Legal Certainty in the Protection of Fixed-Term Contract Workers

Legal Certainty in the Protection of Fixed-Term Contract Workers

Ni Komang Arini Styawati*, I Ketut Kasta Arya Wijaya, I Wayan Rideng, Made Wiyani, Heri Dianostika

Denpasar, Bali, Indonesia

*Corresponding author

DOI: https://dx.doi.org/10.47772/IJRISS.2025.908000551

Received: 14 August 2025; Accepted: 20 August 2025; Published: 20 September 2025

ABSTRACT

The regulation of fixed-term contracts (Perjanjian Kerja Waktu Tertentu, PKWT) in Article 8(1)–(2) of Indonesian Government Regulation (PP) No. 35 of 2021 exhibits an internal inconsistency. Article 8(1) sets a maximum term of five years. Article 8(2) allows an extension, by agreement between the employer and the worker, where the work has not been completed, provided that the aggregate term, including any extensions, does not exceed five years. This raises a critical problem: if the work remains unfinished after five years, the Regulation provides no clear pathway, thereby undermining legal certainty. In practice, implementation of the PKWT regime has generated concern. Drawing on fieldwork in Pujungan Village, Tabanan Regency, workers reported anxiety upon reaching the five-year threshold―uncertain whether their contracts would be renewed or terminated―despite ongoing mutual need between workers and employers. This study addresses two questions: (1) the nature of legal protection for Fixed-Term Contract Workers, and (2) a regulatory model capable of ensuring legal certainty for such workers. Adopting a doctrinal–empirical legal method with statutory, conceptual and analytical approaches, the study finds that protection operates both ex ante (preventive), through clear, certain rules, and ex post (judicial), through court-based dispute resolution enforcing workers’ rights. It proposes a regulatory model that retains a five-year default term but permits renewal beyond five years, by mutual agreement and where the work objectively requires it, thereby restoring legal certainty for Fixed-Term Contract Workers.

Keywords: Legal Certainty; Legal Protection; Worker; Fixed-Term Contract

INTRODUCTION

Background

One of the objectives of the State of Indonesia, as set forth in the Preamble to the 1945 Constitution of the Republic of Indonesia (Undang-Undang Dasar Negara Republik Indonesia Tahun 1945, UUDNRI 1945), particularly in the fourth paragraph, is “…thereafter, to establish an Indonesian Government which shall protect the whole people of Indonesia and the entire homeland of Indonesia, and to promote the general welfare…”. Furthermore, Article 27(2) of the 1945 Constitution stipulates that: “Every citizen shall have the right to employment and to a livelihood befitting humanity.” Article 28D further provides that: (1) Every person shall have the right to recognition, guarantees, protection, and fair legal certainty, as well as equal treatment before the law; and (2) Every person shall have the right to work and to receive fair and proper remuneration and treatment in employment relations [1].

Micro, Small, and Medium Enterprises (MSMEs) play a significant role in the Indonesian economy, including in the absorption of labour. However, advances in the global and competitive economy, coupled with technological progress, have had an impact on global business competition. Technological advancement has also affected labour absorption, which has been declining as human labour is increasingly replaced by machines. This has led to widespread workforce reductions. Although advanced machinery and technology are available, human labour remains necessary to operate such technology, albeit in smaller numbers. In this era of technological advancement, the demand is for a highly skilled workforce [2]. An employment relationship begins with an employment contract, namely an agreement between an employer and a worker. Such a relationship gives rise to rights and obligations for both parties to the contract. The Government has enacted Law No. 13 of 2003 on Manpower. Article 56(1) of this Law stipulates the types of employment contracts, namely Fixed-Term Contracts and Permanent Contracts (Perjanjian Kerja Waktu Tidak Tertentu, PKWTT) [3].

Labour regulations in Indonesia have undergone dynamic developments. Law No. 13 of 2003 on Manpower was amended by the enactment of Law No. 11 of 2020 on Job Creation, which was subsequently reviewed by the Constitutional Court. However, through Government Regulation in Lieu of Law No. 2 of 2022 on Job Creation, the provisions were reinstated and later enacted as Law No. 6 of 2023 on the Enactment of Government Regulation in Lieu of Law No. 2 of 2022 on Job Creation into Law.

