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Definite Employment Contract for Indonesia

Definite Employment Contract Template for Indonesia

A Definite Employment Contract (PKWT) is a fixed-term employment agreement governed by Indonesian labor law, specifically Law No. 13 of 2003 as amended by the Job Creation Law (Omnibus Law) No. 11 of 2020 and its implementing regulations. This contract establishes a formal employment relationship for a specified period between an employer and employee, detailing terms and conditions including job responsibilities, compensation, working hours, and duration of employment. The agreement must comply with strict Indonesian regulatory requirements regarding fixed-term employment, including limitations on contract duration, renewal terms, and types of work that can be performed under such arrangements.

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What is a Definite Employment Contract?

The Definite Employment Contract (PKWT) is a fundamental document in Indonesian employment law, designed for temporary or fixed-term employment arrangements. This type of contract is specifically regulated under Law No. 13 of 2003 on Manpower and subsequent regulations, which stipulate that it can only be used for work that will be completed within a specific timeframe, seasonal work, or work related to new products or activities still in trial phase. The contract must be written in Indonesian language and include essential provisions regarding employment terms, compensation, duties, and duration. It's crucial to note that Indonesian law places strict limitations on the duration of fixed-term contracts (maximum 5 years including renewals) and the types of work that can be performed under such arrangements. This document serves as a legally binding agreement that protects both employer and employee rights while ensuring compliance with local labor regulations.

What sections should be included in a Definite Employment Contract?

1. Parties: Identification of the employer and employee with complete legal names and addresses

2. Background: Brief context of the employment relationship and basis for the fixed-term contract

3. Definitions: Definitions of key terms used throughout the agreement

4. Term of Employment: Specific duration of the contract, including start and end dates, in compliance with Indonesian labor law limitations

5. Position and Duties: Details of the employee's role, responsibilities, and reporting relationships

6. Place of Work: Location(s) where the employee will perform their duties

7. Working Hours: Standard working hours, rest periods, and overtime arrangements in accordance with labor laws

8. Compensation and Benefits: Salary, allowances, bonuses, and other benefits, including payment terms and methods

9. Leave Entitlements: Annual leave, sick leave, religious holiday leave, and other statutory leave entitlements

10. Confidentiality: Obligations regarding company confidential information and trade secrets

11. Intellectual Property: Ownership and rights regarding work-related intellectual property

12. Performance Evaluation: Process and timing of performance reviews

13. Termination: Grounds and procedures for contract termination

14. Post-Employment Obligations: Obligations that continue after employment ends

15. Governing Law: Specification of Indonesian law as governing law

16. Dispute Resolution: Procedures for resolving employment-related disputes

17. Entire Agreement: Statement that the contract represents the complete agreement between parties

18. Execution: Signature blocks and execution requirements

What sections are optional to include in a Definite Employment Contract?

1. Probationary Period: Details of any probationary period (Note: not legally allowed for PKWT but sometimes incorrectly included)

2. Mobility Clause: Terms regarding potential workplace relocation or travel requirements

3. Non-Competition: Restrictions on working for competitors (if applicable and enforceable)

4. Training Requirements: Specific training obligations and commitments

5. Company Policies: Reference to and incorporation of specific company policies

6. Safety and Health Protocols: Specific health and safety requirements, particularly relevant in certain industries

7. Remote Working Arrangements: Terms for any work-from-home or remote working provisions

8. Commission Structure: Detailed commission terms for sales or similar roles

9. Language Provision: For bilingual contracts, specification of prevailing language

What schedules should be included in a Definite Employment Contract?

1. Schedule 1 - Job Description: Detailed description of roles, responsibilities, and key performance indicators

2. Schedule 2 - Compensation Details: Breakdown of salary components, allowances, and benefits

3. Schedule 3 - Working Hours Schedule: Detailed working hours, shift patterns if applicable

4. Schedule 4 - Company Policies: Key company policies that form part of the employment terms

5. Schedule 5 - Confidential Information: Detailed list of what constitutes confidential information

6. Appendix A - Required Documents: List of documents required from employee (certifications, ID copies, etc.)

7. Appendix B - Employee Benefits Summary: Detailed description of all employee benefits and eligibility criteria

8. Appendix C - Statutory Declaration: Employee's declaration of compliance with employment requirements

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Indonesia

Publisher

Ƶ

Cost

Free to use
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Manufacturing

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Industries






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Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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