Project Based Employment Contract Template for Indonesia
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What is a Project Based Employment Contract?
The Project Based Employment Contract is a specialized employment agreement used in Indonesia when hiring employees for specific, time-bound projects. This contract type is regulated under Indonesian Labor Law No. 13 of 2003 and Government Regulation No. 35 of 2021, which set strict requirements for fixed-term employment agreements (PKWT). The document is essential for businesses undertaking project-based work where employment is needed for a defined period or specific project completion. It provides legal protection for both employers and employees by clearly defining project scope, duration, responsibilities, and compensation while ensuring compliance with Indonesian labor regulations regarding fixed-term employment, including maximum duration limits and renewal restrictions.
About the Project Based Employment Contract
A Project Based Employment Contract is a specialized type of fixed-term employment agreement (PKWT) designed specifically for hiring employees to complete defined projects with clear timelines. Under Indonesian labor law, this contract type provides a legal framework for temporary employment relationships while ensuring compliance with strict regulatory requirements governing project-based work arrangements.
When do you need this document?
You need a Project Based Employment Contract when your company undertakes specific projects requiring temporary staff with specialized skills. This includes construction projects, IT system implementations, research initiatives, marketing campaigns with defined timelines, or any work with a clear beginning and end date. The contract is particularly valuable for businesses that experience seasonal fluctuations or need to expand their workforce temporarily without committing to permanent employment relationships.
Key legal considerations
Several critical legal elements must be carefully addressed in your Project Based Employment Contract. The project scope and duration must be clearly defined with specific start and end dates, as Indonesian law prohibits indefinite project-based contracts. Employee duties, reporting relationships, and performance expectations should be detailed to avoid disputes. Compensation terms, including salary, overtime rates, and any project completion bonuses, must comply with minimum wage requirements. The contract should specify work location, equipment provision, and confidentiality obligations. Most importantly, include clear termination clauses that outline circumstances for early contract termination and the procedures for project completion or extension.
Legal requirements in Indonesia
Indonesian labor law imposes strict requirements on Project Based Employment Contracts that you must follow to ensure legal validity. Under Law No. 13 of 2003 and Government Regulation No. 35 of 2021, project-based contracts cannot exceed the actual project duration and must have clearly defined completion criteria. The contract must be written in Indonesian language and registered with local manpower authorities within seven days of signing. Employers must provide mandatory social security coverage through BPJS for health insurance and employment benefits. The agreement cannot be renewed indefinitely - if the same type of work continues beyond the original project scope, you must convert the employment relationship to a permanent contract. Additionally, project-based employees are entitled to proportional leave benefits, overtime compensation according to standard rates, and proper termination procedures that comply with Indonesian severance requirements. Failure to meet these legal standards can result in the contract being deemed a permanent employment relationship by Indonesian labor courts.
GOVERNING LAW
Applicable law
This Project Based Employment Contract is drafted to comply with Indonesia law. Key legislation includes:
Law No. 11 of 2020 on Job Creation (Omnibus Law): Recent comprehensive law that amended various provisions of the Labor Law, including regulations on fixed-term employment contracts and severance payments
Government Regulation No. 35 of 2021: Implementing regulation of the Job Creation Law specifically regarding fixed-term employment agreements, outsourcing, working hours, and rest periods
Law No. 24 of 2011 on Social Security Administrative Bodies (BPJS): Regulates mandatory social security and health insurance enrollment for employees
Minister of Manpower Regulation No. 2 of 1993: Specific regulation on Standard Employment Contracts that provides guidelines for contract structure and content
Government Regulation No. 36 of 2021: Regulation on Wages, including provisions for minimum wage requirements and wage components
Minister of Manpower Decree No. 100 of 2004: Specific provisions for implementation of fixed-term employment agreements, including maximum duration and conditions for project-based work
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