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How to get Indonesian Citizenship


Employment Contract

Employment contract is a very important thing for prospective workers to check and understand before signing a work contract, because a work contract is a form of anticipation in reducing the risk of loss caused by both the worker and the employer. Following are several points of explanation regarding the importance of employment contracts.

Image by Romain Dancre
What is an employment contract?

Employment contract is an agreement between a worker and an entrepreneur or employer that contains the terms and conditions of a work agreement that is valid according to labor law in Indonesia.The contract will contain the conditions, rights, and obligations of both the employee and the employer.Through this, you can find out the employee's work status, whether they are permanent or contract employees.

Why is an Employment Contract Important?

An employment contract is an important thing for workers to pay attention to when accepting work from an employer. So that everything is clear at the start, workers must carefully understand what is contained in the employment contract. The following are the reasons why employment contracts are important;

  1. Explaining Employment Status
    With an employment contract that contains clear provisions regarding the working period, a worker can clearly know whether his or her employment status is included as a permanent employee or not.

  2. Clarifying the Rights of Employees and Employers
    In the employment contract there are provisions regarding the rights that workers have, such as wage rights, leave rights, and other employment rights. Meanwhile, the employer in this case has the right to get the work results or performance he requires from the employee because he has provided wages during the working time. Thus, both workers and employers have limitations regarding their respective rights. If matters related to this right are not stated in the form of provisions in the work contract, there will be confusion in the work process.

  3. Explain Company / Employer Rules
    Some companies sometimes do not explain in detail the work rules they have and immediately bring the worker to work without telling them about the work rules. This will result in the employee being burdened with adaptation while he is working. For this reason, it is important to regulate work rules in a company to make it easier for workers and provide clear boundaries for both workers and employers.

  4. Know the work position well
    In the employment contract there are provisions regarding a worker's job desk, through this job desk the worker will know clearly what the duties and authorities are in their position.

  5. Explaining About Wages
    Wages in an employment contract are not only the basic wage, but there are several other wage components such as allowances (Health, Transportation, Old Age Allowance, etc.), overtime pay, wage deductions, etc. so that a worker can know clearly how much wages and other components they will receive.

These are several points of explanation regarding the importance of work contracts, so it is important for a prospective worker to ensure a clear and precise work contract before signing it to start work, because the work contract will provide legal protection, especially for both the worker and the employer.

Signing a Contract
Image by Annika Wischnewsky
What terms of an employment contract are considered valid?

Before signing the contract, you also need to understand the terms of the work agreement that is considered valid and the type of work contract. Based on the provisions of the Civil Code (Civil Code) article 1320, the terms of an employment contract are considered valid, including:

  1. Their agreement binds them

  2. The ability to create an engagement

  3. A certain subject matter

  4. A reason that is not prohibited.

What are Well Applicable Terms of Employment Contract Agreement?

Based on the provisions in force in Indonesia, the detailed terms of the employment contract are as follows:

  1. There are parties as employees and employers

  2. In a valid work agreement, there must be an employee and an employer who know and agree to the work contract.Through this, the employer can explain the terms, rights and obligations between the employee and the employer in full.

  3. Bound in Time
    The work agreement should be able to explain the period of time that has been set for the implementation of the work.

  4. Clarity of Wages Received
    Wages are an important thing for employees to know as a form of reward given by the employer for the implementation of the work that has been done.Wages can be in the form of money or allowances which according to an agreement or statutory regulations are paid on the basis of an employment agreement.

  5. Agreement
    The work contract agreement and also the agreement to work must be agreed to sincerely or voluntarily between the parties making the agreement.Employment agreements generally occur after prospective workers have gone through the job interview process.

  6. Rights and obligations
    The work agreement must be able to explain the rights and obligations of the employee and employer in the implementation of the work to be carried out.This is useful so that no misunderstandings arise in the future between the parties concerned.

  7. Work protection
    Employee protection is something that must be included in the employment agreement.Workers and employers need to know what job protection guarantees are provided by the company.This is a form of anticipation if an accident occurs during the work to be carried out.

Image by Sebastian Herrmann
Image by Garvit Nama
What are Types of Employment Contracts in Indonesia?
  1. Specific Time Work Agreement (PKWT)
    A Specific Time Work Agreement (PKWT) is an agreement between an employee and an employer who wishes to enter into an employment relationship only for a certain period of time, which is usually used for certain jobs where the end time of the job can be predicted. PKWT is made in writing and registered with the employment service, and can only be valid for a maximum period of five years or until the work is completed. If the work in question has not been completed but the work contract has ended, the work contract can be extended in accordance with the agreement between the employer and employee for a period of no more than five years. Apart from that, at the end of the work period, the employer is obliged to provide compensation money to the worker. PKWT is based on the time period for completing certain work, and only for types of work that are completed at a certain time. Types of PKWT work include:

    • Once completed work or temporary work

    • It is estimated that the completion of the work will not take long, a maximum of 3 (three) years

    • Seasonal work

    • Carrying out work related to new products or activities, things that are still in the experimental or exploration stage

  2. Indefinite Time Work Agreement (PKWTT)
    An Indefinite Time Work Agreement (PKWTT) is a work agreement between an employee and an employer who wishes to enter into an employment relationship but which is permanent and can be applied to all types of work. In contrast to PKWT, apart from being able to be made in writing, PKWTT can be made verbally and is not required to be registered with the employment service. If the PKWTT is made orally, the employer is obliged to make a work appointment letter for the worker concerned.

  3. Outsourcing Work Agreement
    An Outsourcing Work Agreement is a work agreement where the workforce used comes from a third party, namely an Outsourcing Company to complete certain work. The relationship between workers and employers can be carried out in the form of PKWT or PKWTT but must contain policies related to Transfer of Protection Employment.

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