Why a contract?
Even if a contract is not legal requirement, signing one benefits everyone:
- For you, it’s a great opportunity to be clear about your needs and expectations. Ultimately, it increases the likelihood that your employee 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. It gives your worker a full understanding of what you expect from her and what she can expect from you.
Carefully read the contract together with your employee to make sure they understand all the terms and conditions.
Don’t have time to write a contract? No problem, we’ve prepared a bilingual template for you HERE!
What should the contract typically mention?
Do your best to be honest with yourself and make sure your expectations are realistic and fair.
Working hours and expected overtime
Housework and childcare are both 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.
Salary, bonus, overtime rate and terms of payment
See our separate post on salary guidelines here.
Paying by bank transfer to the employee’s account is the best option: it is safer than handling cash and will automatically have a record of payments.
If your employee insists on being paid in cash, make sure you both sign a monthly salary receipt to avoid potential misunderstanding.
Other benefits: food , transportation allowance…
Will you provide food or a food allowance instead? A monthly allowance provides more clarity while sharing food may feel easier. If you choose to share or provide food, ask whether your worker has any allergies or religious diet restrictions, and establish clear guidelines.
Other common benefits include food, transportation, overtime, healthcare… Some families keep them separate from the salary as severance and yearly bonuses are calculated as a multiple of the salary. But if keeping track of allowances feels like an unnecessary effort and you can choose to pay an all-inclusive monthly wage.
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). Members are often met with lengthy waits but it is very affordable (Rp25,000 – 80,000/person/month depending on the selected class), is very easy to pay online, and most importantly provides wide coverage.
Everything you need to know on BPJS and how to pay online can be found here.
Most employers give at 10-15 days of annual leave, which are usually taken at the end of Ramadan (or the appropriate religious holiday for staff of other religions). This comes in addition to public holidays, which is consistent with Indonesian labor laws.
Your 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. Indonesian labour laws specifically provide for 2-3 days of paid leave for each type of personal leave. 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 also consider offering incentives for following the rules you set by letting your employee cash out unused leave at the end of the year.
Some families ask that their employee go through a medical check prior to starting to work. 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…
Employer and employee should agree to a trial period during which both party can terminate the contract without repurcussions.
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 rules, it may be a good idea to attach them to the contract.
Rules around use of mobile phone, privacy (ex: social media and sharing of photos), or potential loans are often cited as examples.