Background Checks

Educational Credentials: Employers often verify educational qualifications, employment history, and professional licenses. These checks are typically provided voluntarily by the applicant.

• Statement of Good Behavior (SKCK): Employers may require a Surat Keterangan Catatan Kepolisian (SKCK) from the local police, confirming the applicant is of good behavior and not involved in criminal proceedings. This document is valid for six months and pertains only to the specific police district.
• Health Check-ups: Required by law, employers must check the physical and mental health of employees to ensure they are fit for the job.

Verification and New Hire Reporting

While Indonesia does not have a centralized “new hire report” system like some countries, employers must:

• Register employees with BPJS (both Kesehatan and Ketenagakerjaan)
• Report foreign hires to the Ministry of Manpower via the Foreign Worker Utilization Plan (RPTKA) and obtain IMTA/KITAS
• Maintain personnel records for at least 5 years, including contracts, payslips, and leave records
• Submit tax and payroll data through the Directorate General of Taxes (DGT)

Failure to comply with these obligations can result in administrative penalties or legal disputes.

Onboarding Process & Documentation

Collecting Required Documentation

Employers must collect and maintain the following from new hires:

• Signed employment contract (mandatory for fixed-term contracts; must be in Bahasa Indonesia or bilingual)
• Copy of KTP (Indonesian ID) or passport for identity verification
• Tax Identification Number (NPWP)
• Social security registration: Enroll employees in BPJS Kesehatan (healthcare) and BPJS Ketenagakerjaan (employment insurance)
• Bank account details for salary payments
• Emergency contact information
• Work permit (IMTA) and stay permit (KITAS) for foreign employees

Providing Employee Rights and Obligations

Employers are legally required to inform employees of their rights and responsibilities, including:

• Working hours and overtime rules (typically 40 hours/week)
• Leave entitlements: annual, sick, maternity/paternity, and special leave
• Wage structure and payment schedule
• Social security and health insurance benefits
• Workplace safety policies
• Termination procedures and severance rights
• Right to join a labor union

These should be clearly outlined in the employment contract and/or employee handbook.

Healthcare

Health care coverage for employees is primarily provided through the BPJS Kesehatan (Health Insurance) scheme, which is mandatory for all employees.

• Overs medical treatments, hospitalizations, preventive care, and prescribed medications.
• Both employers and employees contribute to the premiums. Employers pay a larger portion, while employees contribute a smaller amount through payroll deductions.

Private Health Insurance

• Many employers offer additional private health insurance to provide enhanced coverage beyond BPJS Kesehatan. This can include access to specialists, international coverage, and dental and vision care.

Retirement

Retirement age will be 59 years. Employees are entitled to a retirement allowance, which includes severance pay, reward pay for years of service, and compensation pay. Additionally, the BPJS Ketenagakerjaan (Employment Social Security Administration Agency) provides pension benefits, including old-age pensions, disability pensions, and survivor pensions.

Social Security

Employers and employees in Indonesia are required to participate in the national social security programs administered by BPJS (Badan Penyelenggara Jaminan Sosial). These programs are divided into two primary categories:

• BPJS Kesehatan – Provides universal health insurance coverage for all registered individuals.
• BPJS Ketenagakerjaan – Offers a range of employment-related protections, including benefits for workplace injuries, death, retirement savings, pensions, and unemployment.

Contribution rates for each program are shared between employers and employees, with specific percentages varying depending on the type of coverage and relevant regulations.

Employment Contract Details

Employers are legally required to provide formal written contracts for all employees that include salary/wage, termination terms, job title, etc.

• Definite Period Contracts: Known as Perjanjian Kerja Waktu Tertentu (PKWT), these contracts are used for temporary work or work that can be completed within a certain time frame. PKWTs cannot exceed specific duration limits and must not be used for permanent work.
• Indefinite Period Contracts: Also known as Perjanjian Kerja Waktu Tidak Tertentu (PKWTT), these are used for permanent positions and offer more job security.

Probation Period

Probation period for permanent employees is generally set at three months.

