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The Intricacy of a Work Agreement

The Intricacy of a Work Agreement

The Intricacy of a Work Agreement

Indonesian Labour Law is regulated under the Act of the Republic of Indonesia Number 13 of 2003 concerning Manpower [hereinafter, “Law No. 13/2003”]. The Law No. 13/2003 governs the general rules of labour to protect the fundamental rights of workers and to secure the implementation of equal treatment without discrimination to realize the welfare of labourers as well as their family.

As a worker, it is a must to understand the rights you have and obligations you bear. To secure your position, an agreement usually plays a pivotal role. In the work field, it is called a work agreement. There are two types of a work agreement, i.e an individual work agreement and a collective work agreement. Under Article 1 (14) of Law No.13/2003, an individual work agreement shall be defined as an agreement made between a worker/labourer and an entrepreneur or an employer. The agreement specifies work requirements, rights and obligations of both sides. On the other hand, as defined under Article 1 (21) of Law No.13/2003, a collective work agreement is an agreement resulting from negotiations between a trade/ labour union or several trade/ labour unions and an entrepreneur or several entrepreneurs or an association of entrepreneurs which is registered at a government agency responsible for labour affairs. The agreement shall specify work requirements, rights and obligations of both sides.

Read more : Indonesian Labor Law: Contract Employee Rights upon Contract Termination

An employment relation is established by the existence of a work agreement between the entrepreneur and the worker and may only be withdrawn and/or changed if both parties agree to do so. The work agreements can be made either in writing or orally. Written work agreements shall be carried out in accordance with valid legislation as regulated under Article 51 of Law No. 13/2003.

Requirement of the work agreement includes:

  1. The agreement of both sides;
  2. The capability or competence to take legally-sanctioned actions;
  3. The availability/existence of the job which both sides have agreed about;
  4. The agreed job is not against public order, morality and the applicable laws and regulations.

A work agreement which is against point 1 and 2 may be abolished, whereas agreement made against point c and d shall be declared null and void.

A written work agreement shall at least include informations regarding:

  1. The name, address and line of business [of the enterprise];
  2. The name, sex, age and address of the worker/labourer;
  3. The occupation or the type of job;
  4. The place, where the job is to be carried out;
  5. The amount of wages and how the wages shall be paid;
  6. Job requirements stating the rights and obligations of both the entrepreneur and the worker/labourer;
  7. The date the work agreement starts to take effect and the period during which it is effective;
  8. The place and the date where the work agreement is made; and
  9. The signatures of the parties involved in the work agreement.

A work agreement can be distinguished by the time period, which are:

  1. A work agreement with a specified period of time
    It is based on a term or completion of a certain job. It must be written in Indonesian language with Latin alphabets. Foreign language version is allowed along with the Indonesian text. If any differences in interpretation arise, the Indonesian text shall be regarded as the authoritative one. The agreement cannot stipulate a probation period, and if any, the probation period shall be declared null and void. The work agreement can only be made for a certain job which will finish in a specified period of time such as seasonal work. It can be renewed or extended for no longer than once.
  2. A work agreement with an unspecified period of time can be made in writing or orally. If made orally, the entrepreneur is under an obligation to issue a letter of appointment for the worker which contains information concerning the name and address of the worker, start date of work, type of work and amount of wage the worker is entitled to. The work agreement may require a probation period for no longer than 3 months and no less than a minimum wage payment.

How does a work agreement come to an end?

  1. The worker dies;
  2. The work agreement expires;
  3. A court ruling and/or a decision or a resolution of the institute for the settlement of industrial relations disputes, which has a permanent legal force, ends the agreement;
  4. There is a certain situation or incident prescribed in the work agreement, the enterprise’s rules and regulations, or the enterprise’s collective work agreement which may effectively result in the termination of employment.

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