INDONESIA Law and Practice Contributed by: Agus Ahadi Deradjat (Agung), Gustaaf Reerink, Adri Dharma, Karina Widyaputri and Ilma Sulistyani, ABNR Counsellors at Law
4.3 Working Time The Indonesian Labour Law sets out clear standards for working hours and overtime, with flexibility for cer - tain business sectors. Standard Working Hours The law specifies two standard working hours arrange - ments: • seven hours per day and 40 hours per week for companies operating on a six-day workweek; or • eight hours per day and 40 hours per week for companies with a five-day workweek. These provisions may not apply to companies in specific sectors that require continuous operations or have unique scheduling needs, where alternative arrangements are permitted. Overtime Work • Employer instruction and employee consent – overtime must be explicitly ordered by the employer and agreed to by the employee, either in physical or digital form. Employers are required to maintain records of employees who consent to work overtime, including the duration of such work. • Maximum duration and rest provisions – the maxi - mum allowable overtime is four hours per day and 18 hours per week, excluding weekly days off and official public holidays. For employees working overtime for four hours or more, employers must provide adequate rest and food and beverages with a minimum caloric value of 1,400 kcal. This requirement cannot be substituted with monetary compensation. • Overtime compensation – employers must pay overtime wages in accordance with the formula prescribed by applicable laws and regulations. Employees in roles such as thinkers, planners, imple - menters, or supervisors, whose working hours cannot be standardised and who receive higher wages, are generally not entitled to overtime pay. However, this exemption must be clearly stated in the employment agreement, employee handbook, or collective labour agreement. If not explicitly stipulated, the employer is obligated to provide overtime compensation.
Under the Labour Law, an employment relationship is established through the existence of an employment contract between the employer and the employee. This contract may be structured as either: • an indefinite-term employment agreement (perma - nent); or • a definite-term employment agreement, which may only be used for: (a) completion of a specific task; or (b) a specific period not exceeding five years. 4.2 Characteristics of Employment Contracts Under the Indonesian Labour Law, employment con - tracts, whether for a definite-term and an indefinite- term, are subject to distinct legal characteristics and formal requirements. A definite-term employment contract must be made in writing, in the Indonesian language, and must include the following elements: • name, address, and type of business of the com - pany; • name, gender, age, and address of the employee; • job title or type of work; • workplace location; • amount of wages and the method of payment; • terms of employment outlining the rights and obli - gations of both the employer and the employee; • start date and duration of the employment con - tract; • place and date the contract was made; and • signatures of both parties involved in the contract. An indefinite-term (permanent) employment contract may be made verbally or in writing. If made verbally, the employer is required to issue a letter of appoint - ment once the employee is confirmed as permanent – typically after completing a probation period of up to three months. This letter must include at least the following: • name and address of the employee;
• date the employee begins work; • type of work to be performed; and • amount of wages to be paid.
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