Visas

Indonesia offers several visa options tailored to different purposes of travel:

• Tourist Visa (Visa Kunjungan Sosial Budaya)
  • Eligibility: For temporary visits such as tourism and social activities.
  • Validity: Generally valid for 30 days, extendable once for another 30 days.
  • Requirements: Valid passport, proof of onward or return travel tickets, proof of sufficient funds.
• Business Visa (Visa Bisnis)
  • Eligibility: For short business trips, attending seminars, or meetings.
  • Validity: Valid for 60 days, extendable up to 180 days in specific cases.
  • Requirements: Sponsor letter from an Indonesian company, completed visa application form, additional documents like bank statement or company invitation letter.
• Work Visa (KITAS-KITAP for Employment)
  • Eligibility: Foreign workers with a job offer from an Indonesian entity.
  • Validity: KITAS valid for up to 12 months, can be converted to KITAP for permanent residency.
  • Requirements: Work permit (IMTA), application for Limited Stay Visa (VITAS), employment contract, company registration, applicant’s resume.
• Investor Visa
  • Eligibility: Individuals investing significant capital in Indonesian enterprises.
  • Validity: Valid for up to 2 years, renewable.
  • Requirements: Proof of investment, business registration, financial documents.
• Spouse and Family Visas
  • Eligibility: Spouses and dependents of KITAS holders.
  • Validity: Aligned with the primary KITAS holder’s visa.
  • Requirements: Legalized marriage certificate, birth certificates for dependent children, sponsorship letters.

General Steps for Visa Application

• Determine the appropriate visa category based on travel purpose.
• Collect required documents as per specific visa requirements.
• Complete the online or paper-based visa application form.
• Submit the application along with supporting documents to the Indonesian consulate or embassy.
• Pay the visa fee and retain the receipt.
• Attend a visa interview if required.
• Await processing and ensure timely follow-ups.
• Retrieve the visa and verify all details for accuracy.

Independent Contractors

An employer-employee relationship is governed by Labor Law and involves a superior-subordinate dynamic. In contrast, a company-independent contractor relationship is governed by contract law and other relevant legislation, treating both parties as equals.

In an employment relationship, the employee receives a salary or wage without needing to submit an invoice. For independent contractors, payment is termed as a ‘fee,’ and the contractor typically submits an invoice for payment.

Paid Time Off

Employee are entitled to at least 12 days per year after completing a full year of employment. Employees working for six consecutive years for the same employer are entitled to one month.

Public Holidays

• New Year
• Isra Mi’raj
• Chinese New Year
• Bali’s official Day of Silence – Hindu New Year – Federal Capital City
• Good Friday
• Easter Sunday
• Idul Fitri
• International Labor Day
• The Ascension of Jesus Christ
• Vesak 2567
• Five Principle Day
• Idul Adha
• Islamic New Year
• Indonesian National Independence Day
• Birthday of the Prophet Muhammad
• Christmas Day

Bereavement

Employees are entitled to the following paid leave in the event of a death:

• Up to 2 days for the death of their spouse.
• 1 day for the death of their parents, parents-in-law, children, or children-in-law.
• 1 day for the death of a member of their household.

Maternity Leave

Employees are entitled to three months of fully paid maternity leave before the estimated due date and one and a half months of leave after the birth. This leave is compensated at 100% of the regular salary rate.

Paternity Leave

New fathers are entitled to two days of leave for the birth of their child or in the event of a miscarriage.

Parental Leave

Employees are entitled to paid leave for child-related events as follows:

• 2 days for the circumcision of their child.
• 2 days for the baptism of their child.
• 2 days for the marriage of their child.
• 2 days for the death of their child.

Sick Leave

Employees who are sick or injured are entitled to paid sick leave, provided they present medical confirmation of their condition. For long-term sick leave exceeding one year, a written recommendation from a doctor is required.

The payment structure for employees on extended sick leave is as follows:

• 100% of wages for the first four months, paid by the employer.
• 75% of wages from the fifth to eighth months, paid by the employer.
• 50% of wages from the ninth to twelfth months, paid by the employer.
• 25% of wages from the thirteenth month until termination, paid by the employer

Termination Requirements

Before terminating an employee, the employer must try to avoid it by negotiating changes like working hours or methods. If termination is necessary, the employer must explain the reasons in writing.

Employees can challenge the termination in the Labor Court if they believe it’s unfair.

Reasons for Termination Employees can be terminated for:

• Breaking the employment agreement.
• Being imprisoned.
• Being ill for over 12 months.
• Being absent for over 5 days without a valid reason (after two warnings).
• Reaching retirement age.

