Recruitment in Indonesia: Getting the Right Candidate Is Only Half the Problem

Finding qualified talent in Indonesia is achievable. The harder part is ensuring that the hiring process, employment contract structure, workforce reporting, and data handling are all compliant with Indonesian manpower regulations from the moment a candidate accepts an offer. XPND manages recruitment as a complete compliance and placement service so your company does not inherit risk alongside its new hires.

Where Companies Run Into Trouble

Recruitment problems in Indonesia rarely surface during the hiring process. They surface afterward, when the employment relationship is already established and the compliance gaps become visible.

You have been using an informal recruitment vendor or individual headhunter to source candidates. The placements have been working operationally, but the arrangement is not documented in a way that satisfies Indonesian employment law, and the workforce data has not been reported to the Ministry of Manpower. If audited, the company cannot demonstrate that its hiring process met regulatory standards.

You hired a senior manager on a fixed-term employment contract (Perjanjian Kerja Waktu Tertentu or PKWT) because the role was framed as project-based. Under Government Regulation (Peraturan Pemerintah or PP) No. 35 of 2021, the conditions for a valid PKWT are specific: the work must be completed within a defined period or be seasonal or trial in nature. Using a PKWT for what is substantively a permanent role creates a legal obligation to convert the contract and pay compensation that was never budgeted.

During the hiring process, your team collected candidate CVs, identification documents, and reference check information. Under Law No. 27 of 2022 on Personal Data Protection (Undang-Undang Perlindungan Data Pribadi or UU PDP), the collection, processing, and storage of candidate personal data requires a lawful basis, defined retention periods, and appropriate security measures. Most companies do not have a documented candidate data management process.

You sourced a candidate through an online job platform and the platform charged the candidate a fee for premium visibility or application processing. Under Minister of Manpower (Peraturan Menteri Ketenagakerjaan or Permenaker) Regulation No. 18 of 2024, all placement-related costs must be borne by the employer. Any arrangement where candidates pay fees creates compliance exposure for both the platform and the hiring company.

Your new employee started and you have not yet updated your Mandatory Employment Report (Wajib Lapor Ketenagakerjaan Perusahaan or WLKP). Under Law No. 7 of 1981 on Mandatory Employment Reporting, every company must report workforce changes through the SIAPkerja system. Failure to maintain current WLKP data carries administrative penalties and affects the company’s compliance profile with the Ministry of Manpower.

All of these are situations that could have been structured correctly from the beginning if the recruitment process had been managed with the regulatory framework in mind from day one.

Tell us about the role, the timeline, and any compliance concerns you have. We will give you a clear picture of the right approach.

The Regulatory Framework That Shapes Recruitment in Indonesia

Recruitment and workforce placement in Indonesia is governed by a layered regulatory framework that has been significantly updated since 2021.

The Job Creation Law and its implementing regulations form the current primary framework for employment relationships. Law No. 6 of 2023 on Job Creation and Government Regulation or PP No. 35 of 2021 establish the rules for fixed-term contracts, permanent employment, outsourcing arrangements, working hours, and termination. The distinction between contract types is material because it determines severance obligations, conversion rights, and the legality of the employment arrangement as a whole.

Minister of Manpower Regulation No. 18 of 2024 on Domestic Workforce Placement updated the framework governing how workforce placement activities are conducted in Indonesia. The regulation formalizes the Employer Pays Model, prohibiting any arrangement where placement or recruitment costs are charged to candidates. It also addresses the integration of placement services with the SIAPkerja digital ecosystem operated by the Ministry of Manpower under Minister of Manpower Regulation No. 17 of 2024.

The SIAPkerja platform, established under Minister of Manpower Regulation No. 17 of 2024, is now the centralized digital ecosystem for all manpower-related activities including job placement, workforce reporting, training programs, and industrial relations services. Since May 2025, job seeker registration on SIAPkerja is mandatory for participation in job fairs and government employment programs. Workforce data reported through WLKP is processed through the same platform.

Law No. 27 of 2022 on Personal Data Protection applies to the handling of candidate information during the recruitment process. This includes the collection of CVs, identity documents, and reference data. Companies that collect candidate personal data without a documented lawful basis, defined retention periods, or appropriate security measures are in violation of the PDP Law regardless of whether a hire is ultimately made.