The regulation of employment contracts has been specifically provided for in the Manpower Law. Nevertheless, with the enactment of the Job Creation Law, several provisions of the Manpower Law have been amended. The requirements for the validity of an employment contract, however, remain unchanged. Article 52 of the Manpower Law stipulates that an employment contract must fulfil the following legal requirements: mutual consent of the parties; the capacity or legal competence to perform legal acts; the existence of the work agreed upon; and that the work agreed upon must not be contrary to public order, morality, or the prevailing laws and regulations. Failure to meet the requirements of “mutual consent” and “capacity” renders the contract voidable, whereas failure to meet the requirements of a “specific subject matter” and “lawful cause” renders the contract null and void.

By reference to these provisions, the general requirements for a valid agreement, as regulated in Article 1320 of the Indonesian Civil Code, are consistent with those for a valid employment contract as regulated in Article 52 of the Manpower Law, except that in the Manpower Law the object of the agreement is more specifically defined as work. Under the Manpower Law, employment contracts are classified into Fixed-Term Contracts and Permanent Contracts. The fundamental distinction between these two types lies in their duration: a Fixed-Term Contract is an agreement between a worker and an employer to establish an employment relationship for a specified period, whereas a Permanent Contract is an agreement between a worker and an employer to establish an employment relationship of a permanent nature [4].

The implementation of fixed-term contracts is regulated under Government Regulation No. 35 of 2021. Article 4 of Government Regulation No. 35 of 2021 stipulates that fixed-term contracts shall be based on: (a) a specified period; or (b) the completion of a particular job. A fixed-term contract may not be concluded for work of a permanent nature. Furthermore, Article 5 in paragraph (1) provides that a fixed-term contract may be established for specific types, such as: (a) work that is estimated to be completed within a relatively short period; b) seasonal work; or (c) work related to new products, new activities, or additional products still in the trial or exploratory stage. Paragraph (2) provides that a fixed-term contract based on the completion of a particular job may be concluded for specific work, namely: (a) work that is completed once only; or (b) work that is temporary in nature [5]. An employment relationship essentially entails the rights and obligations of both the worker and the employer. These rights and obligations are not only regulated by statutory provisions but are also determined by mutual agreement between the worker and the employer, as set out in the employment contract. Accordingly, an employment relationship cannot be separated from the employment contract concluded between the worker and the employer [2].

The maximum duration of a fixed-term contract is five years, as stipulated in Article 8(1) of Indonesian Government Regulation No. 35 of 2021, which provides that a fixed-term contract based on a specified period as referred to in Article 5(1) may be concluded for a maximum of five (5) years. Article 8(2) further provides that where the term of a fixed-term contract, as referred to in paragraph (1), is about to expire and the work has not been completed, the fixed-term contract may be extended for a period agreed upon by the employer and the worker/labourer, provided that the total duration of the fixed-term contract, including its extension, does not exceed five (5) years. This gives rise to an inconsistency between the provisions of paragraphs (1) and (2) of Article 8 of Government Regulation No. 35 of 2021. Paragraph (1) expressly states that the maximum duration of a fixed-term contract is five years. Paragraph (2), however, stipulates that if the contract term is about to end and the work has not yet been completed, it may be extended by agreement between the employer and the worker/labourer, provided that the total term, including the extension, does not exceed five years. This raises the question: what happens if the contract term is already five years but the work remains unfinished? In such a case, no further extension would be possible, since the regulation prohibits a total term exceeding five years. This calls into question the very meaning and purpose of the “extension” provision.

 In practice, the provisions governing fixed-term contracts have also become a matter of concern for both fixed-term contract workers and employers, owing to the five (5) year limit on their duration. For instance, in poultry farming companies located in Pujungan Village and Batungsel Village, Pupuan District, Tabanan Regency, anxiety has arisen among workers regarding their future after completing five years of service―whether their contracts will be renewed or their employment terminated. This uncertainty stems from the regulation that limits the tenure of fixed-term contract workers to five years.

