Hiring Employees in Lombok: Contracts, BPJS, THR, Payroll and Termination for Foreign-Owned Companies

Reviewed against official sources on 26 October 2026. This guide concerns Indonesian employees; foreign-worker permissions require a separate review.

Hiring your first receptionist, chef or dive-centre assistant is an important step for a Lombok business. It also creates obligations that extend beyond agreeing on a monthly salary.

For hiring employees in Indonesia, start with the actual job and working arrangement. A contract label cannot replace the facts of how someone works.

A PT PMA follows Indonesian employment rules

Foreign ownership does not provide an exemption from Indonesian labour protections. Your villa, restaurant, tourism company or office must apply the rules relevant to its employees and operations.

Budget for the full employment cost: wages, employer social-security contributions, overtime, THR, paid leave and potential end-of-employment payments.

PKWT vs PKWTT: choose the correct arrangement

PKWT is fixed-term employment for legally eligible temporary work. PKWTT is employment without a predetermined end date, commonly described as permanent employment.

An ongoing receptionist position does not become temporary simply because the owner prefers annual contracts. Genuine seasonal or project work may support PKWT, depending on its nature.

Issue	PKWT: fixed-term	PKWTT: indefinite-term
Appropriate use	Eligible temporary, seasonal or defined-completion work	Continuing employment
Duration	Subject to the legal limit; the Constitutional Court clarified a maximum of five years including extensions	No predetermined expiry date
Written form	Must be written in Indonesian using Latin script	Written agreement strongly recommended; lawful oral arrangements require an appointment letter
Probation	Prohibited	May be agreed for a maximum of three months
End of employment	Expiry may trigger statutory PKWT compensation	Termination rights depend on the reason and applicable procedure
Basic protections	Wage, social-security, THR and other applicable rights remain relevant	The same core protections apply

The Constitutional Court’s Decision 168/PUU-XXI/2023 clarified the PKWT duration limit. BPJS Ketenagakerjaan also explains the different probation rules. Do not use a three-month “trial contract” to impose probation within PKWT.

For PKWTT probation, state the arrangement clearly from the outset and pay at least the applicable minimum wage. Probation does not mean unpaid work.

What should the employment agreement include?

Prepare an Indonesian agreement; a consistent English translation can help foreign management understand it.

Include:

The employing company’s legal identity and employee details.
Position, duties, workplace and reporting line.
Start date and appropriate employment status.
For PKWT, the lawful temporary basis and duration or completion condition.
Basic wage, allowances, payment date and permitted deductions.
Working schedule, rest, overtime and leave arrangements.
BPJS, THR and additional benefits.
Conduct, safety, confidentiality and grievance procedures.
Applicable departure arrangements and signatures.

PKWT must also be recorded through the prescribed manpower process. PP 35/2021 provides a three-working-day online registration period after signing, or seven working days through the local manpower office where online recording is unavailable.

Verbal promises can create disputes about wages, start dates and benefits. WhatsApp messages and attendance records may also establish facts that differ from an unsigned template.

Seasonal and daily workers need careful classification

Lombok businesses often need extra people during holidays, weddings or busy diving periods. Extra demand does not automatically justify using temporary contracts for every role.

Daily agreements under PP 35/2021 concern work varying in time and volume, with pay based on attendance. The employee must work fewer than 21 days monthly. Working 21 days or more for three consecutive months triggers conversion to PKWTT under that provision.

Keep actual attendance records. Calling a kitchen employee “casual” while scheduling them continuously creates obvious risk.

Minimum wage: use the correct Lombok location

There is no single wage figure covering every workplace in Lombok.

Check the applicable provincial, regency/city and any relevant sectoral minimum, together with the current governor’s decree. The wage framework was updated by PP 49/2025.

For example, Central Lombok’s manpower office confirms a 2026 UMK of Rp2,741,526 per month, effective 1 January 2026. That figure should not be copied automatically into payroll for West Lombok, North Lombok or Mataram.

Minimum wages generally govern employees with less than one year’s service; longer-serving employees require the applicable wage structure and scale. Do not assume everyone should remain on an identical minimum-wage salary indefinitely.

Separate basic wages and fixed allowances from variable benefits. Tips, meals and accommodation should not casually be used to offset mandatory wage obligations.

Working hours, shifts and overtime

Hospitality operates beyond office hours, but employee schedules still need legal limits.

The standard arrangements are seven hours daily and 40 weekly over six working days, or eight daily and 40 weekly over five days. Ordinary overtime is generally limited to four hours daily and 18 weekly; work on weekly rest days or public holidays has separate treatment.

Plan shifts around actual work: opening preparations, equipment cleaning, guest handovers and closing duties all need attention.

For example, a restaurant roster ending at 10 p.m. is unreliable if staff routinely clean until 11 p.m. Record the finishing time and assess overtime accordingly.

Obtain the required overtime instruction and employee consent, retain the records and apply statutory overtime calculations. A broad “salary includes all overtime” clause is not a dependable solution. Job titles alone do not establish an exemption.

For dive operations, safety training and adequate rest matter alongside payroll compliance. Insurance does not replace safe equipment and working practices.

