Why a contract?
Even if a contract is not legal requirement, signing one eventually benefits everyone. For you, it’s a great opportunity to be clear about your needs and expectations and increases the likelihood that your worker will meet your standards. For the worker, a written description of job duties, benefits, and work terms professionalizes the relationship, fosters job stability, and builds trust, giving a worker a full understanding of what you expect from her and what she can expect from you.
Don’t have time to write a contract? No problem, we’ve prepared a bilingual template for you. DOWNLOAD HERE!
Before you get the contract signed, ask your employee to read all the terms and conditions carefully and make sure everything is understood.
What should the contract typically mention?
Housework duties (such as cooking, light cleaning, or laundry…), care giving duties (childcare, elderly care, pet care…).
Do your best to be honest with yourself and make sure your expectations are realistic and fair.
- Working hours and expected overtime
House work and childcare are both very demanding, which is why workers should be given adequate rest. Indonesian labour laws prescribes ‘normal working hours’ as no more than seven (7) hours per day, 40 hours per week, and six days per week.
A worker who agrees to give up this rest period must be paid overtime.
There may be exceptions for live-in workers who choose to work longer hours for increased benefits; however, set working hours should be clearly set out and agreed between the parties so that employees receive adequate breaks and rest days.
- Salary, bonus, overtime rate and terms of payment
See our seperate post here for salary guidelines.
Paying by bank transfer to the employee’s account is the best option, it is safer than handling cash and both employee and employer will automatically have a record of payments. It is very common for domestic workers in Indonesia to ask for loans from their employer and this is due in part to the fact that many of them are still unbanked and/or do not meet the basic requirements to access bank loans or other similar financial services. If your employee insists on being paid in cash, you should both sign a salary receipt every month and keep a copy of this to avoid any misunderstanding.
- Other benefits: food allowance, transportation allowance, medical fees
Most employers tend to separate salary from daily allowances for costs such as transport (for live-out staff), food, overtime, etc. With this method, if the employee doesn’t work, they don’t get their allowance. More significantly, the THR is calculated as a multiple of the base salary, not the allowances. On the other hand, keeping track of allowances requires more effort for the employer, which is why some prefer to pay an all-inclusive monthly wage and dispense entirely with allowances.
For employees who live-in with their employers, will the employer provide food or a food allowance? A monthly allowance provides more clarity while sharing food might feel easier. If you choose to share or provide food, ask whether your worker has any allergies or religious diet restrictions, and make sure to establish clear guidelines about what they are allowed to eat.
- Medical allowance
While some employers choose to cover medical expenses up to a certain amount upon presentation of medical bills (ex: equivalent to one or two months’ salary), we recommend contributing to the National Health Insurance System (BPJS). It is far from perfect as members are often met with lengthy waits but provides wide coverage while being affordable (Rp25,000 – 80,000/person/month depending on the selected class), and is very easy to pay online. Everything you need to know on BPJS and how to pay online can be found here.
Most employers give at least 12 days of vacation at Idul Fitri (or the appropriate religious holiday for staff of other religions), which is consistent with Indonesian labor laws (12 days of annual leave per year in addition to religious holidays).
Household staff will almost certainly need to be absent from time to time for their own or a relative’s illness, funerals, weddings, school conferences, etc This is consistent with Indonesian labour laws which specifically provide for 2-3 days of paid leave for each type of personal leave (except maternity leave which is 90 days before birth and 90 days after birth). For example, Indonesian employees receive 3 x days of leave for employee’s own wedding and 2 x days of paternity leave, and 2 x days of leave for a baptism, marriage, birth and death of a family member. However, use your discretion as employees may require longer periods of leave if they need to travel back to their village to attend funerals or see family.
You may consider offering incentives for following the rules you set by letting your employee cash out unused leave at the end of the year.
- Medical check
Some families ask that their employee go through a medical check. In Jakarta, many hospitals offer health check packages for domestic workers, such as: International SOS, Brawijaya Hospital, Good Practice, Prodia Lab, Siloam Kebon Jeruk, MMC Hospital, Bunda Medical Clinic…
- Trial period
Employer and employee should agree to a trial period during both party can terminate the contract.
- Termination of an employee in good standing
If you terminate an employee for reasons other than wrong-doing (ex: moving home, or no longer needing a nanny), it is common practice to give severance pay equal to one month’s salary for each year the employee has worked for you. Payment of severance is a requirement of Indonesian labor laws and will be expected by your employees.
- Other house rules
If you have important house rules, you may also attach them to the contract is also a good place to put them in writing.
Establishing rules around use of mobile phone during working hours, privacy (ex: social media and sharing of photos) are often cited as examples of important house rules.
Emergency protocol may also be added to the contract (what to do, where to go, whom to call in case of an emergency).