Probation Period in Indonesia: Rules, Duration & Common Mistakes by Employers

When you hire someone, you want time to assess whether they’re the right fit before you’re fully committed. Hence the instinct to add a probation clause to every employment contract. In Indonesia, that reflex can backfire.

Indonesian labor law does provide for this, but the mechanism depends on which contract structure you’re using. For permanent hires (PKWTT), you get a formal probation period of up to three months. For fixed-term hires (PKWT) , the contract duration itself serves that function, and adding a probation clause actually works against you.

Understanding how these work helps you structure the arrangement correctly from the start.

Difference Between Permanent (PKWTT) vs Fixed-Term (PKWT) Contracts

To properly understand probations in Indonesia you need to know the difference between a permanent and fixed-term contract. ​​Under Indonesian Law (Law No. 13 of 2003 on Labor, as amended by the Job Creation Law), probation is only allowed for PKWTT (Permanent) employees.

Here’s how they are distinguished:

1. PKWTT (Perjanjian Kerja Waktu Tidak Tertentu): This is a permanent employment agreement. It’s designed for roles that are ongoing and not tied to a specific project or deadline.
2. PKWT (Perjanjian Kerja Waktu Tertentu): This is a fixed-term or “contract” employment agreement. It is strictly for work that is temporary, seasonal, or related to a specific project. Following the Job Creation Law (Omnibus Law), these are usually capped at five years including extensions.

For example, if you are hiring a General Manager, a Senior Accountant, or an HR Lead, you are likely looking at a PKWTT. Meanwhile, a PKWT is more appropriate for a freelance software engineer or if you’re consulting with a niche expert for a project. 

For more details, refer to our guide on employment contracts in Indonesia.

Rules for Permanent Employee (PKWTT) Probation

PKWTT probation is explicitly defined on Article 60 of Law No. 13 of 2003. For permanent employees, this is a standard way to assess cultural fit and technical competency. However, the law provides a very strict framework for how this period must be managed. 

1. The 3-Month Maximum Limit

The maximum allowable probation period in Indonesia is three months with no extensions. Even if the employee needs more time to hit their KPIs, or if they were on sick leave for a month, the clock does not stop. 

Any attempt to “renew” a probation period for another three months is legally void. If the employee continues to work past the three-month mark without a termination notice, they are automatically considered a permanent employee who has passed their probation.

2. Written Probation Clause in the Employment Contract

A probation period must be clearly stated in the written employment agreement. If you hire someone under a PKWTT but fail to mention a probation period in the contract, the law assumes the employee is permanent from day one without any trial period.

If the employment agreement is made orally (which is permitted for PKWTT but highly discouraged), you must still issue a written notification to the employee stating that they are on probation. Without this paper trail, you lose your right to terminate the employee under probationary terms.

3. Minimum Wage Requirements During Probation

During probation, you cannot pay the employee less than the applicable regional minimum wage (UMR). On paragraph 2 of Article 60 on Law No. 13 of 2003, employers are prohibited from paying wages below the applicable minimum. If you are caught paying below the minimum wage, you could face administrative sanctions and be forced to pay back-dated wages.

The Legal Risks of Putting Contract Workers (PKWT) on Probation

One of the most critical compliance risks for international companies in Indonesia is failing to distinguish between permanent and contract roles. Because a PKWT is, by definition, for a specified period of time, the law views a “trial” as unnecessary and exploitative for this class of worker.

Article 58: The “Null and Void” Clause

Article 58 of the Labor Law is very clear: “Employment agreements for a specified period of time (PKWT) cannot require a probation period.”

If you include a probation clause in a PKWT, two things happen immediately:

1. The probation clause is null and void. It’s as if it never existed.
2. The time spent in “trial” counts as the contract duration. You cannot fire the person during that period for “failing probation.”

For example, a tech company hires a developer on a 12-month fixed-term contract (PKWT). They include a 3-month probation clause in the agreement, assuming they can let the developer go if the code isn’t up to standard. After 2 months, the company decides the developer isn’t a good fit and terminates the contract, citing “failed probation.”

Because the probation clause is legally null and void (Article 58), the court views this not as a failed probation, but as an unjustified early termination of a fixed-term contract. Under Article 62 of the Labor Law, the company is now legally required to pay the developer their remaining 10 months of salary as compensation. 

The Financial Penalty for Early Termination

Above is a good example of financial penalties for early termination of PKWT contracts. Under Article 62 of Law No. 13 of 2003, if either party terminates a PKWT before it expires, the terminating party must pay the other party compensation equal to the employee’s salary for the remaining period of the contract.

How an EOR (Employer of Record) Simplifies Hiring in Indonesia

If you want to build a remote team in Indonesia, these subtle nuances can be a big risk. RecruitGo can help mitigate these legal risks with our  Employer of Record. As the legal employer of your staff, we will take care of all compliance matters so you can focus on running your business such as:

1. Creating Legally Compliance Contracts: We ensure that every contract is compliant with the latest Indonesian regulations. If you are hiring a permanent employee, we include the correct three-month probation clause. If you are hiring a contract worker, we ensure there is no probation clause, protecting you from the early termination penalties mentioned above.
2. Automated Compliance Monitoring: We track the 90-day window for every permanent hire. We notify you well in advance of the probation expiry so you can make an informed decision. This prevents “accidental” permanent hiring caused by missing a deadline.
3. Managing Offboarding and Termination Risks: Terminating an employee in Indonesia, even during probation, requires following specific administrative steps to avoid disputes. An EOR handles the communication and documentation, ensuring that if someone isn’t a fit, they are offboarded in a way that minimizes legal exposure.

Start expanding your team in Indonesia with RecruitGo! Know more about Employer of Record from our compliance experts with a free consultation.