When growing your company to Indonesia, you need to ensure you’re prepared to succeed in the local recruiting landscape. Keep these recruiting and hiring best practices in mind as you enter the local market.

Recruiting in Indonesia

Understanding Indonesia’s local employment laws and cultural norms surrounding the hiring process is an important first step. If an employer is noncompliant at any stage throughout the recruitment and hiring strategy, they may face fees and penalties that result in an even lengthier market entry process.

Laws against discrimination in Indonesia

Under Indonesia’s constitution and labor laws, employees are protected against any form of discrimination throughout the hiring process and the course of their employment. Types of discrimination may include unfair treatment based on characteristics including the following:

  • Ethnicity
  • Gender
  • Race
  • Skin color
  • Religion
  • Nationality
  • Origin
  • Political beliefs
  • Disability

Employers should avoid asking candidates questions about any of the above characteristics. If any of these subjects do come up in casual conversation with prospective employees, they must make sure they do not factor them into any hiring decisions.

Indonesia employment laws

Companies must comply with Indonesia’s employment laws, starting with the employment contract. They can use a fixed-term employment agreement as long as it’s written in the official language, Bahasa Indonesia. The contract can last up to 5 years in total. Employers may extend a fixed-term employment contract (PKWT), but the initial term and any extension must stay within that 5-year cap.

Employment contracts can also last for an unspecified period of time. When employers hire an employee in Indonesia under this contract, they should include information regarding compensation, benefits, termination requirements, and more. The contract should state the payable salary, allowances, and recurring compensation amounts in Indonesia rupiah (IDR). A foreign-currency reference may be included for benchmarking or explanation, but it should not be the sole contractual wage amount.

Once hired, employees generally work a standard workweek of 40 hours, either 8 hours over a 5-day period or 7 hours over 6 days. Work beyond the applicable daily or weekly limit is generally treated as overtime, subject to overtime pay and related requirements. Overtime is generally permitted up to 4 hours per day and 18 hours per week. It is typically subject to employee agreement and overtime pay requirements., paid at the following rate:

  • 150% of standard pay for the first hour and 200% of standard pay for each subsequent hour of overtime on a working day
  • 200% to 400% of the hourly wage for overtime on weekly rest days and/or national holidays. The exact rate depends on the employee’s normal workweek pattern and overtime hours worked.

Onboarding in Indonesia

Indonesia’s laws do not mandate one way to onboard employees, so employers can choose the option that is best for their company. Since negotiations can be complex, it’s best practice to review the agreed-upon employment contract together during the employee’s first day or week.

Many employers also choose to onboard multiple employees at once. This approach will streamline the onboarding process and help new hires integrate within the company culture.

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