A Fixed-Term Employment Agreement (PKWT) is a work agreement between an employee and a company to establish a working relationship for a certain period of time or often referred to as a contract employee. In PKWT, there are provisions that regulate various aspects, including the salary of PKWT employees. Yes, salary is one of the most important aspects in determining the working relationship between companies and employees, including non-permanent contracts. Determining a salary that is fair and in accordance with applicable regulations is an obligation of the company, as well as an employee’s right that must be protected. In addition, a good understanding of salary provisions, including for non-permanent employees, can also help companies to prevent potential conflicts and disputes that may arise in the future. Therefore, in this article, we will discuss in detail the salary provisions for non-permanent employees. Hopefully, it can be a useful guide for companies in implementing specific time work agreements properly and in accordance with applicable regulations, yes!
PKWT at a glance
Before discussing more about salaries, you need to first understand what is meant by PKWT. According to Government Regulation No. 35 of 2021, non-permanent contracts are work agreements between workers/laborers and employers to establish a working relationship within a certain time or for a certain job. In other words, non-permanent contracts are similar to employment contracts that are governed by a certain timeframe or the end of the profession. In this case, employees who join a company with a PKWT contract agreement must fulfill their rights, obligations, and a number of other conditions by the company. Meanwhile, employees are also obliged to carry out work according to the contract agreed with the company.
Types and Expiration Period of Fixed-Term Employment
The type of non-permanent work contained in Article 59 of Law No. 13/2003 (Labor Law) is work that is not permanent or annual in nature. The implementation of non-permanent work can be very dependent on the season, so the working time limit can be relaxed, but within a maximum period of three years. Some jobs that use this work agreement include event organizers, product launching, sales or distribution that are not continuous, or work related to mining. Article 61 of the Labor Law also explains that PKWT will end if:
- The employee has passed away
- Expiration of the term of the employment agreement of the employee concerned
- The existence of a court decision and / or a decision of an industrial relations dispute settlement institution that has permanent legal force
- The existence of certain circumstances or events that have been included in the employment agreement, company regulations, or collective labor agreement that can cause the end of the employment relationship.
What are the salary terms of non-permanent contracts?
Article 1 of the Manpower Law states that salary or wage is the right of workers/laborers who are received and expressed in the form of money as compensation from employers or employers to workers/laborers who are determined and paid according to a work agreement, agreement, or laws and regulations, including benefits for workers/laborers and their families for work and/or services that have been or will be performed. In fact, the government does not specify wages or salaries for non-permanent employees specifically. However, if you refer to the laws and regulations, the minimum wage itself has been regulated in Government Regulation No. 78/2015 Article 42 where the minimum wage applies to employees with a working period of less than one year in the company concerned. The minimum wage consists of wages without benefits or basic wages including fixed benefits. The determination of this minimum wage serves as a safety net so that wages are not paid lower than the minimum wage set by the government. The governors in 34 provinces in Indonesia have announced the Provincial Minimum Wage (UMP) which will officially take effect in 2023. This means that the minimum salary for workers in DKI Jakarta can be different from the minimum salary for workers in West Java and Central Java, and so on. Below is a detailed list of UMP in 34 Indonesian provinces:
- Aceh Rp3,413,666
- North Sumatra Rp2,710,493
- West Sumatra Rp2,742,476
- Riau Islands Rp3,279,194
- Bangka Belitung Rp3,498,479
- Riau Rp3,191,662
- Bengkulu Rp2,418,280
- South Sumatra Rp2,404,177
- Jambi IDR 2,943,000
- Lampung Rp2,633,284
- Banten Rp2,661,280
- DKI Jakarta Rp4,900,798
- West Java IDR 1,986,670
- Central Java IDR 1,958,169
- DI Yogyakarta Rp1,981,782
- East Java IDR 2,040,244
- Bali IDR 2,713,672
- West Nusa Tenggara IDR 2,372,407
- East Nusa Tenggara IDR 2,123,994
- West Kalimantan Rp2,608,601
- Central Kalimantan Rp3,181,013
- South Kalimantan Rp3,149,977
- East Kalimantan Rp3,201,396
- North Kalimantan Rp3,251,702
- Central Sulawesi Rp2,599,546
- Southeast Sulawesi Rp2,758,984
- North Sulawesi Rp3,485,000
- South Sulawesi Rp3,385,145
- Gorontalo Rp1,989,350
- West Sulawesi Rp2,871,794
- Maluku IDR 2,812,827
- North Maluku Rp2,976,720
- Papua Rp3,864,696
- West Papua Rp3,282,000
This is a list of UMPs that have been determined based on provinces in Indonesia, including for non-permanent employees who have less than one year of service. In contrast, wages for employees with a work period of one year or more can be bipartite negotiated between employees and the company. Yes, the company is prohibited from paying salaries lower than the minimum wage, including for non-permanent employees.
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The punishment for companies that pay their employees below the minimum wage is imprisonment for a minimum of one year and a maximum of four years, and/or a fine of at least Rp100 million and a maximum of Rp400 million.
KH Contact
This is the information regarding the PKWT salary provisions that must be considered by the company. Every company has obligations that must be carried out in accordance with applicable regulations for all employees, including providing salaries that are not lower than the minimum wage in accordance with applicable regulations. This salary provision is also one of the aspects that must be included in the PKWT agreement. That way, both the company and the employee know clearly and in writing about the salary agreement and the agreement is valid in the eyes of the law. The existence of a written and official PKWT agreement can also be used as evidence in disputes or legal disputes between employees and employers, thus helping in conflict resolution. Well, for KH Pals who are still confused about making a PKWT agreement including the things that must be included in it, you can contact Kontrak Hukum! We can help you to consult about PKWT and other rules related to employment agreements in accordance with applicable regulations.
What are you waiting for? Simplify the employment relationship safely by creating an agreement at KH Services – PKWT Contract. If you have questions about other company needs, you can also contact us at Ask KH or via direct message (DM) to Instagram @kontrakhukum.
