Employment contracts in Indonesia can either be fixed-term or for an unspecified period of time. Fixed-term contracts are given for defined time periods or until the completion of a certain job. Such contracts cannot exceed two years in length. Extending a contract for up to one year is allowed.
Job contracts with no specified termination date can sometimes include a probationary period of up to three months. Fixed-term contracts may not include a probationary period.
Only fixed-term employment contracts need to be made in writing. They should be written in Indonesian. Job contracts, where used, should contain the following information:
A letter of appointment only is required for permanent employment.
All workers are entitled to 12 days of leave each year.
If either an employer or employee terminates employment before the specified date in a fixed-term contract the party that initiated the termination has to pay compensation to the other party. This compensation covers the employee's wages until the date that the contract was due to finish. The only exemptions to this rule are if the employment was terminated due to the employee's death, a court decision or if there is a special clause outlined for such circumstances in the job contract.
There are a number of circumstances under which an employee can apply to end their employment and receive severance pay:
Indonesian employment law states that employers and trade unions must make all efforts to avoid dismissing an employee. If discussions between a union (if the employee is a member of one), the employee and the employer are not successful then the employer must apply for permission to terminate the employment from the Institution for the Settlement of Industrial Relation Disputes (ISIRD). In the event of gross misconduct (theft or fraud for example) permission is not needed.
Should an employee break the terms of their contract they can be dismissed once three warning letters have been issued.
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