“An employment contract for a foreign worker in Indonesia has a specific characteristic; it must be a fixed-term contract and supported by a work permit.“
Type, Language, and Duration of Employment Contract
As with other employees, a foreigner who wants to work in Indonesia as like other employees should have an employment contract based on the labor regulation in Indonesia. The employment contract for a foreign worker is made for a certain period of time, namely a fixed-term contract or PKWT (Perjanjian Kerja Waktu Tertentu).
According to PP 35/2021, fixed-term work agreements can be drawn up for the maximum period of 5 (five) years and are not limited to a specific number of extensions. Nonetheless, it is stated that the maximum employment period under fixed-term work agreements in total can only be up to 5 (five) years. Therefore, should a fixed-term work agreement be drawn up for the period of 5 (five) years, such work agreement cannot be extended because the total maximum employment period has been fulfilled. On the other hand, should a fixed-term work agreement be drawn up for less than 5 (five) years, such work agreement can be extended infinitely until the total maximum employment period reaches 5 (five) years.
The regulation stipulates that a contract is deemed valid insofar as the contract contains the Indonesian language. Even if it is made in a bilingual version, the Indonesian language shall ultimately prevail.
Content of Employment Contract
An employment contract should cover the working relationship of a company and an employee. Thus, both parties can clearly understand their obligations and terms of employment. More specifically, an employment agreement should include:
- Identity of both parties, company and an employee;
- Duration of employment, the contract should specify the length of the time the employee agrees to work for the company;
- Job Description, the various task and work that will be expected to fulfil by the employee;
- Benefits, a contract should lay out all benefits for the employee; and
- Salary or wages, the contract will itemize the salary, wage or commission for the employee.
Other possible terms of the agreement can be included in the contract if needed and information on settling disputes at work.
Work Permit During Employment
Besides employment agreement, when hiring foreign worker, the companies also should provide an Expatriate Work Permit. The companies should prepare of Foreign Worker Utilization Plant (or locally known by Rencana Penggunaan Tenaga Kerja Asing (RPTKA). The RPTKA must be submitted through online systems to the office of the Ministry of Manpower for its approval.
The approval of the RPTKA is key for the foreign workers to further apply for Indonesian visa and stay permits. Along with that, the companies must also provide Indonesian Employee as a counterpart to work alongside the expatriates.
Author: Sutria Puti Dwirahayu
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