Hiring and firing in Indonesia: PKWT, PHK and severance
Indonesian employment law protects employees more strongly than many foreign owners expect. Getting hiring and termination right from day one avoids expensive surprises.
Fixed-term vs permanent
A PKWT is a fixed-term contract, allowed only for work that is genuinely temporary or seasonal. Misusing a PKWT for an ongoing role can cause it to be treated as a permanent (PKWTT) relationship - with all the protections that brings.
Termination (PHK)
Termination is regulated and rarely 'at will'. Depending on the reason and the employee's tenure, you may owe severance pay, long-service pay and compensation by formula. Process matters as much as the reason.
The honest take
Most employment problems we see are not bad intentions - they are good businesses using the wrong contract or skipping the process. Both are avoidable.
Frequently asked questions
What is the difference between PKWT and PKWTT?
A PKWT is a fixed-term contract allowed only for genuinely temporary or seasonal work. Misusing it for an ongoing role can cause the relationship to be treated as permanent (PKWTT), with all the protections that brings.
Can I terminate an employee at will in Indonesia?
No — termination (PHK) is regulated and rarely 'at will'. The process matters as much as the reason.
What do I owe an employee on termination?
Depending on the reason and the employee's tenure: severance pay, long-service pay and compensation, calculated by formula.
Not sure where you stand? A short, confidential first conversation — bring the documents and I will tell you honestly what I see.
Chat on WhatsApp[email protected]You will be speaking with Jeremy Jordan, S.H. — DPN Indonesia, NIA 25.25.32730.
General information only, not legal advice for your situation. No result is guaranteed. Speak to a lawyer about your specific facts.