An employment contract is a legal document that protects the rights and obligations of both employees and employers. Whether you’re about to start working, an HR officer preparing documents, or a business owner clarifying work rules, understanding the contents and format of an employment contract letter is a must.
This article will walk you through the contents of an employment contract, its benefits and importance, and provide sample formats you can use as references.
Why Is an Employment Contract Important?
An employment contract is an official document that contains the agreement between the employee and the employer. It serves as the legal foundation that governs rights, obligations, and terms of employment.
It’s essential that both employees and employers agree on the terms written in the contract. In practice, contracts are crucial for creating a professional and healthy work relationship.
The importance of employment contracts goes beyond administrative requirements—they also serve as legal protection. Here’s why:
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They clarify what employees must do and what they will receive in return.
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They ensure all agreed-upon rules serve as the foundation to avoid misunderstandings and prevent future conflicts.
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They act as a reference for extending, terminating, or promoting an employee.
Without an employment contract, employment status becomes unclear and highly prone to disputes between both parties.
Contents of an Employment Contract
The contents of an employment contract should reflect clarity and transparency. Here are the key elements that must be included:
1. Parties’ Identities
Start by stating the details of both the employer and the employee. This includes full name, address, phone number, and job title or position. Also include the contract date as the start of the agreement.
2. Job Description and Employment Status
This section specifies the tasks and responsibilities tied to the role. It ensures there is no misunderstanding about job scope. It should also clearly state the employee’s status—whether permanent, contract, part-time, or freelance.
3. Contract Period or Duration
For non-permanent employees, the duration of employment must be written clearly, including the start and end dates. If there’s a possibility of extension, add that as a note.
4. Salary, Benefits, and Compensation
This section details the salary amount, payment method (monthly/weekly), and benefits such as health insurance, transportation, bonuses, or performance incentives. It should also include deductions like taxes and social security (BPJS) to avoid confusion.
5. Working Hours and Leave
Include daily or weekly working hours, start and end times, overtime rules, and annual leave entitlements. This ensures employees understand their rights and responsibilities from the beginning.
6. Termination of Employment
This section explains procedures for termination (PHK). It should cover conditions for resignation, severance pay, compensation, and penalties (if any) when either party ends the contract early.
7. Employee Rights and Obligations
The contract should clearly list employees’ rights, such as leave, health coverage, and overtime pay. At the same time, it should specify obligations like following company rules, maintaining confidentiality, and professionalism.
Examples of Employment Contracts
Here are simple sample formats based on different employee statuses:
1. Example of a Fixed-Term Employment Contract
EMPLOYMENT CONTRACT AGREEMENT
No: 001/SPK/VII/2025
On this day, [Day], date [Date], month [Month], year [Year], the undersigned:
First Party (Employer):
Company Name: PT Maju Bersama
Address: Jl. Jendral Sudirman No. 88, Jakarta
Name: Budi Santosa
Position: HR Manager
Second Party (Employee):
Name: Rizky Hidayat
Address: Jl. Kemang Timur No. 23, South Jakarta
ID Number: 1234567890123456
Position: Administrative Staff
Agree to enter into an employment contract with the following terms:
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Contract Period: Valid for six (6) months from August 1, 2025, until January 31, 2026.
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Duties and Responsibilities: The Employee will carry out tasks as Administrative Staff according to the agreed job description.
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Salary and Benefits: The Employer will pay a salary of IDR 4,500,000/month and provide transportation allowance and health insurance (BPJS).
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Working Hours: Monday–Friday, 9:00 AM–5:00 PM WIB. Overtime will be paid according to company rules.
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Leave and Holidays: The Employee is entitled to 12 days of annual leave after one year of service and public holidays.
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Termination: Either party may terminate the contract with 30 days’ written notice.
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Closing Statement: This agreement is made in two copies with equal legal force.
Jakarta, August 1, 2025
Signatures of Employer and Employee
2. Example of an Internship Agreement
INTERNSHIP AGREEMENT
No: 012/SPM/VII/2025
The undersigned:
First Party (Company):
Company Name: PT Cerdas Digital
Address: Jl. Asia Afrika No. 20, Bandung
Name: Vidawati Pratiwi
Position: HR Manager
Second Party (Intern):
Name: Iwan Vidawan
Address: Jl. Ganesha No. 15, Bandung
Institution: Universitas Indonesia
Program: Communication Science
Student ID: 190123456
Agree to the following internship terms:
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Internship Period: July 15, 2025 – October 15, 2025 (3 months).
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Purpose: Provide practical work experience aligned with the intern’s academic program.
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Placement: Marketing Communication Division, reporting directly to the division supervisor.
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Working Hours: Monday–Friday, 9:00 AM–5:00 PM WIB.
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Allowance: IDR 1,000,000/month for transportation.
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Confidentiality & Conduct: The Intern must protect company data and follow workplace rules.
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Closing Statement: Agreement is made voluntarily and signed by both parties.
Bandung, July 15, 2025
Signatures of Company and Intern
3. Example of a Permanent Employment Contract
PERMANENT EMPLOYMENT AGREEMENT
No: 045/SPK/IX/2025
On this day, [Monday], September 1, 2025, the undersigned:
First Party (Employer):
Company Name: PT Sejahtera Sekali
Address: Surabaya
Name: Andika Vidawan
Position: CEO
Second Party (Employee):
Name: Putri Vidawati
Address: Jl. Raya Darmo, Surabaya
ID Number: 3578123456780002
Position: Customer Service Representative
Agree to the following terms:
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Employment Status: Permanent employee after a 3-month probation based on performance evaluation.
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Job Description & Duties: Handle customer complaints, provide product information, and other tasks as assigned.
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Working Hours & Location: 40 hours/week, Monday–Friday 8:00 AM–5:00 PM WIB, based at PT Sejahtera Sekali headquarters in Surabaya.
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Salary & Compensation:
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Base salary: IDR 5,500,000/month
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Transportation allowance: IDR 500,000/month
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BPJS Health & Employment insurance
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Annual performance bonus
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Payroll: Paid on the 25th of each month via employee’s bank account.
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Leave & Holidays: 12 days of annual leave after 12 months of work, other leave as per company and labor law, plus national holidays.
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Confidentiality & Code of Conduct: Employee must maintain company confidentiality and uphold professionalism.
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Termination: Only under lawful conditions. Resignation requires 30 days’ written notice.
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Other Terms: Additional matters may be regulated in company policies or contract addendums.
Surabaya, September 1, 2025
Signatures of Employer and Employee
Tips for Signing an Employment Contract
Today, many companies send employment contracts via email. HR may allow signatures using photos or scanned signatures. However, these are not always legally valid.
To ensure your contract signing is legally binding and secure, you should use digital signatures. If you rely on scanned signatures, they may not be recognized in court.
With VIDA Digital Signature, your contract signing process is secure, practical, and legally valid—recognized under Indonesia’s ITE Law and certified by PSrE.
And to make contract digitization easier, you can also use Magic Scan, a VIDA feature that allows you to scan documents directly with your phone.
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