Hiring staff for a villa or a company in Bali: contracts, payments, fines (2026)
AB
Andrei Balinsky
Founder of Balinsky
Indonesia's labour rules changed a lot after the 2020 reform (the job creation law, now No. 6/2023). Many tips online refer to repealed articles. Here is what applies now.
Fixed-term contract
- In writing and in Indonesian only.
- Term - up to 5 years in total, including extensions.
- When the term ends, the employee receives compensation: one month's salary per 12 months of work, pro rata for a shorter period.
- If the employer terminates the contract early on its own initiative, it pays the salary for the remaining term.
- Severance pay and the long-service bonus do not apply to a fixed-term contract. They are due only to employees on a permanent contract.
- Foreigners are not entitled to compensation under a fixed-term contract.
- The law treats an oral fixed-term contract as permanent. And dismissing a permanent employee costs more.
Permanent contract
- It can be concluded orally, but then the employee is given a letter of appointment.
- On dismissal, severance pay and a long-service bonus are due. The amount depends on the reason for dismissal (Government Regulation No. 35/2021).
- You cannot dismiss someone for illness if it lasts less than 12 months in a row.
- You can dismiss for absence if the employee has not shown up for 5 days in a row without explanation and has received two written summonses.
Mandatory payments
- The holiday allowance (THR) - no later than 7 days before the employee's religious holiday. It is due after 1 month of service, pro rata. Late payment - a 5% fine. There are no exceptions by religion.
- Service charge in a hotel or restaurant: 3% for possible losses, 2% for training, 95% - to staff.
- BPJS social insurance is mandatory. Non-payment - up to 8 years in prison or a fine of up to 1 billion rupiah.
Working hours
40 hours a week. Overtime - up to 4 hours a day and up to 18 hours a week. Annual leave - 12 days a year.
A foreign employee
- You need a foreign worker hiring plan (RPTKA) and a work KITAS. The fee is $100 a month.
- For the employer, a foreigner without a permit means 1 to 4 years and/or a fine of 100 to 400 million rupiah.
- For the foreigner: up to 5 years or up to 500 million rupiah, plus deportation.
- The C18 visa for a future employee: 90 days without extension, once per company (since 14.06.2025).
What may change
In 2024, the Constitutional Court ordered a new labour law to be adopted within two years. Keep an eye on changes.
Editorial note
Balinsky editorial team · 12 October 2026. The text has been checked against Indonesian laws in force on this date.
Update: reviews contained repealed rules: a fixed-term contract of "maximum 2 years plus 1", dismissal under Articles 158 and 161, severance pay under a fixed-term contract, a 15% housing allowance. In one review, the penalty for employing a foreigner without a permit was understated many times over.
Materials the article is based on: https://t.me/BaliLawyer/46, https://t.me/BaliLawyer/47, https://t.me/BaliLawyer/48, https://t.me/BaliLawyer/49, https://t.me/BaliLawyer/50, https://t.me/BaliLawyer/54, https://t.me/BaliLawyer/102, https://t.me/BaliLawyer/107, https://t.me/BaliLawyer/127, https://t.me/BaliLawyer/146, https://t.me/BaliLawyer/184
Sources
- Government Regulation No. 35/2021 (contracts, dismissal): https://pasal.id/peraturan/pp/pp-no-35-tahun-2021
- Labour Law, Art. 185 (penalty): https://pasal.id/peraturan/uu/uu-no-13-tahun-2003/pasal-185
- Social Security Law, Art. 55: https://pasal.id/peraturan/uu/uu-no-24-tahun-2011/pasal-55
- Immigration Law, Art. 122: https://pasal.id/peraturan/uu/uu-no-6-tahun-2011/pasal-122
- Hukumonline on fixed-term contracts: https://www.hukumonline.com/berita/a/begini-pengaturan-lengkap-pp-pkwt-phk-lt603395220adef
- Immigration service on the C18 visa: https://imigrasi.go.id/siaran_pers/2025/06/16/ditjen-imigrasi-perbarui-aturan-visa-kunjungan-untuk-calon-tka-dalam-uji-coba