Employees hired under a fixed-term employment agreement (PKWT) in Indonesia may be entitled to statutory PKWT compensation (uang kompensasi) under Indonesian employment regulations.
How is PKWT compensation calculated?
The compensation is calculated based on the employee’s period of service:
Period of service | Compensation |
12 months of continuous service | 1 month’s wages |
Less than 12 months | Calculated proportionally: (period of service ÷ 12) × 1 month’s wages |
More than 12 months | Calculated proportionally based on the total period of service |
The applicable wage basis is determined in accordance with Indonesian regulations and the employee’s applicable wage structure.
When is PKWT compensation paid?
For employees employed by Remote People, PKWT compensation is calculated based on the employee’s eligible period of service and is processed as part of the employee’s final employment settlement.
Where an employee’s PKWT is extended or renewed, the compensation calculation continues to account for the applicable periods of service in accordance with the applicable arrangement.
Does PKWT compensation apply to foreign employees?
No. Statutory PKWT compensation does not apply to foreign workers employed under a PKWT.
What happens if a PKWT ends early?
If either the employer or employee ends the employment relationship before the agreed PKWT expiry date, PKWT compensation may still be payable based on the period of the PKWT that has been completed.
Early termination may also result in separate statutory obligations. The applicable treatment depends on the circumstances of the termination.
If you have questions about PKWT compensation or how it applies to a specific employee, please contact Remote People support at support@remotepeople.com.