The employment of local staff in Bali offers fundamental challenges. All foreign companies doing business in Bali will need to understand the rules and regulations apply. If you do not do your due diligence on your hiring contracts and recruitment, you might find yourself facing potential lawsuits from the government.
How many types of employment contracts are there? What should be included in the contracts? What are the minimum wages in Bali? Do foreign companies need to have a legal entity in Bali to hire local staff directly?
In this article, we will tell you what you need to know about how to hire a worker in Bali.
Types of Employment Contract in Bali
In general, an employment contract creates a relationship between an employee and his or her employer. The employment contract is a mutually agreed document, and it initiates certain obligations and rights for both parties.
You can find two types of employment contracts in Bali under the Manpower Law of Indonesia: Permanent employment contract and Temporary employment contract.
Permanent Employment Contract
This is the most common type of employment contract and is often offered for permanent positions. There is generally a 3-month probation period under this contract and after the employee will become a full-time or permanent employee once the probation period is over.
From that point onwards, termination of an employee will become more complicated as compared to temporary workers.
Temporary Employment Contract
As the name implies, this type of employment contract only lasts for a specific amount of time – no more than 2 years – and has been set and agreed in advance.
A temporary employment contract is extendable upon its expiry. However, it can only be extended once for a maximum period of 12 months.
Temporary employment contracts are usually used for workers hired for seasonal or short-term projects (usually no more than three years), or projects with new product development and experiments.
There will be fewer complications to terminate an employee under a temporary employment contract if the termination is necessary.
Employee’s Minimum Wages in Bali
The minimum wage in Bali has regional differences to keep pace with the cost of living and development in the city. The differences in minimum wages are shown in the list for 2019 below:
- Badung – IDR 2,700,297
- Bangli – IDR 2,299,152
- Buleleng – IDR 2,338,840
- Gianyar – IDR 2,421,000
- Jembrana – IDR 2,356,559
- Karangasem – IDR 2,355,054
- Klungkung – IDR 2,338,840
- Kota Denpasar – IDR 2,553,000
- Tabanan – IDR 2,419,332
The minimum wage is based on 40 hours of work per week. Generally, there are two recognised ways:
- 6 days of work per week – app. 7 hours per day
- 5 days of work per week – 8 hours per day
Working during public holidays is considered overtime and employees must be paid as follows:
- first hour: 1.5 times the hourly rate
- subsequent hours: 2 times the hourly rate
Religious Holiday Allowance (THR)
Also known as Tunjangan Hari Raya in Indonesian, THR is an additional income paid to employees by employers before a religious holiday – separating from employee’s minimum wages and salaries.
Religious holidays recognised for THR are Eid al-Fitr, Christmas Day, Day of Silence, Waisak and Chinese New Year.
Details in an Employment Contract in Bali
The details of an agreement set out in an employment contract clarify the relationship and protect both parties. The following terms and conditions are usually seen in an employment contract in Bali:
- Job scope and information
- Personal information
- Employment and probation periods
- Termination clause
- Sick days, maternity leaves, annual leaves
- Social security, benefits and taxes
- Working hours and minimum wages
- Applicable law and dispute process
Bali Employment: Hiring “Pembantu” in Bali
For the purpose of receiving a retirement visa in Bali, foreigners will need to hire a helper – “pembantu”. The difference between an employee and a helper is that it is not necessary for foreigners to own a business in Bali. It is very common that these helpers are not hired on a contract basis in Bali and might be not considered as official workers.
Therefore, if you want to hire a worker in Bali, seek advice from Cekindo. Our legal consultants and experts can help you with all legal checks of employment contracts, recruitment process as well as compliance with social and health insurance programs.
Fill in the form below or drop at our office located in Badung.