Airlangga: Fixed-Term Employment Contracts and Outsourcing to be Regulated in New Employment Law

Jakarta — The Coordinating Minister for the Economy Airlangga Hartarto stated that workers on fixed-term employment contracts (PKWT) and labour outsourcing will be regulated under the new Employment Law currently being drafted.

This follows the United States’ requirement in the Agreement on Reciprocal Trade (ART) document, which obligates Indonesia to restrict PKWT and outsourcing practices.

“We are currently drafting a new Employment Law. The restrictions on PKWT and outsourcing will be included in the new Employment Law,” Airlangga said at the Ministry of Manpower, Jakarta, on Friday.

The ART document, which was signed by Indonesia and the United States some time ago, stipulates that Indonesia must establish implementing regulations limiting the use of labour outsourcing companies.

This differs from the Job Creation Law (Law No. 6 of 2023) and Government Regulation No. 35 of 2021, which previously regulated PKWT with a maximum duration of five years including extensions.

Furthermore, Airlangga stated that the Constitutional Court has also ordered that the employment cluster provisions removed from the Job Creation Law be returned to legislation.

“We will monitor this situation, as several provisions from the Job Creation Law have been annulled by the Constitutional Court, so everything will be integrated into the new Employment Law,” Airlangga said.