Bali is like a tropical dream that everyone loves. Tourism is booming, so businesses see it as a great place to make money. If you're starting a company in Bali or growing one, you need to know the rules about hiring and firing people to protect your business in this tropical paradise.
As an employer, it is important to be aware of Indonesia’s labor laws that will also be applicable to any business in Bali for hiring or firing employees. They are created in order to protect the workers’ rights and specify what an employer can and cannot do in regard to this.
Employment Contracts: Indonesian law requires all employers to create written contracts for their employees in Indonesia. The employment contracts should determine the terms and conditions of employment, including the nature of the job, working hours, remuneration, and benefits.
Working Hours and Overtime: The official working hours per week in Indonesia are 40 hours, with a maximum of 8 hours a day. Any working hours above the eight hours daily threshold are considered overtime that attracts higher pay.
Minimum Wage: Bali follows the province’s minimum wage guidelines, which vary from each region and industry based on updated wage guidelines. In fact, in 2021 Bali’s provincial minimum wage was 30.64 million IDR.
Employee Benefits: Employees in Bali are subject to benefits such as paid leave and holidays such as medical, sick, annual, and public holidays. Other benefits include health insurance and contributions to pensions.
When it comes to hiring employees in Bali, there are several key considerations to keep in mind:
One of the most competitive tasks for Bali is finding the best candidates. It's tough for tourism, hospitality, and service companies to find skilled workers. At the same time, new grads and job seekers have a hard time landing their first job. Here are some ideas to help you find the right people:
If you want to hire a foreign employee, always remember that the latter should meet the requirements of a work permit. Until these requirements are met, a foreign national can work in Indonesia if:
It is customary to allow new hires to go through a so-called probation period, which usually varies from 3 to 6 months. During this period, the employer retains the right to analyze employee performance, their attitude, and feasibility to have the job. Additionally, the employer has to hold regular performance reviews since regular feedback is key to nip potential issues in the bud.
Firing is both a difficult and delicate process and requires taking measures not to land in the realm of legal implications. The labor laws of Indonesia are highly protective of their employees, which renders the firing process all the more challenging.
Notice Period: For a notice period, employees must serve one to three months depending on the years of service. All employees should be allowed to continue working or be paid for this period.
Severance Pay: If the employee is terminated except for gross misconduct, they should be given the benefit of severance. The amount to be capped depends on the length of service. If over 12 months, the severance amount equivalent to seven months of salary would be provided. If the amount is less than 7 months, the salary is to be given to the employee. The amount depends on the employee's salary, as per Indonesian labor law.
Documentation: When offboarding an employee, always make sure there is proper documentation, including letters of termination, the cause of dismissal, and copies of their performance reviews and warnings.
In case of a dispute, the following legal steps on the solution to labor conflicts need to be considered:
When dealing with conflicts or disputes, it is recommended to involve a legal advisor who will ensure compliance with the existing local rules and regulations.
Ultimately, hiring and firing workers in Bali involves knowledge of Indonesian labor rules, smart hiring techniques, and a cautious approach to dismissals. If a company follows local rules and treats its staff fairly, it may create a pleasant workplace, avert legal issues, and establish a flourishing company on this intriguing island.
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