In reality, both parties continue to require each other: on the one hand, workers still wish to remain employed, while on the other, employers still require the services of these workers, who are regarded as skilled professionals in their roles. Yet the regulation imposes a strict five-year limit, raising the question of where the legal protection for fixed-term contract workers lies. In light of the absence of legal certainty and the lack of guaranteed protection for these workers, this matter is both urgent and worthy of in-depth scholarly investigation.Formulation of the Problems

Based on the foregoing background, the legal issues to be addressed are as follows:

1. What is the nature of legal protection for fixed-term contract workers?
2. What regulatory model for fixed-term contracts can ensure legal certainty for fixed-term contract workers?

RESEARCH METHOD

Research Design

The research employs both normative and empirical legal methods, in view of the gap between what ought to be (das sollen) and what is (das sein) as observed in practice.

Research Approach

This research adopts several approaches, namely:

1. The statute approach and the factual approach, whereby legislation is used as the initial basis for analysis.
2. The conceptual approach, which involves examining the meaning of legal terms contained in legislation and testing them in practice by analysing judicial decisions.
3. The analytical approach, which entails an analysis of the prevailing laws and regulations.
4. The sociological approach, which involves examining phenomena that occur within society.

Data Sources

The data for this research comprise both primary and secondary sources. Primary data were gathered directly from field research by interviews with informants and respondents. Secondary data were derived from library research, with primary legal materials collected through documentation and supported by theories, scholarly opinions, and findings closely related to the subject matter of the study [6].

The legal materials used in this research consist of primary, secondary, and tertiary sources. Primary legal materials, which are binding in nature, are those issued by the government, such as laws and regulations. Secondary legal materials include books and other publications relevant to the topic under study. Tertiary legal materials comprise reference works such as dictionaries, encyclopaedias, newspapers, and online sources.

Research Location

The research was conducted at poultry farming companies located in Pujungan Village and Batungsel Village, Pupuan District, Tabanan Regency. The location was selected because they host poultry companies employing fixed-term contract, and in the village there has been notable concern among such workers regarding their future―specifically, whether their contracts will be renewed or their employment terminated.

Data Collection Techniques

Primary data were collected through interviews with informants and respondents (workers). Secondary data were obtained by recording and extracting relevant statutory provisions and literature related to the issues under study.

Data Analysis

The collected data were organised systematically using inductive–deductive methods and legal interpretation. The data were then qualitatively analysed by providing legal argumentation, with the findings presented descriptively, outlining the actual conditions based on the data obtained in the field.

DISCUSSION

Legal Protection For Fixed-Term Contract Workers

Every citizen has the right to obtain employment and a livelihood befitting human dignity, as well as to receive legal protection. The guarantee of legal protection for every citizen is provided under Article 28D of the 1945 Constitution of the Republic of Indonesia, which stipulates that every person has the right to recognition, guarantees, protection, and fair legal certainty, as well as equal treatment before the law. It further provides that every person has the right to work and to receive fair and proper remuneration and treatment in employment relations.

The direction of labour development policy focuses on creating the widest possible employment opportunities and enhancing the protection of workers’ rights and welfare, both during employment and after the termination of the employment relationship. Consequently, addressing issues concerning employment relations―particularly the regulation and implementation of fixed-term contracts and the protection of workers, especially in business sectors and specific types of work that emphasise protective measures, including ensuring the fulfilment of rights for workers affected by termination of employment―becomes a matter of considerable importance for scholarly examination.

Labour protection is intended to guarantee the fundamental rights of workers and to ensure equal opportunities and treatment without discrimination of any kind, with a view to promoting the welfare of workers and their families, while taking into account developments in the business sector. According to the theory of legal protection advanced by the German philosopher Immanuel Kant, as cited in Tanya [7], human beings are rational creatures endowed with free will. The duty of the state is to uphold the rights and freedoms of its citizens, and the purpose of the state and the law is the happiness and prosperity of the people. Accordingly, fundamental human rights must not be violated by those in power; indeed, in their implementation, such rights must not be hindered by the state. For Kant, the protection of the people’s rights constitutes a moral imperative. In light of Kant’s view that every human being must be treated in accordance with their dignity, workers too must be accorded such dignity, for they are subjects rather than objects. As human beings, workers possess fundamental rights, including the right to legal protection and the right to employment and a livelihood befitting humanity, as guaranteed under Article 27(2) of the 1945 Constitution of the Republic of Indonesia. Pancasila, as the state ideology and philosophy, forms the foundational principle of legal protection in Indonesia.

