From Contract Employees to Permanent Employees, Here Are the Rules

In an organization, it is very natural for us to have contract employees bound by a certain time work agreement (PKWT) and permanent employees to have a working relationship based on an indefinite work agreement (PKWTT).

According to the latest regulations, the maximum period of PKWT is 5 years, including contract extensions. The PKWT employment relationship automatically ends according to the agreed limit or the completion of the work, and the entrepreneur is obliged to pay compensation. Meanwhile, the termination of the PKWTT employment relationship is carried out through layoffs, and the entrepreneur is obliged to pay severance pay.

On the other hand, it is very common for the status of contract employees (PKWT) to change to permanent/permanent employees (PKWTT). For example, when the results of the employee's job evaluation are satisfactory.

This change in status from contract employees to permanent employees is a common HR practice of the company in seeking qualified employees. Apart from the company's initiative factor, there are certain conditions which according to the laws and regulations can cause a change in the status of a contract employee to become a permanent employee.

- PKWT that does not meet the requirements for the type of work
If you look at the PKWT rules of Law No. 11 of 2020, it can be clearly seen that PKWT is only made for certain types of work. If not, then the PKWT changes to PKWTT, which means that the status of contract employees also changes to permanent employees.

- PKWT that does not meet the requirements for daily workers
However, the daily work agreement must meet the provisions of the maximum limit of working days in a month. Workers/laborers work less than 21 days in 1 month. If not, then the PKWT changes to PKWTT.

- PKWT that is not made in writing
PKWT must be made in writing and must use Indonesian and Latin letters. In the event that the PKWT is made in Indonesian and a foreign language, if there is a difference in interpretation between the two, the PKWT which is made in the Indonesian language shall prevail. If the PKWT contract is made unwritten, it will automatically turn into a PKWTT. Because, only PKWTT can be made orally.

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