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An Indefinite Employment Agreement

The previous article has been discussed about employment agreement for a definite period of time, now this article will discussed about employment agreement for an indefinite period of time. Under Article 1 number 14 of Law Number 13 of 2003 on Labor (“Labor Law”), an (individual) employment agreement shall be defined as an agreement made between anemployee and an entrepreneur or an employer. The agreement specifies the work requirements, rights, and obligations of both sides.

Under article 1 number 2 Kepmenakertrans 100/2004, an employment agreement for an indefinite period of time (“PKWTT”)is an employment agreement made between an employee and an entrepreneur or an employer for a permanent job.


PKWTT may be in writing or verbally and the work agreement is not compulsory to get a ratification from a related labor institution. In the event that PKWTT is made verbally, then the clauses that are applicable between worker and employer are clauses that are regulated in Labor Law.

PKWTT may require a probation period for no longer than 3 (three) months. During the probation period the entrepreneur is obliged to pay the wages, and the wages cannot be less than the applicable minimum wage.

According to Kepmenkertrans 100/2004, in Article 15, PKWT can be changed into PKWTT if:

  1. PKWT which is not made in Indonesian language and Latin alphabetsischanged into PKWTT since an employment relation has begun.
  2. If PKWT does not fulfill provisions as set out in the requirements of type of work, then PKWT is changed into PKWTT since an employment relation has begun.
  3. If PKWT is implementedfor a job that is related to a new product deviates from the conditions of the extension term, then PKWT is changed into PKWTT since the deviation has occurred.
  4. In the event that the renewal of PKWT does not pass the grace period of 30 (thirty days) after the expiryof extension of PKWT and it is not agreed otherwise, then PKWT is changed into PKWTT since the requirements of PKWT arenot fulfilled.
  5. In the event that the entrepreneur terminates an employment relation against its employee through PKWT employment relation as set out in number (1), number (2), number(3), and number (4), then the labor’s right and the settlement procedure is implemented in accordance with the prevailing regulations for PKWTT.

Maria Amanda

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