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Probation and Its Legal Basis in Indonesia
Discover probation details in Indonesia, its legal foundation under the law, and its impact on extending contracts, permanent employment, or termination decisions.
Updated Jul 18, 2024
Probation and Its Legal Basis in IndonesiaIf you're involved in Human Resources or Talent Acquisition, you probably already know about probation or trial periods. Probation is a mandatory period for newly recruited employees to assess their capabilities at work.
Many companies implement probation policies to assess the fit between candidates and their new roles. For them, probation is crucial as it can influence decisions on long-term employment.
Probation cannot be conducted arbitrarily. You must consider the legal basis of probation applicable in Indonesia. Let's dive into this article!
What is Probation?
During probation, newly recruited and promoted employees demonstrate their abilities and adaptability to new roles. It assesses their performance and ability to align with company culture and expectations.
Additional training, supervision, and feedback aid in their adjustment. Post-probation, performance evaluations determine contract extension, permanent employment, or termination.
Legal Basis of Probation
Probation is regulated under Law Number 13 of 2003 concerning Manpower. Essentially, probation is not mandatory for companies to implement. However, companies can apply probationary periods to both new and permanent employees as long as there is a contract or agreement between both parties.
It's important to note that probation for employees under Fixed-Term Employment Agreements (PKWT) differs from those under Permanent Employment Agreements (PKWTT). Contract or PKWT employees do not have probationary periods as stipulated in Article 58 paragraph (1) of Law No. 13/2003 on Manpower, unlike PKWTT employees.
PKWTT employees are also not required to undergo a probationary period. This means if a company wishes to implement probation, it must be included in the contract agreed upon by both parties.
During probation, employees are entitled to receive wages according to the prevailing minimum wage. In addition to the minimum wage, companies must also provide THR (Religious Holiday Allowance) to probationary employees as stipulated in Article 2 paragraph (1) of Minister of Manpower Regulation No. 6/2016 concerning Religious Holiday Allowance for Workers in Companies.
How Long Can a Company Set Probation Periods?
Companies determine their probation periods, often 3 or 6 months. Yet, under Article 60 (1) of the Manpower Law, PKWTT employees can only undergo a maximum 3-month probation. Extending beyond this invalidates probation; the employee then gains permanent status if terminated, entitling them to full rights.
Does the Company Have to Pay Employees During Probation?
Yes, the company is obliged to pay employees during probation, in accordance with Article 90 paragraph 1 of the Manpower Law. The wage amount set must not be lower than the regional minimum wage, whether provincial or district/city. Failure to fulfill this obligation may result in criminal sanctions or fines.
Employees are also entitled to receive Religious Holiday Allowance (THR) if they have worked continuously for more than 1 month. This obligation is regulated in Minister of Manpower Regulation No. 6/2016 concerning Religious Holiday Allowance for Workers in Companies.
Does the Company Have to Pay Compensation when Terminating Employees during Probation?
The company's compensation obligation to terminated probationary employees depends on their contract status. For PKWT contracts, the company must pay one month's remaining wages and compensation. This obligation excludes terminations due to:
- The employee has died.
- The period of the employment agreement has ended.
- The specific work has been declared finished.
- There is a court decision or industrial relations dispute settlement institution that has legal force.
Specific circumstances or events in the employment agreement, company regulations, or joint employment agreements can lead to termination. For PKWTT employees terminated during probation due to failure to meet expectations, the company ends the contract without severance pay or compensation.
If terminating a PKWT employee before 3 months for other reasons, the company compensates with wages up to 1 month until the contract ends. Conversely, terminating a PKWTT employee after the contract's end doesn't require severance pay or compensation.
What are the Rights and Obligations of Employees during Probation?
Employees undergoing probation have rights and obligations that must be fulfilled. As Human Resources, make sure you understand the probationary employee's rights and obligations below.
Employee Rights during Probation
The rights of probationary employees are not much different from those of permanent employees. Employees in probationary periods are entitled to receive basic wages with a minimum nominal equivalent to the regional minimum wage.
Additionally, they are entitled to receive fixed or non-fixed allowances according to applicable regulations. Failure to fulfill these rights may result in criminal penalties with imprisonment for approximately one to four years or a fine of IDR 400 million.
Furthermore, companies are required to provide Religious Holiday Allowance (THR) to employees who have worked continuously for one month or more.
Probationary Employee Obligations
Employees undergoing probation have an obligation to meet targets or Key Performance Indicators (KPIs) established by the company. Employee performance is assessed based on predefined parameters. These KPIs must be communicated so that employees have clear targets in their work.
If employees successfully meet KPIs and company expectations during probation, they are likely to be promoted to permanent employees. Conversely, if employees do not meet the established standards, the company has the right to terminate the PKWTT contract after probation ends. In this case, the company is not obligated to provide severance pay or compensation money.
Probation has a strong legal basis in Indonesia, especially regarding compensation. Therefore, it's essential to understand the compensation, rights, and obligations of probationary employees before recruiting them.
FAQ About Probation in Indonesia
How long can probation last?
Probation can only be applied to permanent employees ("PKWTT") or regular employees, with a maximum duration of 3 months.
Is probation the same as a contract?
Essentially, probation and a contract are not the same. Probation is a trial work period. This means that during probation, you will be evaluated deeply regarding your quality and performance. Of course, this is different from a contract.
Does probation receive full pay?
Of course, yes. Every worker is entitled to receive wages for their work. Regarding the amount of salary given to employees who are still in probation, it is regulated in Article 60 Paragraph 2 of the Manpower Law, where companies are prohibited from giving salaries below the applicable minimum wage.
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Lavtania
Digital Marketing Executive at Epicareer
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