What You Should Know About Employment Agreement in Indonesia

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Every employee should understand about employment agreement. It’s important to understand the agreement between the Company and candidate. Employment agreement known as official document that the employee and employer enter into a relationship between two parties. As defined by Employment Relations Act, “Employment Agreement” is:

  • Means a contract of service
  • Including an employee’s terms and conditions of employment in a collective agreement; or an individual employment agreement.

Moreover, employment contract involves you in terms and conditions regarding of your duties, place of work, contracted hours and statutory entitlements. Also, employment agreement will include the employee benefit such as salary, benefits, work schedule, vacation allotment, restriction on confidential information. All agreements must have Bahasa Indonesia as the main language. If the agreement includes an English version, it must have Bahasa Indonesia version as well.

According to the applied law regulation in Indonesia about employment agreement, article 54(1) states that employment agreement has to include:

  • Details of the company, including the name and address of the company and the line of business it operates in;
  • Details of the employee, including the name and address, the gender and the age of the employee;
  • Details of the job, including the work/job specification to be performed by the employee, the job requirements, the job location, and commencement of the work / effective period of the work agreement;
  • Details of allowances, including the amount of wage and payment method of the wage;
  • Contractual details, including the signing location and the date of the employment agreement, which must be signed by all parties whom are involved in the employment agreement.

Therefore, knowing the content of employment agreement will give you a huge advantage because it would reduce the misinformation between the two parties. Also, this will identify about company identity and give you the strong contract agreement when you have bilingual language, English and Bahasa Indonesia.



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