According to Hadjon, “legal protection is, in essence, the provision of safeguards for the party in a weaker position against arbitrary actions by another party in a stronger position.” Legal protection is generally afforded in both preventive and repressive forms. Preventive protection is implemented through provisions in legislation, while repressive protection is carried out through the courts in the form of judicial decisions [8]. Rahardjo defines “legal protection” as “an effort to provide safeguards for human rights that are harmed by others, with such protection being granted to the community so that they may enjoy all the rights conferred upon them by law [9].”

According to Soepomo, labour protection can be classified into three types: economic protection, social protection, and technical protection [10]. These can be explained as follows.

1. Economic protection refers to safeguarding workers’ welfare through adequate income, including in situations where the worker is unable to work for reasons beyond their control.
2. Social protection refers to safeguarding workers’ rights through occupational health guarantees, the freedom of association, and the protection of the right to organise.
3. Technical protection refers to safeguarding workers through measures that ensure occupational safety and health.

The three types of protection outlined above must be fully understood and properly implemented by employers in relation to workers as service providers. Employers who violate these obligations shall be subject to sanctions [11].

Soepomo argues that legal protection for workers is intended to ensure that they can undertake work that is dignified and humane [10]. One form of such protection is the establishment of labour standards, including safeguards relating to working time; remuneration systems that accord with statutory provisions set by the government; social obligations; measures to sustain morale and motivation so as to ensure high productivity; and treatment that respects human dignity and maintains morale. Labour protection is regulated under Law No. 13 of 2003 on Indonesian Manpower and Government Regulation No. 35 of 2021 on Fixed-Term Employment Agreements, Outsourcing, Working Hours and Rest Periods, and Termination of Employment.

The duration of a fixed-term contract is governed by Article 81 point 12 of Law No. 6 of 2023 on Job Creation, which amends Article 56(3) of Law No. 13 of 2003 on Indonesian Manpower. Article 81 point 12 limits the term of a fixed-term contract to a maximum of five years, inclusive of any extensions.

Field research in Tabanan Regency identified the following operational arrangements at PT Japfa Comfeed Indonesia Tbk:

1. Unit Pupuan 2 (Pujungan Village) receives day-old chicks (DOC) and parent stock and raises them until they produce hatching eggs for broiler production;
2. Unit Pupuan 1 (Batungsel Village) receives laying-ready parent stock from Unit Pupuan 2; and
3. Unit HTC Baturiti (Mekarsari Village) receives eggs from Unit Pupuan 1 for incubation to produce day-old chicks (DOC), which are then reared by growers or partner companies to produce chicken meat.

The number of employees working at PT Japfa Comfeed Indonesia, Tbk. Pupuan 2 in Pujungan Village is presented in Table 1.

Table 1: Employee Data ― PT Japfa Comfeed Indonesia Tbk, Farm Unit Pupuan 2 (Pujungan Village), April 2025

Source: PT Japfa Comfeed Indonesia, Unit Farm Pupuan.

Notes. Based on the data in the table above, the workforce at PT Japfa Comfeed Indonesia Tbk, Farm Unit Pupuan 2 (Pujungan), as at April 2025, totalled 37 employees (all male), comprising 11 permanent employees and 26 fixed-term contract workers.

Figure 1: Poultry Farm Location

Drawing on interviews with Mr Rudi Gunawan (Manager, Unit Pupuan 2) and Mr Dody Exwan Dono (Manager, Farm Unit Pupuan 1), the following rights of Fixed-Term Contract Workers were identified:

1. Payment of compensation upon expiry of the contract term.
2. Overtime is governed through the e-overtime application; prior to 2020 the company provided meal assistance where the estimated overtime was three hours, whereas since 2020 meal assistance has been provided only when the estimated overtime exceeds four hours.
3. PKWT durations are aligned with the completion of the chicken-rearing cycle; the previous 30-day “off” period is no longer applied.