Leave and employee benefits

Employees generally qualify for at least 12 working days of annual leave after 12 months of continuous service. Record leave entitlements and approvals rather than relying on memory.

Weekly rest, public holidays, sickness and legally protected family-related absences require separate treatment. Do not deduct every absence from annual leave.

Maternity rights also require current advice under the employment framework and Law 4/2024 on maternal and child welfare, including additional leave in qualifying medical circumstances. Prepare cover for the role without pressuring the employee to resign.

BPJS Kesehatan and BPJS Ketenagakerjaan

Register employees correctly

BPJS for a foreign company in Indonesia is an employer compliance obligation, not simply an optional benefit.

BPJS Kesehatan administers national health coverage. Employers must register eligible employees under the appropriate wage-earner arrangement and provide accurate employee, family and wage information. An existing personal or subsidised membership needs checking; it does not automatically remove the employer’s responsibility.

BPJS Ketenagakerjaan covers employment-related programmes, including:

JKK: occupational accident protection.
JKM: death benefits.
JHT: old-age savings.
JP: pension protection.
JKP: unemployment protection, subject to eligibility.

Programme participation and contribution calculations depend on applicable requirements. JKK risk classification is particularly important for businesses involving boats, diving equipment or machinery.

Build contributions into payroll

For JHT, BPJS states an employee contribution of 2% and employer contribution of 3.7% of the applicable monthly wage base. Other programmes have different contribution arrangements, ceilings or risk categories.

Obtain current calculations for both BPJS systems before setting payroll deductions. Do not shift the employer’s share onto employees or delay registration until probation ends.

Reconcile employee lists, reported wages, contributions and payment confirmations monthly.

THR: budget before the holiday arrives

THR is the mandatory religious holiday allowance, separate from a discretionary performance bonus.

The government’s 2026 guidance confirms:

Eligibility from one month of continuous service.
One month’s wage for at least 12 months’ continuous service.
Proportionate payment for service of at least one but less than 12 months.
Full payment no later than seven days before the relevant religious holiday.

The proportionate calculation is months of service divided by 12, multiplied by the applicable one-month wage. Daily workers have specific wage-averaging rules.

An illustrative restaurant employee with six months’ service and a qualifying monthly wage of Rp4 million would receive Rp2 million THR.

For THR Indonesia employer budgeting, reserve funds throughout the year. Low occupancy is not a reason to turn a mandatory payment into an optional bonus.

Payroll records and employee income tax

Good payroll for an Indonesian PT PMA should reconcile with attendance, contracts, bank payments and tax filings.

Keep a monthly record of:

Basic wages and allowances.
Overtime, bonuses, THR and relevant taxable benefits.
Employee deductions and employer contributions.
PPh 21 withholding.
Net pay, payslips and payment evidence.

Use bank transfers where practical. If paying cash, obtain a dated acknowledgement matching the payslip.

Under PMK 168/2023, regular employee withholding generally uses the applicable effective rate during ordinary tax periods, with reconciliation using annual income-tax rules in the final period. Daily or irregular workers may require different calculations.

Collect accurate identity and tax details, issue withholding evidence and complete the applicable reporting.

Resignation, expiry and termination

Contract expiry is not always cost-free

Eligible Indonesian PKWT employees are entitled to statutory compensation. Early termination can also create additional obligations, so distinguish expiry from ending a contract prematurely. Kemnaker confirms compensation based on service actually completed when a PKWT ends early.

Resignation needs a clear record

Obtain a voluntary written resignation, review the applicable notice requirements and calculate outstanding entitlements. Handover arrangements should be documented.

Do not pressure employees to sign resignation letters to disguise an employer-initiated dismissal. Resignation, redundancy and misconduct can produce different payment consequences.

Disciplinary problems require a fair process

Document attendance, performance concerns, instructions and warnings under the applicable rules. Investigate allegations and let the employee respond.

For disputed termination, the Constitutional Court clarified that unsuccessful bipartite negotiations must proceed through the industrial-relations dispute mechanism, with termination requiring a final binding determination. Continuing obligations during that process need specific advice.

Severance, service awards and compensation depend on the legal reason, service, wage basis and current law. Avoid generic internet formulas.

Common mistakes when hiring staff in Lombok

Avoid these recurring problems:

Using PKWT for ongoing roles without a lawful basis.
Adding probation to fixed-term contracts.
Delaying BPJS registration.
Forgetting THR and contract-end compensation.
Ignoring actual overtime.
Paying undocumented cash salaries.
Treating tips as a substitute for legal wages.
Assuming foreign ownership changes employee protections.

Before the first shift, have the contract, BPJS process, roster and payroll instructions ready. Review them whenever roles or operating hours change.

FAQ

Can a small villa hire informally?

Small headcount does not erase employment obligations. Written terms and reliable records remain valuable.

Do seasonal employees qualify for THR?

They can, if they meet the relevant eligibility requirements. Temporary status alone does not exclude them.

Can staff agree to waive BPJS or overtime?

Do not rely on agreements waiving mandatory protections. Apply the relevant legal requirements.

Should I use a local employment adviser?

For contract classification, disputed departures or unusual shifts, qualified advice and coordination with the relevant manpower office can prevent costly mistakes.