in Indonesia: Template, Key Clauses and Local Law (2026)

What is an employment contract in Indonesia, and when do you need one? An employment contract in Indonesia is the agreement between an employer and a worker that sets the job, the pay, the hours and the rights on each side. You need one for every hire, and the law cares a great deal about which type you use. Indonesia recognises two forms: a fixed-term contract, the PKWT (Perjanjian Kerja Waktu Tertentu), for work that is temporary or project-based, and an indefinite-term contract, the PKWTT (Perjanjian Kerja Waktu Tidak Tertentu), for permanent roles. Choosing the wrong one is the single most common and most expensive mistake, because a PKWT used for permanent work can be deemed a PKWTT by operation of law, with all the permanent protections that brings. The framework is Law No. 13 of 2003 on Manpower, as amended by the Job Creation Law (now Law No. 6 of 2023) and detailed in Government Regulation No. 35 of 2021. A Constitutional Court decision in 2023 directed that the labour provisions be moved into a standalone law and restored several worker protections, so this is an area in active change. Two more rules shape every contract. First, under Law No. 24 of 2009, an agreement involving an Indonesian party must be made in the Indonesian language, so a contract for Indonesian staff should be in Bahasa Indonesia, bilingual if you also need English. Second, enrolment in the BPJS social security schemes, for employment (Ketenagakerjaan) and health (Kesehatan), is mandatory. This article is general guidance, not legal advice. Labour rules and wage figures change, so have an Indonesian lawyer review a contract before you rely on it. Last verified October 2026. ## Indonesia employment contract template Copy the block below and fill the bracketed fields. Use the PKWT clause for a fixed term and the PKWTT clause for a permanent role; delete the one you do not need. Issue the contract in Bahasa Indonesia, or bilingual with Bahasa prevailing. ```

EMPLOYMENT AGREEMENT / PERJANJIAN KERJA This Employment Agreement (the "Agreement") is made on [DATE] BETWEEN: [EMPLOYER NAME], a company at [address] (the "Company") AND [EMPLOYEE NAME], of [address], ID [KTP number] (the "Employee") 1. POSITION AND DUTIES The Employee is engaged as [job title], reporting to [role], with the duties in Schedule 1, at [work location]. 2. TYPE AND TERM [PKWT: This is a fixed-term agreement from [START] to [END] for the following temporary/project work: [describe]. It may be extended within the limits of the law.] [PKWTT: This is an indefinite-term agreement starting on [START], subject to a probation period of up to three months.] 3. PROBATION (PKWTT ONLY) The first [up to 3] months are probation, during which either party may end the Agreement on the notice in clause 9. Probation does not apply to a PKWT. 4. WORKING HOURS Normal hours are [40 hours per week, as 8 hours over 5 days or 7 hours over 6 days]. Overtime is paid at the statutory rates with the Employee's consent. 5. REMUNERATION The Company pays a monthly wage of IDR [AMOUNT], not below the applicable regional minimum wage, plus [allowances]. The Company pays the religious holiday allowance (THR) as required by law. 6. SOCIAL SECURITY AND TAX The Company enrols the Employee in BPJS Ketenagakerjaan and BPJS Kesehatan and remits contributions. The Company withholds income tax (PPh 21) from the wage and remits it. 7. LEAVE The Employee is entitled to annual leave of [at least 12 days after 12 months service], public holidays, and sick, maternity and other statutory leave. 8. CONFIDENTIALITY AND IP The Employee keeps Company information confidential and assigns to the Company intellectual property created in the course of employment. 9. TERMINATION Termination follows the law, including any required process and, for a PKWTT, severance, long-service and compensation entitlements. A PKWT that ends early may trigger compensation under Article 61A. 10. COMPENSATION ON END OF PKWT At the end of a PKWT the Company pays the statutory compensation for the period worked. 11. GOVERNING LAW This Agreement is governed by Indonesian law. It is made in the Indonesian language [and English, with the Indonesian version prevailing]. Signed: Company: __________________ Employee: __________________ Name / title / date Name / date

- **Probation (clause 3).** A probation period of up to three months is allowed only for a PKWTT. A probation clause in a PKWT is void, and the worker is treated as permanent from day one if you try it.
- **Working hours (clause 4).** The standard is 40 hours a week. Overtime needs consent and is paid at statutory multiples.
- **Remuneration and THR (clause 5).** Pay at least the regional minimum wage, which is set province by province and updated each year. The religious holiday allowance (THR), equal to about one month of wages for a full year of service, is a separate legal obligation paid before the religious holiday.
- **Social security (clause 6).** BPJS Ketenagakerjaan (work accident, old age, pension, death and job-loss) and BPJS Kesehatan (health) are mandatory, with contributions split between employer and employee at set rates.
- **Termination (clauses 9 and 10).** Ending a PKWTT follows a defined process and can require severance pay, long-service pay and compensation of rights, calculated from the Government Regulation. Ending a PKWT early, or reaching its end, triggers the compensation introduced by the Job Creation Law. ## Key local-law points - **PKWT versus PKWTT is everything.** The type sets the protections, the probation rules and the exit cost. Misusing a PKWT is the most common ground for a deemed-permanent finding.
- **Language.** Under Law No. 24 of 2009 a contract with an Indonesian worker should be in Bahasa Indonesia. A single foreign-language contract risks being held unenforceable, as Indonesian courts have found for English-only agreements.
- **Minimum wage and THR.** The regional minimum wage and the THR are hard legal floors, not negotiable down.
- **BPJS.** Enrolment and contributions are mandatory; skipping them exposes the employer to penalties and back payment.
- **This area is changing.** The 2023 Constitutional Court decision directed a new standalone labour law and restored some protections, so confirm the current position before drafting. ## Red flags to avoid - Using a PKWT for a core, ongoing role to avoid permanent obligations. It usually backfires as a deemed PKWTT.
- Putting a probation period in a PKWT, which the law does not allow.
- A contract only in English for an Indonesian employee, risking unenforceability.
- Paying below the applicable regional minimum wage or skipping the THR.
- Treating termination as a simple notice, when a PKWTT dismissal has a process and statutory payments attached. Get the contract type, the language, the wage floor and the exit obligations right, and the template above will serve most Indonesian hires. ## Where a contract workspace helps A template gives you one sound employment contract. The work that compounds is managing a workforce of them: keeping PKWT end dates and conversion limits in view, keeping bilingual versions aligned, tracking THR and BPJS obligations, and knowing which contracts are fixed-term and when each expires. Drafting from a standard tuned to how your company hires, having the type, language and termination terms checked as you go, and tracking every expiry and renewal can live in one AI contract workspace rather than a shared drive and a payroll spreadsheet. [Adira](https://adiralaw.com) is one such workspace. Its established depth today is in Indian corporate law, so Indonesian employment specifics sit on its roadmap rather than being settled, and local output should be reviewed by an Indonesian adviser. The idea is simple enough on its own: when drafting, review and date tracking share one place, a fixed-term contract never quietly becomes a permanent one by surprise.