From interviews with Mr Mochamad Taufiq, Manager of Unit HTC Baturiti, it was revealed that several changes had occurred following the implementation of the Job Creation Law in the unit under his leadership, namely:

1. Prior to the enactment of the Job Creation Law, there was a 30-day interval for contract renewals. After its enactment, contract renewals no longer require a 30-day interval, allowing continuity in line with the livestock hatching process in the unit.
2. Provision of compensation to fixed-term contract workers upon the expiry of their contract term.
3. Provision of meals for fixed-term contract employees working overtime, applicable after four hours of work.
4. Submission of overtime requests now utilises the e-overtime system, replacing the previous manual procedure with a digital one.

Regulatory Model for Fixed-Term Contracts Guaranteeing Legal Certainty for Workers

1) Legal Certainty Guarantee for Fixed-Term Contract Workers

Legal certainty encompasses interrelated elements, one of which is the legal protection afforded to individuals against other individuals. According to Marzuki [12], legal certainty embodies two key aspects: first, the existence of general rules enabling individuals to understand which actions are permissible or prohibited; and second, the provision of legal security for individuals and the authority of the Government, as such general rules allow individuals to ascertain what may be imposed or undertaken by the state upon them. Normatively, legal certainty exists when a regulation is enacted and promulgated with precision, regulating matters in a clear and logical manner. Clarity, in this sense, means that the regulation does not give rise to doubt or multiple interpretations, and logic implies that the rule forms part of a coherent normative system that does not conflict with other norms. Legal certainty denotes the application of laws that are clear, stable, consistent, and consequential, and whose implementation cannot be influenced by subjective circumstances. Certainty and justice are not merely moral imperatives; rather, they factually constitute inherent characteristics of law.

In Mertokusumo’s view, legal certainty is one of the essential requirements that must be fulfilled in the enforcement of law [13]. In this context, Mertokusumo defines legal certainty as judicial protection against acts of arbitrariness, meaning that an individual will be able to obtain what they are rightfully entitled to in a given situation. Legal certainty does not exclusively concern the legal relationship between a citizen and the state, nor is it solely related to the state, as its essence lies in the protection of individuals from arbitrary actions. The actors capable of committing arbitrary acts are not limited to the state alone but may also include other groups or parties beyond the state [14].

Fundamentally, the objective of social security for workers is to ensure the continuity of income flow for their families. In addition, the social security programme for workers aims, inter alia, to:

1. Provide a basic level of protection to meet the minimum living needs of workers and their families; and
2. Recognise and foster the independence of workers so that they are not compelled to rely on the charity of others when facing risks arising in the course of employment, such as occupational accidents, illness, old age, and other contingencies.

With respect to fixed-term employment contracts, as regulated under Article 4 of Indonesian Government Regulation No. 35 of 2021 concerning Fixed-term Contracts, Outsourcing, Working Hours and Rest Periods, and Termination of Employment, it is stipulated that:

1. Pursuant to paragraph (1), a fixed-term contract shall be based on:
   1. a specified period of time; or
   2. the completion of a particular task.
2. Under paragraph (2), a fixed-term contract may not be concluded for work of a permanent nature.

Furthermore, Article 5 provides that:

1. A fixed-term contract based on a specified period of time, as referred to in Article 4(1)(a), may be concluded for specific work that:
   1. is expected to be completed within a relatively short period;
   2. is seasonal in nature; or
   3. is associated with a new product, a new activity, or an additional product that is still in the trial or exploratory stage.
2. A fixed-term contract based on the completion of a particular task, as referred to in Article 4(1)(b), may be concluded for specific work that:
   1. is completed once only; or
   2. is temporary in nature.
3. In addition to the specific work referred to in paragraphs (1) and (2), a fixed-term contract may also be applied to other types of work that, by their nature or type of activity, are not permanent.

Furthermore, Article 6 stipulates that work expected to be completed within a relatively short period shall be performed for a maximum of five (5) years.

Article 8 further determines that:

• A fixed-term contract based on a specified period of time, as referred to in Article 5(1), may be concluded for a maximum duration of five (5) years.
• In the event that the term of a fixed-term contract, as referred to in paragraph (1), is due to expire and the work in question has not yet been completed, the fixed-term contract may be extended for a period agreed upon between the employer and the worker/labourer, provided that the total duration of the fixed-term contract, including such extension, shall not exceed five (5) years.

