Probation Period in Indonesia
Probation Period in Indonesia: Employment Rules, Risks & Best Practices
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Table of Contents
What Is a Probation Period in Indonesia?
A probation period in Indonesia is a trial phase where employers evaluate new employees’ competence, skills, and suitability for their roles. Under the Job Creation Law (Omnibus Law) of 2020 and its implementing regulation Government Regulation No. 35 of 2021, probation periods are explicitly regulated for permanent employment contracts (PKWTT).
During this evaluation phase, employers assess whether employees can perform job duties effectively while employees determine if the position meets their expectations. The probation period must be clearly stated in the employment contract before work commences. This clause cannot be added retroactively after employment begins.
Indonesian law requires that probationary employment be formalized through a permanent employment contract (PKWTT), not a fixed-term contract (PKWT). This ensures employees receive security of tenure upon successful completion of probation. The probation clause serves as a legally recognized assessment tool within the permanent employment framework.
Is a Probation Period Mandatory Under Labour Laws in Indonesia?
No, probation periods are not mandatory under Indonesian labor law. Employers have the option to include or exclude a probation clause when drafting permanent employment contracts (PKWTT). However, if employers choose to implement probation, they must strictly comply with the requirements set forth in Government Regulation No. 35 of 2021.
When probation is used, it must be clearly specified in writing in the employment contract before the employee starts work. The contract must state the probation duration and evaluation criteria. Failure to document probation properly results in the employee being considered a permanent worker from day one without any trial period.
Many Indonesian employers utilize probation periods as a standard practice to minimize hiring risks. This is particularly common in industries requiring specialized skills, technical competencies, or specific behavioral competencies aligned with corporate culture and values.
How Long Can a Probation Period Last in Indonesia?
Under Government Regulation No. 35 of 2021, the maximum probation period in Indonesia is three months. This applies to all permanent employment contracts (PKWTT) regardless of industry, position level, or employee category. Employers cannot exceed this statutory limit under any circumstances.
The three-month period is calculated from the employee’s first working day and includes all calendar days, not just working days. If the employer does not make a decision by the end of the three-month period, the employee automatically becomes a permanent employee without any probation restrictions. Employers must act before this deadline.
The regulation strictly prohibits setting probation periods longer than three months. Employment contracts stipulating longer probation periods are considered invalid for that clause, and the employee is deemed a permanent worker from day one. Employers should ensure contract compliance to avoid unintended permanent employment status.
Can the Probation Period Be Extended in Indonesia?
No, probation periods cannot be extended beyond three months under Indonesian labor law. Government Regulation No. 35 of 2021 sets an absolute maximum limit with no provision for extensions. Any attempt to extend probation beyond three months violates labor regulations and automatically converts the employee to permanent status.
Employers cannot add extension clauses to employment contracts or request employees to agree to extended probation periods. Even with mutual consent, such extensions are legally invalid. Courts and labor dispute resolution bodies consistently reject probation extensions as contrary to statutory provisions.
Employers must complete their evaluation within the three-month window. If additional assessment time is needed, employers must either confirm the employee as permanent or terminate employment before the probation period expires. Proper planning and structured evaluation processes help employers make timely decisions.
Employment Rights During Probation Period in Indonesia
Probationary employees in Indonesia are entitled to the same fundamental rights as permanent employees under labor law. They must receive at least the applicable minimum wage (UMR/UMP/UMK), are entitled to paid leave, religious holidays, and statutory benefits. Social security enrollment in BPJS Kesehatan and BPJS Ketenagakerjaan is mandatory from day one.
The key difference is that probationary employees can be terminated more easily if they fail to meet job requirements. However, they still enjoy protection against arbitrary dismissal and discrimination. Employers cannot reduce wages or deny statutory benefits during probation as a cost-saving measure.
