Fixed-term employees get no severance — they get compensation pay

By Equipo Saplic Published on 12/08/2026 Updated on 12/08/2026

A different mechanism with a different calculation.

For guidance only

The amounts and deadlines in this guide can change by law. Always check the update date and the official sources cited below. For a specific case, consult the labour authority or a professional.

In this guide
  1. PKWTT
  2. PKWT
  3. What PKWT employees get instead
  4. When PKWT ends
  5. The contractor question
  6. What to check in your contract
  7. Duration and renewal limits
  8. Where to raise a problem

Indonesian employment splits into two contract types, and the difference determines what you receive when it ends.

PKWTT

Perjanjian Kerja Waktu Tidak Tertentu — the indefinite-term, permanent contract.

It carries stronger protections and full severance obligations: Pesangon, Long Service Pay and Compensation of Rights.

PKWT

Perjanjian Kerja Waktu Tertentu — the fixed-term contract, used for temporary or project-based roles, subject to duration and renewal limits.

PKWT employees are not entitled to Uang Pesangon or Uang Penghargaan Masa Kerja.

What PKWT employees get instead

A proportional Compensation Pay: months worked ÷ 12 × one month's salary.

Paid at each contract renewal point and at final expiry — not only at the end.

If you have been renewed several times and never received it, that is worth raising.

When PKWT ends

Employment ends automatically on the agreed expiry date. No PHK process is required.

The contractor question

Separately from PKWT, some workers are engaged as independent contractors. That only holds if the relationship genuinely functions as independent contracting.

If it has fixed hours, ongoing supervision and regular monthly pay, Indonesian labour law treats it as employment regardless of the contract label — and severance obligations apply on termination the same as any employee.

What to check in your contract

  1. Whether it is PKWT or PKWTT
  2. If PKWT, the duration and renewal terms
  3. Whether Compensation Pay was paid at previous renewals
  4. What counts as salary for severance and THR purposes
  5. Whether BPJS registration is confirmed

Duration and renewal limits

PKWT is subject to limits under Indonesian labour law. A contract that exceeds them may be treated differently.

Where to raise a problem

The local Manpower Office, then the Industrial Relations Court.

Frequently asked questions

What is the difference between PKWT and PKWTT?
PKWTT is the indefinite permanent contract with full severance obligations. PKWT is the fixed-term contract, not entitled to Pesangon or Long Service Pay.
What do PKWT employees receive instead?
Proportional Compensation Pay: months worked divided by 12, times one month’s salary, paid at each contract renewal point and at final expiry.
What if I was never paid it at renewals?
It is due at each renewal point, not only at the end. If you have been renewed several times without receiving it, that is worth raising.
Does contractor status hold up?
Only if the relationship genuinely functions as independent contracting. Fixed hours, ongoing supervision and regular monthly pay make it employment regardless of the label.
When does a PKWT contract end?
Automatically on the agreed expiry date, with no PHK process required.

Sources

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