Understanding Indonesia's Working Hours and Employment Regulations

Maximum Working Hours and Overtime Regulations

Indonesia's labor framework, governed by the Ministry of Manpower, establishes clear guidelines for working hours and overtime compensation. These regulations form the foundation of employment practices that international companies must adhere to when operating in Indonesia.

Standard Working Hours Framework

Indonesian law stipulates two primary work schedule options: a 7-hour day over 6 days per week, or an 8-hour day across 5 days, both totaling 40 hours weekly. Overtime requires mutual consent through written documentation from both employer and employee. The legal limit stands at 4 hours daily and 18 hours weekly, with exceptions for specific industries. Extended overtime beyond 4 hours mandates nutritional support—employers must provide meals and beverages totaling at least 1400 kcal, which cannot be substituted with monetary compensation.

Overtime Compensation Structure

Overtime payments follow a progressive calculation method based on work schedules:

Weekday Overtime Rates:

First hour: 150% of regular hourly wage
Subsequent hours (2-4): 200% of regular hourly wage

Holiday Overtime Calculations:

5-day workweek: Hours 1-8 at 200%, hour 9 at 300%, hours 10-11 at 400%
6-day workweek: Hours 1-7 at 200%, hour 8 at 300%, hours 9-10 at 400%

Managerial and executive positions operate under different parameters, with no overtime eligibility but higher base compensation. Their overtime calculation uses a monthly wage formula incorporating fixed allowances where applicable.

Employment Contract Requirements

Indonesian employment agreements must be drafted in Indonesian language using Latin script, with Indonesian text prevailing in case of translation discrepancies. Companies can utilize fixed-term contracts (PKWT) for temporary, seasonal, or project-based roles lasting 1-3 years, or permanent contracts (PKWTT) for ongoing positions.

Essential contract components include:

Company details and business activities
Employee personal information and position
Work location and compensation structure
Terms outlining rights and responsibilities
Contract duration and effective date
Signatures from both parties

Proper contract documentation establishes clear expectations, ensures regulatory compliance, and provides dispute resolution mechanisms. SailGlobal's expertise helps multinational companies navigate these requirements effectively.

Probation Period Guidelines

Permanent contracts may include a probation period not exceeding three months, while fixed-term agreements cannot incorporate trial periods. Employers must provide objective, socially acceptable justifications for termination during probation, typically with one month's notice. Extension of probation requires explicit contractual provisions and reasonable justification. Successful completion transitions employees to formal employment status with full contractual rights.

Indonesia Labor Laws: Working Hours, Overtime & Employment Contracts Guide