- Minimum wage: Must receive applicable provincial/district minimum wage
- Working hours: Subject to standard 40 hours per week maximum
- Paid leave: Entitled to annual leave (12 days) and religious holidays
- Social security: Mandatory BPJS Kesehatan and Ketenagakerjaan enrollment
- Overtime pay: Entitled to overtime compensation per legal rates
- Non-discrimination: Full protection under employment equality laws
Salary, Payroll, and Benefits During Probation
Probationary employees must be paid at least the applicable minimum wage for their work location—either provincial (UMP) or district/city (UMK) minimum wage. Employers cannot pay probationers below minimum wage rates. All wage components including overtime, holiday pay, and allowances must comply with standard labor regulations.
Payroll processing must include social security contributions to BPJS Kesehatan (health insurance) and BPJS Ketenagakerjaan (employment social security covering work accidents, death benefits, old age savings, and pension). These contributions are mandatory from the first day of employment and cannot be delayed until after probation ends.
Probationary employees are entitled to statutory annual leave (12 working days after 12 months of service) and paid religious holidays. While some companies may restrict discretionary bonuses or additional perks during probation, all government-mandated wages and benefits must be provided without reduction or delay.
Termination Rules During Probation Period in Indonesia
Employers can terminate probationary employees within the three-month period if the employee fails to meet job requirements or performance standards. However, termination must be based on legitimate, objective assessment criteria specified in the employment contract. The decision must be communicated in writing before the probation period expires.
Under Government Regulation No. 35 of 2021, probationary terminations do not require severance pay (pesangon), long-service pay, or compensation for rights. This exemption only applies if termination occurs within the three-month probation window and is properly documented. After three months, full severance obligations apply.
Employers must maintain documentation of performance evaluations, feedback sessions, and reasons for termination. While procedural requirements are less stringent than for permanent employees, terminations based on discrimination, retaliation, or without legitimate performance grounds can still result in labor disputes and reinstatement orders.
Notice Period Requirements During Probation
Indonesian labor law does not mandate a specific advance notice period for termination during probation. However, best practice requires employers to provide written notification to the employee stating the termination decision and effective date. This notice should be delivered before the three-month probation period expires.
Some employment contracts specify notice periods for probationary terminations, typically ranging from 7 to 14 days. If stipulated in the contract, employers should honor these terms. Even without contractual notice requirements, providing reasonable advance notice demonstrates good faith and reduces potential disputes.
Employees who wish to resign during probation should provide notice as specified in their employment contract. Standard practice is 30 days’ notice, though probationary employees may negotiate shorter notice periods depending on circumstances and company policy.
Can Employees Be Terminated Without Cause During Probation?
Payroll, Taxes, and Compliance During Probation Period in Indonesia
Employers must withhold income tax (PPh 21) from probationary employees’ salaries according to the progressive tax rates set by the Indonesian tax authority. Monthly tax calculations must account for the employee’s NPWP (tax identification number) status, with higher withholding rates applied to employees without NPWP. Tax compliance starts from the first payment.
BPJS enrollment is mandatory from day one for both health insurance (BPJS Kesehatan) and employment social security (BPJS Ketenagakerjaan). Employer and employee contribution rates are fixed by regulation. Failure to register employees or remit contributions results in administrative penalties and potential legal liabilities for workplace accidents or health claims.
- Income tax (PPh 21): Progressive withholding based on income brackets and NPWP status
- BPJS Kesehatan: 5% of salary (4% employer, 1% employee), capped at maximum salary threshold
- BPJS Ketenagakerjaan: Covers work accident insurance, death benefit, old age savings, and pension
- Minimum wage compliance: Must meet or exceed UMP/UMK for work location
- Payroll records: Maintain detailed records for labor inspection compliance
Common Compliance Risks During Probation Period in Indonesia
The most significant compliance risk is failing to specify the probation period in writing in the employment contract before work begins. Adding probation clauses after employment starts is invalid and results in the employee being treated as permanent from day one. Another common error is exceeding the three-month maximum period without making a decision.