Fixed-Term vs Permanent Employment: The Contract Decision That Has Downstream Consequences

One of the most consequential decisions in the hiring process is whether to offer a fixed-term contract or a permanent employment agreement. This decision is not simply a commercial preference. Under PP No. 35 of 2021, the use of a fixed-term employment contract or PKWT is legally valid only for specific categories of work.

A PKWT may be used for work that will be completed within a defined period not exceeding five years, work that is seasonal or cyclical in nature, or work that is supplemental and not part of the company’s core production or service activities.

A PKWT may not be used for permanent roles, core operational functions, or positions where the work is ongoing rather than project-bound. A company that structures what is substantively a permanent role as a PKWT faces a legal conversion obligation and may be liable for severance and long service entitlements as if the employee had been on a permanent contract from the start.

XPND advises on contract type before the offer is made, not after the employee has already started on the wrong contract structure.

Candidate Data and the PDP Law Obligations During Recruitment

Most companies treat candidate data as informal and temporary. The Personal Data Protection Law does not.

Under Law No. 27 of 2022, any personal data collected from candidates including name, identification number, contact details, educational records, and employment history is subject to the same data protection obligations as any other personal data. The company must have a lawful basis for collecting it, must inform the candidate of the purpose and retention period, must store it securely, and must delete it when the retention period ends or when the purpose is no longer relevant.

In a typical recruitment process, companies collect significant amounts of candidate data from applicants who are not hired. This data is often retained indefinitely in email archives or HR systems without any documented retention policy. If a data subject requests deletion or makes a complaint, the company must be able to demonstrate that it had a proper legal basis for retention.

XPND structures the candidate management process to be PDP-compliant from initial contact through to either onboarding or data deletion, so the recruitment process does not create residual data liability.

Recruiting multiple candidates and not sure your data handling is compliant? Let XPND review the process.

MoM Circular on Diploma Withholding: A Practice That Must Stop

Minister of Manpower Circular Letter No. M/5/HK.04.00/V/2025 explicitly prohibits employers and recruitment service providers from withholding employees’ diplomas or personal documents as a form of employment bond or security. This practice, which has been common particularly in certain industry sectors, is now formally prohibited under ministerial guidance.

Companies that have existing employees whose documents are being held, or recruitment vendors that practice document retention as part of their placement arrangements, carry direct compliance exposure under this circular. XPND does not practice document retention and screens placement partners for compliance with this requirement.

What XPND Covers in the Recruitment Process

Position scoping and contract structure advisory 

Before sourcing begins, XPND reviews the role description, reporting structure, and employment duration to confirm the appropriate contract type and ensure the position description aligns with the company’s KBLI registration. This prevents the contract structure problems that surface after onboarding.

Candidate sourcing and structured assessment 

XPND sources candidates through professional networks, direct approach, and the SIAPkerja ecosystem. Assessment is structured and documented, including competency mapping against the role requirements. All sourcing and assessment costs are borne by XPND as the service provider, not charged to candidates.

PDP-compliant candidate data management 

Candidate data is collected, processed, and stored under a documented legal basis consistent with Law No. 27 of 2022. Candidates who are not selected have their data deleted according to defined retention schedules. The company’s exposure from candidate data handling is managed within the recruitment process rather than left as residual liability.

Employment contract preparation 

XPND prepares employment contracts that reflect the correct contract type, probation terms, compensation structure, and statutory entitlements under PP No. 35 of 2021. Contracts are drafted in Bahasa Indonesia as required under Indonesian employment law for domestic placements.

WLKP and SIAPkerja workforce reporting 

After each placement, XPND manages the WLKP update through the SIAPkerja platform to ensure the company’s mandatory employment report reflects the new hire within the required reporting window. This keeps the company’s Ministry of Manpower compliance profile current.

Ready to start a search or need to restructure an existing hiring arrangement? Talk to our team.

Why Recruitment

For a company entering or expanding in Indonesia, getting recruitment right at the start has compounding value. An employee who was hired with the correct contract structure, whose data was handled properly, and whose placement was reported correctly to the Ministry of Manpower is an employee whose relationship with the company starts on a clean legal foundation.

The companies that invest in getting this right at the sourcing stage consistently face fewer employment disputes, smoother audits, and simpler workforce restructuring when business needs change. The ones that cut corners on process or use non-compliant vendors spend significantly more time and money resolving the compliance gaps that accumulate over multiple hire cycles.