Basic Indonesian Employment Law If You Hire Staff For Your Bali Villas Business

If you are planning or already running a Bali villas rental business, you may have sought legal advice relating to property ownership, owning a business, and possibly taxation laws to ensure you are compliant with the Indonesian laws which govern Bali. However, if you already employ or plan to employ staff for your business, then we hope you are also familiar with Indonesian employment laws.

Employment laws differ from country to country so you must know what the legalities are should you wish to hire local staff. In truth, employment laws in Bali are no more complex than they are in Australia, however, there are differences that you must be aware of. To assist in that quest, we have outlined some of the basic employment laws and regulations which apply in Bali.

Types Of Employment Contract

In Bali, there are two main types of employment contracts that you will be able to offer staff. The first is a permanent contract which allows you to employ someone on a 3-month probation period to ensure they are suitable. Once they have passed probation they will be classed as a permanent employee with all the rights that comes with that.

The second type of employment contract is a temporary employment contract. Here, you can employ someone temporarily but only up to a maximum time of two years unless you extend it by the allowable one year. As you would expect, temporary contracts are easier to terminate than permanent contracts.

Minimum Wages Rules

Bali has minimum wage rules, where the main complication is that the specific amount payable varies by region within Bali. There are nine regions that each have their own minimum wage, and these amounts at the time of writing may differ from what they are when you read this so rather than state minimum wage amounts we advise you to check locally for the current minimum wage.

Employee Health And Social Security Rights

Your full-time employees have rights pertaining to social security and insurance. All these employees must be registered for both the social security system in Indonesia and the public health insurance scheme. For social security there are amounts payable by both the employer and the employee towards the following:

  • Pension Plan
  • Retirement Savings
  • Work-Related Injuries Insurance
  • Non-Work Related Accidental Death

Similarly, the employee and the employer both pay towards Indonesia’s national health system. All the current percentages payable are available from your local tax office in Bali.

Working Hours & Overtime

The working hours’ arrangements for full-time employees can be organised in one of two ways. the first is a 5-day week, at 8 hours a day, for a total of 40 hours per week. Alternatively, a 6-day week can be worked, but on each day the employee only works 7 hours. Should an employee work on an official public holiday this is classed as overtime. Overtime wages should be 1.5 x the hourly rate for the first hour, and 2 x the hourly rate for any further overtime hours worked.

Annual Leave

Regardless of whether they have a temporary or permanent contract, employees in Bali are entitled to annual leave. This equates to one day of holiday for every 23 working days, up to a maximum of 12 days per year. All employees must take a period of leave of 6 consecutive workdays during the year.