PKWT and PKWTT
PKWT is a fixed-term contract with statutory limits on length and purpose. PKWTT is indefinite. Using PKWT for an ongoing role is how conversion and compensation claims start.
Countries/Indonesia/Hiring guide
Southeast Asia · Hiring guide · 2026
Hiring in Indonesia: labour law and payroll
This page is the labour-law and payroll stack for multinational employers hiring in Indonesia. It is not a salary survey.
In-country employment is how you run this stack without a PT PMA.
To hire without incorporating first, use in-country employment in Indonesia.
Contracts
Contracts and probation
Probation
Probation is only allowed on a PKWTT, and only up to three months. A PKWT cannot carry a probation clause.
Wage structure (SUSU)
Employers are expected to have a documented wage scale. Employees with more than a year of service should not sit on the UMP with no structure above it.
Hours
Working time and overtime
Ordinary hours
Generally 7 hours a day / 40 a week on a six-day week, or 8 hours a day / 40 a week on a five-day week. Overtime needs written instruction and employee agreement, with statutory hourly multiples and a monthly cap.
Leave
At least 12 working days of annual leave after 12 months. Long-leave entitlements in some sectors are additional. Public holidays are gazetted nationally.
THR calendar
Pay THR at least seven days before the employee's religious holiday. For a mixed Muslim / Christian / Hindu team that means more than one payroll event a year if you follow each employee's holiday.
Wage floor
Minimum wage, 2026
There is no national monthly minimum wage. Jakarta's 2026 UMP is the highest provincial floor. Always check UMK for the district of work.
| Rule | Figure |
|---|---|
| Jakarta UMP 2026 | IDR 5,729,876 / month |
| Other provinces | Lower UMP; many districts set a higher UMK |
| THR | 1 month after 12 months' service; pro-rated after 1 month |
| BPJS Kesehatan (employer) | 4%, wages capped at IDR 12,000,000 |
Jakarta's figure is from the 2026 gubernatorial decree (a 6.17% increase). Paying below the applicable UMP or UMK is a violation even if the contract says otherwise. The JP (pension) contribution ceiling was raised to IDR 11,086,300 a month from 1 March 2026.
Exit
Terminating and offboarding
Grounds
Termination follows the grounds and process in the Job Creation Law implementing regulations (notably PP 35/2021). A 'mutual agreement' that is not mutual will be read as a dismissal.
Compensation
Depending on the ground, the package can include compensation pay, service pay, and compensation of rights (unused leave, THR pro-rata). The multiples are lower than under the pre-omnibus formula in some cases, and still expensive.
PKWT expiry
When a valid PKWT ends, compensation of 1/12 of monthly wages per month of service is generally due. That is in addition to THR pro-rata.
Questions
FAQ
- What is Indonesia's minimum wage in 2026?
- Provincial UMP, and often a higher district UMK. Jakarta's 2026 UMP is IDR 5,729,876 a month. Use the place the employee actually works.
- Is THR optional?
- No. It is a statutory religious-holiday allowance: one month's wages after a year of service, pro-rated after one month, paid at least seven days before the holiday.
- Can we put a new hire on PKWT with probation?
- No. Probation is only for PKWTT, maximum three months. PKWT has no probation.
- How much is employer BPJS?
- Kesehatan 4% (capped), JHT 3.7%, JP 2% (capped), JKM 0.30%, and JKK 0.24%–1.74% by risk class. Accrue THR on top.
Other markets
Other hiring guide pages
Reviewed 11 September 2026
This is a hiring briefing for multinational employers, not legal advice. Statutory rates move by city, province, and sector. Confirm the place of work before you issue an offer.
Sources
- Law No. 13/2003 as amended by the Job Creation Law; PP 35/2021
- PP 36/2021 on wages and THR, as amended
- DKI Jakarta UMP 2026 — IDR 5,729,876 / month
- BPJS Kesehatan and BPJS Ketenagakerjaan
Hire in Indonesia
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