Work Contracts

Indonesian law recognises two kinds of employment contract, and the difference matters more than most newcomers expect. A PKWT (Perjanjian Kerja Waktu Tertentu) is fixed-term; a PKWTT (Perjanjian Kerja Waktu Tidak Tertentu) is permanent. If you are a foreign national, you will almost always be on a PKWT, because your right to work is tied to the length of your employer's foreign-worker permit.

The two contract types

A PKWT must be in writing, in Indonesian, using the Latin alphabet. It cannot carry a probation period: any probation clause is void by law, and the time still counts as service. Since the Job Creation Law and its implementing regulation (PP 35 of 2021), a PKWT may run for a maximum of five years including all extensions. Beyond that, or where the work is genuinely permanent in nature, it converts to a PKWTT automatically. Your employer must register the contract with the local manpower office within three working days if filed online, seven if filed in person.

A PKWTT may be oral or written and may include probation of up to three months. Bilingual English–Indonesian contracts are common and permitted, but the Indonesian text governs in any dispute.

What a foreign worker's contract sits inside

You cannot work legally on a contract alone. Your employer must first hold an approved RPTKA (Rencana Penggunaan Tenaga Kerja Asing, the Foreign Worker Utilisation Plan) under PP 34 of 2021. The old standalone IMTA work-permit card no longer exists; an electronic Notifikasi now performs that function, and the approval feeds directly into your work KITAS. The employer also pays a levy, the DKP-TKA, of USD 100 per month, roughly USD 1,200 for a twelve-month permit. Since 2025 the whole chain is digital. See our guide to immigration, visas and work permits for how the permit is obtained.

Money on the way out

Indonesian PKWT staff are owed end-of-contract compensation (uang kompensasi) of one month's wage per year of service. Foreign workers are explicitly excluded from it. Permanent staff who are dismissed receive statutory severance, long-service and rights pay; a 2024 Constitutional Court decision made those figures legal minimums rather than fixed amounts. As a foreign national, your practical protection is whatever your contract says. Read it before you sign.

The law is in transition. The Constitutional Court has ordered a new, consolidated Manpower Law by the end of October 2026, and a proposed trade agreement would cut the PKWT ceiling to a single year. For the authoritative current position, consult Okusi Associates, and see our wider guide to working in Indonesia.

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