The Manpower Law recognizes two principal types of employment contracts: the Indefinite-Term/Permanent Employment Agreement (Perjanjian Kerja Waktu Tidak Tertentu or "PKWTT")...

Employment Contract / Alternatives

• The Manpower Law recognizes two principal types of employment contracts: the Indefinite-Term/Permanent Employment Agreement (Perjanjian Kerja Waktu Tidak Tertentu or "PKWTT") and the Fixed-Term Employment Agreement (Perjanjian Kerja Waktu Tertentu or "PKWT"). The core distinction between these contract types lies in their duration, the nature of the employment, and the legal consequences upon termination.
• A PKWTT, is a permanent employment agreement not limited in duration or type of work. It may include a probationary period of up to three months and can be executed in either written or oral form. For a PKWTT, a formal written agreement is not mandatory; a simple letter of appointment is sufficient to establish the employment relationship.
• In contrast, a PKWT is a fixed-term employment agreement intended for work that is temporary in nature, either limited by time or tied to the completion of a project. The maximum duration of a PKWT is five years, including any p ermissible extensions

Probation Period

• Only an employee under a PKWTT contract may be placed on probation, with a maximum period of three months. This period cannot be extended or repeated. During the probationary period, the employer must pay a wage above the applicable minimum wage. The employer...

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