Indonesian Employment Contracts – PKWT is an abbreviation for Perjanjian Kerja Waktu Tertentu (specific time employment agreement). Whereas PKWTT is Perjanjian Kerja Waktu Tidak Tertentu (indefinite time employment agreement).

According to Article 1 number 14 of Law No. 13 of 2003 concerning Manpower (Manpower Act), “Employment Agreement is an agreement between workers / laborers and employers or employers that contains the terms of work, rights, and obligations of the parties.” From this employment agreement arises an employment relationship between employers and workers / laborers who have elements of work, wages, and orders.

According to Article 51 of the Manpower Act, the employment agreement must at least contain:

  1. name, address of the company, and type of business
  2. name, sex, age, and address of the worker / laborer 
  3. job title or type of work
  4. place of work
  5. the amount of wages and the method of payment
  6. terms and conditions that contain the rights and obligations of employers and workers
  7. starting and the period of validity of the employment agreement
  8. the place and date the employment agreement was made
  9. the signatures of the parties to the employment agreement

PKWT employment agreement have a legal basis in the form of Minister of Manpower and Transmigration Decree No.100 / MEN / IV / 2004. According to the regulation, the Specific Time Employment Agreement or PKWT is an agreement between the worker / laborer and the employer to establish a work relationship within a specific time or for certain workers.

Also according to the rules, companies cannot apply PKWT status to all jobs. That means only a few jobs are permitted for employees with PKWT status. PKWT employment contracts may only be used for temporary work. PKWT has a maximum validity period of three years. After its end, PKWT can still be renewed after a grace period of 30 days.

In contrast to PKWT, PKWTT employment contracts may be enforced for jobs that are continuous, uninterrupted, not limited by time, and become part of the production process. In other words, employees who agree with PKWTT are permanent employees. While PKWT employees are contract employees.

Difference between PKWT and PKWTT :

Items PKWT PKWTT
Time Limited time or completion of work There is no time limit until retirement age or workers die
Termination Dismissal by law (automatically null and void) as stated in the agreement, does not have to go through the LPPHI process Layoffs for some reason must go through the LPPHI (Industrial Relations Dispute Settlement) process
Obligations When Layoff Layoffs in accordance with the agreed time, there is no obligation of the company to pay severance pay and work period reward money layoffs occur, employers must provide payment (except for certain layoffs)
Probation There cannot be a probation period. If enforced, probation is null and void (legally invalid) Probation period allowed
Employment Agreement Agreements must be written in Latin letters, in Indonesian Agreements can be written or verbal
Documentation Must be registered at the Manpower agency Not required to be registered

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