What are the regulations on annual leave in Indonesia?

Annual leave is a fundamental right for employees in Indonesia, providing time for rest and recovery away from work. Understanding the rules and regulations around annual leave ensures both employers and employees are in compliance with labor laws and company policies.


Annual Leave Entitlement

  1. Minimum Leave Entitlement:

    • Employees in Indonesia are entitled to a minimum of 12 days of annual leave after completing 12 months of continuous service with the same employer.

  2. Extended Leave Entitlement:

    • After 6 years of continuous employment with the same employer, employees are entitled to 1 month of annual leave for their 7th and 8th years of service.

  3. Standard Leave Entitlement:

    • While the legal minimum is 12 days, the standard practice among many employers is to offer 15 days of annual leave per year.


Accrual of Annual Leave

  • First Year of Employment: During the first year, annual leave is typically pro-rated based on the employee's start date and the number of months worked.
  • Second Year Onwards: Employees are entitled to the full number of days of annual leave starting from their second year of employment.


Carrying Over Accrued Leave

  • Accrued Leave: Employees may accumulate unused annual leave and carry it over to the next year. However, it is essential to understand the company's policy on the expiration and use of accrued leave.
  • Expiration of Leave: If accrued leave is not taken within 6 months after it is earned, it may expire. The expiration can occur after the first quarter (Q1) of the following year, or according to the specific company policy.


Company Policy on Unused Leave

  • No Obligation to Extend or Cash Out: Employers are not legally obligated to extend the right to unused leave beyond the expiration period or to provide a cash payout for unused leave unless explicitly stated in the employment agreement (EA).
  • Flexibility in Practice: Companies may have different policies on the management of accrued leave, so it is crucial for employees to review their employment agreements and company handbooks for specific details.

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