Compulsory Comprehension : The Distinction of DEA and IEA

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Compulsory Comprehension : The Distinction of DEA and IEA

We often hear the term employee is being employed based on Definite Employment Agreement or Indefinite Employment Agreement. However, what is the distinction between the two?

 

Definite Employment Agreement and Indefinite Employment Agreement

Article 56 Law No. 13 of 2003 regarding Manpower (“Law 13/2003”) dividing Employment Agreement to be two, namely Definite Employment Agreement (“DEA”) and Indefinite Employment Agreement (“IEA”). The difference made based on time period or the completion of particular work.

Other than those 2 components, DEA and IEA also different based on the effective probation period and the form of agreement :

Probation in Employment Agreement

In IEA, probation obtainable to be performed in maximum 3 months (Article 60 Law 13/2003). Nevertheless, probation is prohibited to be carried out in DEA (Article 58 Law 13/2003). The arising out consequence in DEA, then the probation will be considered null and void.

Form of DEA and IEA

DEA is obliged to be made in written with bahasa Indonesia and latin letter as regulated under Article 57 paragraph 1 Law 13/2003. As a result of violating the provision, DEA will be considered as IEA. Meanwhile IEA can be composed either in written or oral. However, shall IEA made orally, then Employer is obliged to make letter of appointment for employee as regulated under Article 63 paragraph 1 Law 13/2003.

The effective period of DEA based on Article 59 paragraph 4 Law 13/2003 is maximum 2 years and only allowed to be extended for maximum 1 year. The renewal of DEA may only be allowed after passing 30 days grace period from the end of previous DEA, the renewal can only be allowed for once in maximum 2 years (Article 59 paragraph 6 Law 13/2003). In short, DEA is only allowed to be performed 2 years, extended once for one year, followed by renewal of DEA once for maximum 2 years. It is essential to be acknowledged that the character of works which allowed to use DEA is regulated under Article 59 paragraph 1 Law 13/2003:

“Employment agreement for definite time can be composed for certain work in accordance with type and character or the activity of work will be done at certain time, namely :

a. one time finished or temporary type of work;

b. work which completion is predicted to spend brief time and maximum 3 years;

c. seasonal type of work; or

d. work related to new product, new activity or additional product still in trial or assessment.”

Please note that violation for Article 59 paragraph 1, 2, 4, 5, 6 will cause DEA to change to become IEA by law.

 

What does generate transition from DEA to IEA?

DEA may be changed to become IEA shall :

  1. DEA used for permanent work.
  2. DEA is performed for 2 years, then prolonged once for 1 year, and renewed once for maximum 2 years.
  3. Employer does not inform DEA extension seven days prior to the end of DEA.
  4. DEA is not made in written and not using bahasa Indonesiaand latin letter.

 

The Implication of Transition from DEA to be IEA for Working Period

It is necessary to be acknowledged that shall DEA becomes IEA, then the working period will be counted since the first time employment between Employer and Employee has started. Therefore, shall there is termination of employment by Employer, then working period will be counted since the employment first conducted between Employer and Employee.

This Article is generally made for the purpose of ANR Law Firm publication only and should not be treated as legal advice for your legal problem. Shall you have any further questions regarding this topic, you may contact the Advocate who authored this article at anrlawfirm@anr-lawfirm.com.

Author: Sarah Sylvania Hutagalung, S.H.

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