Трудовые договоры в Индонезии: Всеобъемлющий обзор
As business owner of a PT PMA or foreigner working in Indonesia, the working contract in Indonesia is governed by the Government Regulation No. 35 of 2021, known as GR 35/2021. The law identifies two primary types based on the nature of work: the Fixed-Term Employment Agreement (PKWT) and the Indefinite Time Employment Agreement (PKWTT). Employment contracts in Indonesia play a pivotal role in providing clarity on rights, obligations, and legal protection, especially in the context of employment termination. It is also essential before applying for a working visa to understand the employment rules. What is an employment contract? How is it in Indonesia? An employment contract is a bilateral agreement, typically a private one, between two parties, one of whom (the employer) is in a position of authority over the other (the employee). This relationship is codified in a document called a “work contract.” This is important because, if no formal contract has been signed, a person in that relationship can literally argue that their agreement is a work contract and recast it accordingly. Indonesia regulates the working relations with the Ministry of Law and Human Rights and the Deputy Ministry of Kemnaker. A working contract in Indonesia has to follow some provisions but in general both parties can define clauses as much as they want as long as they are in line with the manpower law. A working contract in Indonesia can refer to the company regulation if this one has been approved by the ministry. The working contract defines the relation and how parties will interact to each other and their rights and obligations during the duration of the contract. Never worry about taxes and accounting again Dealing with finances, taxes, and accounting can feel overwhelming, especially as a foreigner in Indonesia. Let us guide you through processes like tax calculation, payroll, personal or corporate tax, short-term investments, balance sheet analysis and much more. With ILA by your side, nothing can go wrong. Schedule a free consultation today or learn more about our tax and accounting services. Key Requirements for Working Contract in Indonesia Apart from complying with Article 1320 of the Criminal Code, formulating an employment contract must adhere to specific provisions outlined in Law 13/2003. These include mutual agreement, legal capacity, a specified job, and alignment with public order, decency, and applicable laws. Types of Working Contracts in Indonesia Fixed-Term Working Contract (PKWT) PKWT, often utilized for time-bound projects, is a written agreement registered with the manpower office. It is valid for a maximum of five years or until project completion. If the work extends beyond the contract period, an extension can be agreed upon, not exceeding an additional five years. GR 35/2021 mandates compensation to employees at the conclusion of the working period. Indefinite Time Working Contract (PKWTT) In contrast, PKWTT establishes a permanent employment relationship, applicable to all types of work. Unlike PKWT, PKWTT can be made verbally, with no mandatory registration. If an oral agreement is reached, the employer must issue a written letter of appointment to the employee. Differentiating PKWT and PKWTT The distinctions between PKWT and PKWTT are notable, particularly post the enactment of the 2020 Job Creation Law. A summarized table based on GR 35/2021 highlights differences in terms of the type of work, working period, agreement form, registration, and termination of employment relations. Difference PKWT PKWTT Type of work Limited to specific non-permanent jobs Not limited; encompasses both permanent and non-permanent roles Working period Limited, based on a maximum of 5 years or task completion Unlimited Agreement form Must be written Written or oral (accompanied by a letter of appointment) Registration at Ministry Mandatory within 3 days of signing PKWT Not mandatory Termination of Employment Ends by law at the completion of work or task Either party can terminate; compensation based on PKWT period elapsed Probationary period Not allowed Allowed, with a maximum of 3 months Compensation for Termination PKWT compensation; Article 62 of Law 13/2003 Severance pay, service reward, compensation for rights, or severance pay Essential Elements in Employment Contract in Indonesia According to GR 35/2021, PKWT must include company details, employee information, job specifics, wages, rights and obligations, validity period, and signatures of both parties. PKWTT, as per Law 13/2003, should encompass company details, employee information, job specifics, wages, working conditions, agreement details, and signatures. The Significance of a Written Employment Contract in Indonesia An employment contract is an important document because it clearly defines the rights and obligations of both parties and provides legal certainty by serving as a main reference in the event of disputes. Its significance lies in ensuring clarity on individual rights and duties, legal protection, minimizing potential conflicts, and adhering to agreed-upon terms. Conclusion: Candidates need to careful about what they are signing and whether in these employment contracts all the terms are clearly understood before signing the across as employment contracts are important forms of legal protection for both employee and employer. Understanding their implications well paves the way for a more equally matched and legally protected relationship in the workplace in Indonesia. Special Considerations for Foreign Workers: Temporary Employment Contracts in Indonesia Working Contract for Foreigners in Indonesia and Bali In line with the previously discussed types of contracts contingent on job nature, a distinct provision exists for foreign workers in Indonesia. As stipulated by Article 42 of the Manpower Law, employment contracts for foreign employees must specifically be temporary in nature. In essence, this implies that expatriates are restricted from assuming permanent positions within the Indonesian workforce. However, avenues for further employment with different companies become viable once the existing contract concludes. Position Limitations for Expatriates Moreover, the scope of positions available for expatriates is constrained. As outlined in the Ministry of Manpower Regulation No. 228 of 2019, specific positions are permissible for expatriates. Foreigners cannot conduct any kind of job in any business sector. Some sector are prohibited to foreigners. We recommend checking with ILA or HR which job positions are available for foreigners if you consider working in Bali