Business-Related Termination Employees can also be terminated for business reasons like:

• Company changes status, merges, or is acquired.
• Employer becomes insolvent.
• Employer has two years of continuous losses.
• Business closes permanently.

Notice Period

Generally 30 days, although employers can specify longer notice periods within the employment contract.

Severance Pay

Severance pay is mandatory and is determined by the employee’s length of service.

• Less than 1 year of employment – 1-month wage
• 1 year or more, but less than two years – 2 months wage
• 2 Years or more but less than 3 years – 3 months wage
• 3 years of more, but less than four years – 4 months wage
• 4 years or more, but less than 5 – 5 months wage
• 5 years or more, but less than 6 – 6 months wage
• 6 years or more, but less than 7 – 7 months wage
• 7 years or more, but less than 8 – 8 months wage
• 8 years or more – 9 months wage

Unemployment Insurance

Indonesia introduced its first formal unemployment benefit system through the Job Loss Guarantee (Jaminan Kehilangan Pekerjaan or JKP) program, established under Government Regulation No. 37 of 2021 and later amended by GR No. 6 of 20252. Here’s how it works:

To qualify for JKP benefits, individuals must:

• Be an Indonesian citizen under the age of 54
• Be formally employed under a fixed-term (PKWT) or permanent (PKWTT) contract
• Be registered with both BPJS Ketenagakerjaan and BPJS Kesehatan for at least 6 months prior to termination
• Have contributed to BPJS Ketenagakerjaan for at least 12 months within the last 24 months
• Be willing to return to work, whether as an employee, entrepreneur, or freelancer

Eligible individuals receive:

• Cash stipends: Up to 60% of their last wage, capped at IDR 5 million/month, for a maximum of 6 months
• Access to job vacancy information via government platforms
• Vocational training and career counseling to support re-employment

Funding and Contributions

• Employers contribute 0.24% of monthly wages
• The government contributes an additional 0.22%, totaling 0.46% of wages
• Contributions are drawn from a reallocation of existing social security components, so no additional cost to employees

Anti-Discrimination Practices

The Employment Law prohibits discrimination based on race, gender, religion, and other protected characteristics. Additionally, the Ministry of Manpower issued Decree No. 88 of 2023, which mandates companies to establish a task force to prevent and handle workplace sexual harassment.

Workplace Safety Standards

• Employers must identify potential hazards in the workplace, assess the risks associated with them, and implement control measures to eliminate or minimize these risks. This process should be ongoing and documented.
• Companies meeting specific thresholds (typically 100+ employees or high risk) are required to establish a Safety and Health Committee (Panitia Pembina Keselamatan dan Kesehatan Kerja – P2K3). This committee, comprising representatives from both management and employees, is responsible for developing, implementing, and evaluating OSH programs.
• Employers must provide necessary training to employees to ensure they understand safety procedures and can effectively manage risks.

Workers’ Compensation

Worker’s compensation system is managed by BPJS Ketenagakerjaan (Employment Social Security Administration Agency). Key aspects include:

• Compensation is provided for work-related injuries, illnesses, and fatalities. This includes medical expenses, disability benefits, rehabilitation costs, and death benefits.
• Covers the cost of medical treatment, hospitalization, and medication.
• Provides financial support for employees who are temporarily or permanently disabled due to work-related incidents.
• Covers the expenses for rehabilitation services to help employees recover and return to work.
• Provides financial compensation to the family of an employee who dies due to a work-related incident
• Employers must register all employees with BPJS Ketenagakerjaan and pay the required contributions. Failure to comply can result in penalties.

Labor Law Sanctions

Government Regulation No. 35 of 2021 (Implementing Law No. 11 of 2020 on Job Creation): This regulation details employment contracts, outsourcing, and termination procedures.

Law No. 21 of 2000 on Labor Unions: This law protects the rights of workers to form and join unions and prohibits anti-union discrimination.

Law No. 2 of 2004 on Industrial Relations Dispute Settlement: This law governs how labor disputes are resolved through mediation, arbitration, or the Industrial Relations Court.

Law No. 13 of 2003 on Manpower (as amended by Law No. 2 of 2022 on Job Creation): This is the core labor law in Indonesia, covering employment terms, wages, working hours, and termination

Ministerial Circular No. M/6/HK.04/V/2025: This circular ban age-based discrimination in hiring practices.