Underpayment of wages or failure to enroll employees in BPJS programs creates legal liability. Some employers mistakenly believe they can defer BPJS enrollment or pay below minimum wage during probation, which violates labor regulations. Non-compliance triggers penalties, back payments, and potential criminal sanctions.
- Missing written probation clause: Employee becomes permanent immediately without trial period
- Exceeding three months: Automatic conversion to permanent employee status
- Wage violations: Paying below minimum wage or withholding statutory benefits
- BPJS non-enrollment: Administrative penalties and liability for accidents/illness
- Lack of documentation: Insufficient evidence to justify probationary termination
- Discriminatory practices: Termination based on protected characteristics
- Using fixed-term contracts: Probation must be under PKWTT, not PKWT
Probation Period vs Permanent Employment in Indonesia: Key Differences
The main distinction between probationary and permanent employment in Indonesia relates to termination rights and severance obligations. Probationary employees can be terminated within three months for failure to meet job requirements without severance pay. Permanent employees enjoy greater job security and are entitled to severance, long-service pay, and compensation for rights upon termination.
Both probationary and permanent employees receive the same statutory wages, benefits, working hour protections, and social security coverage. The difference is procedural—terminating permanent employees requires stronger justification, bipartite negotiations, and potentially mediation or labor court proceedings. Probationary terminations have simplified procedures if executed within the three-month window.
| Aspect | Probationary | Permanent |
|---|---|---|
| Duration | Maximum 3 months | Indefinite |
| Termination Ease | Easier within 3 months for performance failure | Requires strong justification and procedures |
| Severance Pay | None if terminated within probation | Severance, long-service, and compensation required |
| Wages & Benefits | Full statutory entitlements | Full statutory entitlements |
| BPJS Coverage | Mandatory from day one | Mandatory throughout employment |
Managing Probation Periods When Hiring Through Employer of Record (EOR)
An Employer of Record (EOR) acts as the legal employer in Indonesia, managing all aspects of probation compliance including drafting PKWTT contracts with valid probation clauses. The EOR ensures the three-month maximum is not exceeded by implementing automated tracking systems that alert clients before probation expiration. This prevents automatic conversion to permanent status.
EORs handle compliant payroll processing including minimum wage calculations, income tax withholding, and BPJS contributions from the employee’s first day. They maintain employment records, performance evaluation documentation, and ensure termination procedures comply with Indonesian regulations. This significantly reduces compliance risks for foreign companies.
Using an EOR is especially valuable for companies without an Indonesian legal entity. The EOR assumes responsibility for employment law compliance while the client company manages day-to-day work direction. This structure enables market testing and talent evaluation during probation without establishing a local presence or navigating complex Indonesian labor regulations.
How Asanify Ensures Probation Compliance in Indonesia
Asanify, recognized as the #1 EOR platform on G2, provides comprehensive probation management through its automated compliance technology. The platform generates compliant PKWTT contracts with properly drafted probation clauses meeting Government Regulation No. 35 requirements. Real-time dashboards track probation end dates with automated alerts 30 and 7 days before expiration.
The platform manages payroll with built-in compliance for minimum wage requirements, PPh 21 tax calculations, and BPJS Kesehatan and Ketenagakerjaan contributions. Asanify’s system ensures timely remittances to tax and social security authorities. The document management system stores performance evaluations and termination documentation to support compliant probationary dismissals.
Asanify’s Indonesian employment law experts provide guidance on performance evaluation frameworks and termination procedures. The platform simplifies multi-country probation management with standardized workflows adapted to local Indonesian requirements, giving HR teams visibility and control while ensuring full regulatory compliance throughout the probation period.
Best Practices for Employers Managing Probation Periods in Indonesia
Employers should always include clear probation clauses in PKWTT contracts before employment commences. Specify the three-month duration, evaluation criteria, and performance standards in writing. Implement structured onboarding that communicates expectations and provides new hires with resources needed to succeed during the evaluation period.
