The differences between PKWT and PKWTT are important aspects that every employee and employer must understand before signing a work contract. Both are types of legal employment agreements under Law Number 13 of 2003 on Manpower.
Understanding these differences is crucial to prevent misunderstandings in the employment relationship, especially regarding legal protection and job security. So, let’s dive into the discussion below!
The Importance of Understanding Types of Employment Contracts
For both companies and employees, understanding the type of employment contract is a crucial first step in building a fair, safe, and legal working relationship.
The type of employment agreement not only determines the length of employment but also affects rights such as social security, leave entitlements, severance pay, and the potential for termination of employment (PHK).
Mistakes in choosing the right contract type or lack of understanding of applicable laws can result in administrative sanctions for the company or the loss of rights for the employee.
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7 Key Differences Between PKWT and PKWTT
To avoid confusion in understanding work arrangements, here are seven detailed differences between PKWT and PKWTT you should know:
1. Definition
PKWT (Perjanjian Kerja Waktu Tertentu) is a fixed-term employment agreement between a company and an employee. This means the employment relationship has a set end date as agreed at the start. PKWT is typically used for temporary or seasonal work.
PKWTT (Perjanjian Kerja Waktu Tidak Tertentu) is an indefinite-term employment agreement. This type applies to permanent employment, where the employee is appointed as a permanent staff member without a predetermined end date.
2. Contract Duration
PKWT has a maximum duration of 5 years, including extensions and renewals, in accordance with Government Regulation Number 35 of 2021.
PKWTT has no fixed duration as it is permanent. Employees under PKWTT can work continuously unless they resign or are terminated in accordance with legal procedures.
3. Employment Status
Under PKWT, employees are considered contract workers. They are not permanent employees and their rights are limited to the agreed contract term.
Under PKWTT, employees are permanent staff entitled to full benefits, legal protection, and social security. This status provides greater job stability and security.
4. Type of Work Allowed
PKWT applies only to certain types of work that are temporary, seasonal, project-based, or expected to be completed within a certain period. Examples include construction work, seasonal harvesting, or project-based assignments.
PKWTT applies to permanent, ongoing positions in a company, such as administrative, finance, customer service, or managerial roles.
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5. Probation Period
Under the law, PKWT contracts cannot include a probation period. If a probation clause is included, it is considered null and void by law.
For PKWTT, a probation period of up to 3 months is allowed. This is used by companies to assess employee performance before confirming them as permanent staff.
6. Contract Validity
PKWT contracts must be in writing, in Indonesian, and use the Latin alphabet. If these requirements are not met, the contract is deemed invalid and automatically converts to a PKWTT.
PKWTT contracts must also be in writing, but the technical requirements are less strict. However, both PKWT and PKWTT contracts must be signed by both parties to be legally valid.
7. Termination of Employment (PHK)
Under PKWT, employment ends automatically when the contract expires. Employees are not entitled to severance pay but may receive compensation based on their length of service.
Under PKWTT, termination must follow official legal procedures. Employees are entitled to severance pay, a long-service award, and compensation for other rights in accordance with labor laws.
Summary Table of Differences:
|
No. |
Aspect |
PKWT (Fixed-Term Contract) |
PKWTT (Indefinite-Term Contract) |
|
1 |
Definition |
Employment for a set period, usually for temporary or seasonal work. |
Employment with no fixed term; permanent employee status. |
|
2 |
Contract Duration |
Max. 5 years (including extensions) as per PP No. 35/2021. |
No time limit; valid until resignation or lawful termination. |
|
3 |
Employment Status |
Contract worker, not permanent staff. |
Permanent employee with full rights and legal protection. |
|
4 |
Type of Work |
Only for temporary, seasonal, project, or short-term work. |
For permanent, continuous, and ongoing work. |
|
5 |
Probation Period |
Not allowed; any such clause is void by law. |
Allowed up to 3 months |
|
6 |
Contract Validity |
Must be written in Indonesian and Latin alphabet; otherwise converts to PKWTT. |
Must be written; more flexible technically, but must be signed by both parties. |
|
7 |
Termination |
Automatically ends when contract expires; no severance, but compensation possible. |
Must follow legal procedures; entitled to severance, long-service award, and other compensation. |
Procedures for Changing PKWT to PKWTT
In some cases, an employee initially hired under PKWT can have their status changed to PKWTT. This is regulated under Article 15 of the Minister of Manpower Decree No. 100 of 2004.
Companies must understand the applicable conditions and procedures to avoid legal violations. Here are some conditions that cause PKWT to automatically convert into PKWTT::
1. Incorrect Language or Format
If a PKWT contract is not written in Indonesian and does not use the Latin alphabet, it is considered invalid. Legally, it becomes a PKWTT to protect the employee’s rights.
2. Inappropriate Type of Work
PKWT is only allowed for non-permanent work. If the work described in the contract is regular and ongoing, the contract does not meet PKWT requirements and becomes a PKWTT.
3. Exceeding Permitted Contract Duration
If a PKWT exceeds the legally allowed duration, including unauthorized extensions, it will automatically convert to a PKWTT. This prevents unfair contract practices against employees.
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4. No Gap Between Contract Renewals
PKWT renewed without at least a 30-day gap after the previous contract expires is considered a continuous employment relationship and is categorized as PKWTT under labor laws.
Understanding the differences between PKWT and PKWTT is essential in the workplace. Companies must determine the correct type of employment agreement to comply with legal requirements, while employees need to know their rights under the contract they sign.
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