DPR: Contract Workers Should Automatically Become Permanent Employees After Four Years

Jakarta — The House of Representatives’ Commission IX has said that the length of fixed-term employment contracts (Perjanjian Kerja Waktu Tertentu, or PKWT) will be capped to give workers greater certainty about their permanent employment status.

Putih Sari, deputy chair of Commission IX from the Gerindra Party and head of the working committee for the draft Employment Protection Law, said the bill would limit PKWT contracts to four years.

“Under the Employment Protection Law, we will limit contract workers’ terms. The initial contract could be two years, and it could be extended twice, with each extension lasting a maximum of one year,” Putih said in a special interview with CNBC Indonesia’s Koneksi, quoted on Friday (16 October 2026).

Putih added that once a worker’s contract had been extended twice, the company would no longer be allowed to retain them as a contract worker and would have to make them a permanent employee.

“After that, their contract-worker status cannot be extended again; they must automatically become a permanent employee, unless there was no further extension under the earlier arrangement—that is a different matter,” Putih said.

She acknowledged that some companies exploit the system by keeping workers on contracts for years without granting them permanent status, and said workers needed protection.

“Many companies, as far as I know, find ways around this. They keep workers on contracts for years but do not want to make them permanent. So we are providing certainty that contracts are permitted, but with limits,” Putih said.