In this regard, an inconsistency arises between the provisions set out in paragraphs (1) and (2) of Article 8 of Indonesian Government Regulation No. 35 of 2021. Paragraph (1) stipulates that the maximum duration of a fixed-term employment contract is five (5) years. However, paragraph (2) provides that, in the event the term of a fixed-term employment contract as referred to in paragraph (1) is about to expire and the work in question has not yet been completed, the contract may be extended for a period agreed upon between the employer and the worker/labourer, provided that the total duration of the fixed-term employment contract, including any extensions, does not exceed five (5) years. This gives rise to a practical legal question: if the contract has already run for five years but the work remains unfinished, an extension would not be permissible under the existing limitation. Given that the law prohibits exceeding the five-year maximum, the legal basis for any purported “extension” in such circumstances becomes unclear.

In the practical implementation of the fixed-term employment contract provisions, concerns are shared by both fixed-term contract workers and employers due to the statutory limitation of five (5) years. For instance, in poultry farming enterprises located in Pujungan Village and Batungsel Village, Pupuan District, Tabanan Regency, anxiety has arisen among fixed-term contract workers regarding their future after completing five years of service―specifically, whether their contracts will be renewed or they will be subject to termination. The regulation clearly stipulates that the maximum period for a fixed-term employment contract is five years. This limitation persists despite the fact that both parties―the workers and the employers―to require each other: the workers still wish to retain their employment, and the employers still rely on these workers, who are considered professionals in their roles. However, with the statutory time limit fixed at five years, the question arises as to where the legal protection for fixed-term contract workers truly lies. The absence of legal certainty and the lack of guaranteed legal protection for fixed-term employment contract workers render this matter highly urgent for further scholarly examination. A key concern among fixed-term contract workers is the possibility of dismissal upon the expiry of their contracts. Should the contract not be renewed, the employment relationship will terminate, resulting in the immediate loss of livelihood for the worker. This would necessitate seeking new employment elsewhere, and, in the event such employment cannot be secured, the worker would face unemployment―an outcome that constitutes the core of the workers’ apprehensions. Similarly, employers stand to lose experienced and skilled personnel. The recruitment of new workers would necessitate further training, thereby incurring additional costs and requiring significant time. Such circumstances expose inherent weaknesses in the current fixed-term employment arrangement.

2) Regulatory Model for Fixed-term Employment Agreement

In order to provide legal certainty for workers employed under fixed-term contracts, it is necessary to establish regulations that explicitly guarantee such certainty while safeguarding the legal protection of contractual workers. The regulatory model proposed involves a reconstruction of the existing provisions governing fixed-term employment agreements. Ideally, the regulation should prescribe a maximum term of five (5) years; however, where the employer continues to require the worker’s services and the worker likewise remains in need of employment with the same enterprise, both parties should be granted the contractual freedom to extend the fixed-term contract by mutual agreement. Such an arrangement would reflect their reciprocal needs, provided that no party suffers detriment as a result of the agreement. Furthermore, the regulation should mandate the provision of health benefits, occupational safety allowances, and holiday allowances to ensure comprehensive protection of workers’ rights within the employment relationship.

CONCLUSION AND RECOMMENDATIONS

In light of the foregoing research findings and discussion, the following conclusions may be drawn:

• Legal protection for fixed-term contract workers takes two forms: preventive and repressive protection. Preventive protection is provided through statutory regulation, as set out in Article 27(2) of the 1945 Constitution of the Republic of Indonesia; Law No. 13 of 2003 on Manpower; Article 81 point 12 of Law No. 6 of 2023 on Job Creation; and Government Regulation No. 35 of 2021 on Fixed-Term Employment Agreements, Outsourcing, Working Hours and Rest Periods, and Termination of Employment. Repressive protection is effected through judicial dispute resolution―namely, court judgments―which serve to safeguard the human rights of individuals who have suffered harm and to ensure the full enjoyment of the rights conferred by law.
• The proposed regulatory model for Fixed-Term Employment Agreements (PKWT) in ensuring legal certainty for workers provides for a five-year term, which may be extended subject to the mutual agreement of the parties. Such an arrangement should also guarantee workers’ entitlements, including health benefits, occupational safety allowances, and holiday allowances.

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