Labor Law in Indonesia 2026: Employer's Guide
Indonesian labor law has specific requirements for employment relationships. Understanding these is essential for compliance.
Employment Contract Types
Contract Types
PKWT vs PKWTT
| Feature | PKWTT Permanent/Indefinite | PKWT Fixed-Term/Contract | Freelance Non-employee |
|---|---|---|---|
| Duration | No end date | Max 5 years | Per project |
| Termination | With cause + severance | At contract end | Per agreement |
| Probation | Max 3 months | Not allowed | N/A |
| Best For | Core employees | Project/temporary | Specific tasks |
PKWT (Fixed-Term Contract)
PKWT Limitations
PKWT can only be used for:
- Temporary work
- Seasonal work
- One-time projects
- Work related to new products/processes (max 2 years)
Cannot be used for:
- Permanent positions
- Core ongoing operations
- Indefinite assignments
Violation: Contract automatically becomes PKWTT (permanent).
PKWT Duration Rules
| Rule | Limit |
|---|---|
| Initial term | Max 5 years (cumulative) |
| Extensions | Within 5-year limit |
| No probation | Probation void if written |
| Compensation | Required upon completion |
Working Hours
Standard Working Hours
| Schedule | Hours/Day | Days/Week | Total/Week |
|---|---|---|---|
| Option 1 | 7 hours | 6 days | 42 hours |
| Option 2 | 8 hours | 5 days | 40 hours |
Overtime Rules
Overtime Calculator
Calculate overtime pay
Default Inputs
- Monthly Salary (IDR)
- 10,000,000 IDR
- Overtime Hours
- 10 hours
- Day Type
- Regular weekday
Estimated Result
Monthly SalaryRp 10.000.000
Hourly Rate (1/173)Rp 57.803
Overtime HoursRp 10
Overtime PayRp 1.127.168
Estimated total
Weekday: 1.5x first hour, 2x after
Rp 1.127.168
Minimum Wage
Regional Minimum Wage (UMR/UMK)
| Province/City | 2026 UMR (Approx) |
|---|---|
| DKI Jakarta | ~IDR 5.1M |
| Bali | ~IDR 2.9M |
| Surabaya | ~IDR 4.7M |
| Bandung | ~IDR 4.0M |
| Semarang | ~IDR 3.1M |
Minimum Wage Notes
- UMR is minimum for permanent employees
- Updated annually (usually January)
- Sectoral minimums may apply
- Components: basic salary can be 75%, allowances 25%
- PKWT workers entitled to same minimums
Mandatory Benefits
Required Employee Benefits
Legal obligations for employers
0 of 8 completed0/8 required
bpjs
leave
bonus
Leave Entitlements
Annual Leave
| Type | Entitlement |
|---|---|
| Annual leave | 12 days/year (after 12 months) |
| Long leave | 2 months after 6 years (some companies) |
| Religious holiday | As per agreement |
Special Leave (Paid)
| Event | Days |
|---|---|
| Marriage | 3 days |
| Child's marriage | 2 days |
| Circumcision | 2 days |
| Baptism | 2 days |
| Spouse/child/parent death | 2 days |
| Other family member death | 1 day |
| Wife giving birth/miscarriage | 2 days |
Maternity/Paternity
| Leave Type | Duration | Pay |
|---|---|---|
| Maternity | 1.5 months before + 1.5 months after birth | Full pay |
| Miscarriage | 1.5 months | Full pay |
| Paternity | 2 days | Full pay |
Employment Contracts
Required Contract Elements
Contract Requirements
What must be in employment contract
0 of 8 completed0/7 required
parties
work
compensation
dates
legal
Company Regulations
When Required
Peraturan Perusahaan
Companies with 10+ employees must have:
- PP (Peraturan Perusahaan) - Company regulations
Or with union:
- PKB (Perjanjian Kerja Bersama) - Collective bargaining agreement
Must be registered with Manpower office and renewed every 2 years.
Foreign Workers
Foreign Employment Requirements
| Requirement | Description |
|---|---|
| RPTKA | Foreign worker utilization plan |
| IMTA | Work permit |
| KITAS | Stay permit |
| Position | Must be permitted role |
| Companion | Indonesian understudies |
Common Violations
| Violation | Risk |
|---|---|
| No BPJS registration | Fines + back payment |
| Below minimum wage | Legal action |
| No written contract | Contract becomes PKWTT |
| Excessive working hours | Penalties |
| No THR payment | Legal action |
| Improper termination | Severance + compensation |
Common Questions
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