Conduct formal performance reviews at 30, 60, and 90-day intervals with documented feedback. This creates a clear record of performance issues and demonstrates fair evaluation processes. Set calendar reminders to ensure decisions are made before the three-month deadline to avoid automatic permanent conversion.
- Draft compliant contracts: Include probation clause in PKWTT before start date
- Communicate standards clearly: Provide written job expectations and performance criteria
- Schedule regular reviews: Conduct evaluations at 30, 60, and 90 days
- Document everything: Maintain records of feedback, coaching, and performance issues
- Track deadlines rigorously: Set alerts for probation expiration dates
- Ensure BPJS enrollment: Register employees from day one without delay
- Pay at or above minimum wage: Verify compliance with UMP/UMK rates
- Train managers: Educate supervisors on evaluation and documentation requirements
Your Probation Compliance Guide: Managing Probation Periods in Indonesia the Right Way
Successfully managing probation periods in Indonesia requires strict adherence to the three-month maximum, proper contract documentation before employment begins, and full compliance with wage, benefit, and social security requirements. The probation period must be embedded within a PKWTT (permanent contract), not a PKWT (fixed-term contract), to ensure legal validity.
The critical compliance factors are timing and documentation. Employers must make termination or confirmation decisions before the three-month deadline. Performance evaluations must be documented with objective evidence supporting any termination decision. Even during probation, employees retain fundamental rights and protection against discriminatory or arbitrary dismissal.
For international companies or organizations without Indonesian HR expertise, partnering with an EOR like Asanify eliminates compliance complexity. Automated contract generation, payroll processing, BPJS enrollment, and deadline tracking ensure probation periods achieve their evaluation purpose while maintaining full compliance with Indonesian labor law throughout the employment relationship.
Frequently Asked Questions About Probation Period in Indonesia
What is the probation period in Indonesia?
The probation period in Indonesia is a maximum three-month evaluation phase included in permanent employment contracts (PKWTT) under Government Regulation No. 35 of 2021. It allows employers to assess whether new employees meet job requirements and performance standards before confirming permanent employment status.
Is probation period mandatory under labour laws in Indonesia?
No, probation periods are optional in Indonesia. Employers can choose to hire directly as permanent employees without probation. However, if probation is used, it must be specified in writing in the PKWTT contract before employment begins and cannot exceed three months.
What is the maximum probation period allowed in Indonesia?
The maximum probation period in Indonesia is three months as set by Government Regulation No. 35 of 2021. This limit cannot be exceeded under any circumstances. If no decision is made by the end of three months, the employee automatically becomes permanent.
Can an employee be terminated during probation in Indonesia?
Yes, employees can be terminated during the three-month probation period if they fail to meet job requirements or performance standards. However, termination must be based on objective criteria and documented evaluations. No severance pay is required if termination occurs within the probation window.
What is the notice period during probation in Indonesia?
Indonesian law does not mandate a specific notice period for probationary terminations. However, employers should provide written notification of the termination decision. Some employment contracts specify notice periods of 7-14 days, which should be honored if included in the agreement.
Are employees entitled to benefits during probation in Indonesia?
Yes, probationary employees receive all statutory benefits including minimum wage, paid leave, religious holidays, overtime pay, and mandatory BPJS Kesehatan and Ketenagakerjaan enrollment from day one. They have the same wage and benefit rights as permanent employees under Indonesian labor law.
How does payroll work during probation period in Indonesia?
Payroll during probation must include income tax withholding (PPh 21), BPJS Kesehatan contributions (5% of salary), and BPJS Ketenagakerjaan contributions for work accident, death, old age, and pension programs. Probationers must receive at least the applicable minimum wage (UMP/UMK) for their location.
How does Employer of Record help manage probation compliance in Indonesia?
An EOR serves as the legal employer in Indonesia, drafting compliant PKWTT contracts with valid probation clauses, managing the three-month timeline, processing compliant payroll with BPJS and tax withholding, and maintaining documentation. This reduces legal risks for foreign companies unfamiliar with Indonesian employment regulations.