Signing an employment contract is a major milestone in anyone’s career journey. Sometimes, in our excitement, we go straight to the salary section. But wait, don’t rush to sign just yet. There are many important things you need to understand before putting your signature on an employment contract.
An employment contract is not just a formality. It is a legally binding document that outlines your rights and obligations as an employee. Through this article, you’ll learn about the common types of employment contracts in Indonesia and the key points you need to review.
Generally, there are two types of employment contracts in Indonesia:
This contract is temporary, with a specific duration. After signing this type of contract, you’ll be employed for a set period unless it is extended. It is usually used for projects, seasonal work, or contractual jobs up to a maximum of 5 years. PKWT cannot be applied to permanent roles.
Examples: project-based customer service, seasonal event staff, or daily freelance workers.
This is a permanent contract, where employees become part of the company after a probationary period. Typically, this contract has no end date, unless the employee resigns or employment is terminated.
Examples: permanent roles such as accountant, marketing staff, or HR officer.
Before you sign your employment contract, it’s crucial to carefully review the document. This is not just paperwork, but a legal foundation between you as the employee and the company as the employer. Without caution, you might end up in an agreement that harms you later.
Here are the points you need to check:
Ensure that your personal details and the company’s information are accurate—full name, address, ID number, and company details should match official documents. Even small errors could lead to disputes in the future.
Review the job description carefully. Make sure the position matches what was explained during recruitment. Pay attention to responsibilities, daily tasks, and performance targets. If possible, ensure that Key Performance Indicators (KPIs) are included.
Don’t overlook work location details. If there is a possibility of remote work or rotation to other branches, it should be clearly stated to avoid forced relocation without prior agreement.
Check whether you are being hired under PKWT (contract) or PKWTT (permanent). For contract workers, the duration and validity period must be clear. Also, confirm extension mechanisms and whether compensation is provided if the contract is terminated early.
Review the terms of working hours, including daily and weekly hours. Ensure compliance with Indonesian labor laws. Also check how overtime is regulated and compensated.
Yes, this is the section everyone looks forward to—but don’t just focus on the salary figure! Check:
Base salary
Fixed and variable allowances (transportation, meal, position, etc.)
Payroll schedule
Salary deductions (taxes, BPJS, etc.)
A legal employer must register employees with BPJS Kesehatan (health) and BPJS Ketenagakerjaan (employment). Confirm whether a new BPJS account will be created or if you’ll need to provide an existing one. Also ask about additional benefits like private insurance.
Check your leave entitlements—annual leave, sick leave, maternity leave, paternity leave, and others. Ensure the number of days matches legal requirements (e.g., at least 12 working days per year). Clarify whether unused leave expires, is paid out, or can be carried over.
Make sure tax deductions (such as PPh 21) and other deductions are detailed clearly. Any deductions for cooperatives, loans, or internal facilities should also be listed.
The contract should state your rights in case of termination, resignation procedures, notice period, and compensation or severance required if employment ends early.
Employers may include a Non-Disclosure Agreement (NDA) to protect confidential information. Some also add non-compete clauses, restricting you from working with competitors after leaving. Be sure you understand these clauses so they don’t affect your career opportunities later.
Lastly, ensure both parties sign the contract. This makes the agreement legally binding. Signatures also confirm that you understand and accept the terms.
Today, many companies use digital signatures—especially for remote onboarding. Use an official platform like VIDA, a government-certified Certificate Authority (PSrE) in Indonesia, to ensure your digital signature is legally valid and secure.
f there are unclear or ambiguous parts of the contract, don’t hesitate to ask HR directly. Remember, understanding your employment contract before signing is your right as an employee.
As a job applicant, you’ll often be asked to sign various documents such as statements, application forms, internship contracts, or employment agreements. Instead of the hassle of printing, scanning, and sending back documents, now you can manage everything directly from your phone with VIDA.
VIDA is an official Certificate Authority (PSrE) recognized by the Indonesian government under Kominfo. This means every digital signature you create with VIDA is legally valid and secure.
Key Features of VIDA Digital Sign:
Legally Valid Digital Signatures – Each signature is backed by a certified electronic certificate, making it legally binding and tamper-proof.
Magic Scan – Convert physical documents into digital format using just your phone camera.
Integrated e-Stamp – Official e-Meterai available for purchase and application directly in the VIDA app.
Document Templates – Access over 100 ready-to-use document templates for various needs.
Anytime Document Access – View, sign, and resend your documents anytime, from anywhere.
Signing an employment contract is not just a formality—it’s a critical step that shapes your career and future. By fully understanding the contract, you can make smarter and safer career decisions.