Indonesian employment law does not distinguish between blue- and white-collar workers. The only distinction it makes between employees relates to the duration of their employment agreement – ie, whether it is permanent or for a fixed term.
An employment agreement for a specified period (fixed term) must be in writing with a maximum cumulative period of five years (including any extension thereof).
However, an employment agreement for a permanent employee may be made orally or in writing. If the former, the employer must issue a letter to the employee confirming the permanent employment. The appointment letter must contain:
The terms and conditions that must be included in an employment agreement include:
Normal working hours are:
Flexible working hour arrangements are possible, subject to agreement between the parties.
An employment is considered part-time if the working hours are fewer than seven hours per day and fewer than 35 hours per week. Wages for part-time employees may be calculated on hourly basis.
Overtime work can only be performed on the order of an employer and consent of the employee, which must be given in hard copy or digitally. Overtime can be worked for a maximum four hours per day and 18 hours per week.
Overtime pay is based on hourly rates calculated as 1/173 x monthly wages (basic salary and fixed allowance). Apart from overtime wages, after four hours of overtime or more, employees must be provided with food and beverages with a calorific value of at least 1,400 kcal.
The working hours that exceed the maximum daily and weekly limits are only applicable in specific sectors and for specific positions, including energy and mineral resources, mining, upstream oil and gas, agribusiness and horticulture, and fisheries.
Minimum wages vary between provinces and only apply to employees with service of less than one year with a particular company. Minimum wages are stipulated by the governor of a province based on suggestions and consideration of a wages council. The governor in a province may also set minimum wages for cities or regencies (districts).
There is no mandatory 13th month for employees in the private sector. Further, incentives, bonuses, or reimbursement of work facilities are based on an agreement between an employer and employee, as well as the employer’s policy.
No government intervention takes place over compensation, pay increases, etc, apart from the minimum wage stipulation.
Additionally, Indonesian employment law recognises a mandatory religious holiday allowance of one month’s wage for employees with 12 months of consecutive service. For those with service periods of one to 12 months, the allowance is paid pro rata. The allowance should be paid at least seven days before the religious holiday.
Employees are entitled to paid leaves as further explained in 5.2 Sabbaticals.
No specific regulations exist on confidentiality or non-disparagement under Indonesian employment law. Its applicability depends on the agreement between an employer and employee.
There is no specific limitation on employee liability under the law. Pursuant to the Indonesian Civil Code, employers are liable for losses or damage caused by their employees. However, under the employment law, employers may make a deduction of up to 50% from an employee’s salary, to compensate for the loss or damage suffered by the employer.
Indonesian employment law does not specifically regulate non-compete clauses. Non-compete clauses can be agreed, in practice, by an employer and employee in an employment agreement or termination agreement (as the case may be). Given that there is no specific regulation on non-compete clauses, the validity and enforcement of non-compete clauses are subject to general contract law. It can be enforced should a breach occur.
As with non-compete clauses, Indonesian employment law does not expressly contain non-solicitation clauses. The matter can be agreed upon in an employment agreement or termination agreement (as the case may be). The validity and enforcement of non-solicitation clauses are also subject to general contract law. Non-solicitation can be enforced should a breach occur.
There is currently no specific data privacy law or regulation in the employment sphere.
In so far as an individual’s private or personal data or information is used, collected, processed, analysed, stored, displayed, sent, shared, destroyed or transferred via electronic media, Law No 27 of 2022 concerning Personal Data Protection (the “PDP Law”) as well as Law No 11 of 2008 on Electronic Information and Transactions (the “EIT Law”), as amended by Law No 19 of 2016, applies. The PDP Law and the EIT Law set the principal standard for the handling of general electronic information and data protection.
The PDP Law stipulates that the processing of personal data must be based on a specific lawful basis, including the following:
In this regard, depending on the specific purpose of processing, an employer may or may not be required to obtain express consent, which will require further assessment on a case-by-case basis.
An implementing regulation of the EIT Law is Ministry of Communications and Informatics (MOCI) Regulation No 20 of 2016 on Protection of Personal Data in Electronic Systems (the “MOCI Regulation No 20/2016”). Under PDP Law and the MOCI Regulation No 20/2016, every company is required to increase awareness, prevention, and implement organisational steps (internal regulations) to protect the personal data of their employees. This can be done by, among others, conducting training to prevent failure of protection of personal data managed by human resources, and determining the level of security of personal data by its nature and risks.
Expatriates can only be employed under a fixed-term employment agreement, subject to their work permit. Expatriates cannot be employed for multiple positions in the same company, and are prohibited from holding positions that involve responsibility for employment matters. The holding of multiple positions is permissible at different companies, provided the positions are at board of director or commissioner levels.
Registration requirements that apply to the use of foreign workers include:
To date, there are no specific regulations and/or restrictions on mobile work in Indonesia. Consequently, whether or not mobile work is to be performed, it would depend on the agreement between the employer and the employee and/or the employer’s policies.
Nevertheless, Law No 13 of 2003 on Manpower (as amended) (the “Manpower Law”) regulates that an employment agreement must at least include information on the location of the workplace. As such, if mobile work arrangement is agreed between the employer and the employee, conservatively, it must be specified under the employment agreement.
As for data privacy regulations in relation to mobile work, it will follow the general data privacy regulations, as there are no specific data privacy regulations related to mobile work. Please see 3.1 Data Privacy Law and Employment.
In terms of occupational safety and health (OSH) in relation to mobile work, there are also no specific regulations and/or restrictions in this regard. General OSH regulations would apply.
Similarly, there are also no specific regulations and/or restrictions for social security in relation to mobile work. Employees on mobile work will also be covered by the Manpower Social Security and the Health Social Security programmes.
What would generally be an issue in mobile work arrangement in relation to OSH and social security would be how to determine work accidents. Under OSH regulations, employers are required to report every work accident that occurs to the authorities. Work accidents will further be covered under the social security programme. Generally, work accidents are:
With the above definition of work accident in mind, in a mobile work arrangement, it would be difficult to determine a work accident, which will also affect employers’ obligation under the OSH regulations.
Indonesian employment law does not specifically recognise the concept of sabbatical leave.
The types of leave that are recognised in Indonesia are as follows:
For each consecutive month exceeding the above period until the employer terminates the employment relationship, the employee continues to be entitled to the payment of their wages, but only 25% of the wage. After this period, the employer may terminate employment by paying the stipulated severance package to the employee.
Other than the above, in practice, employees may also take an unpaid leave based on the employer’s policies, at the employer’s discretion, or subject to the agreement between the employer and the employee, bearing in mind the principle of “no work no pay” that is recognised under Indonesian employment law.
Thus, sabbatical leave may refer to an extended period of leave such as a paid long leave, unpaid leave, prolonged illness, and/or leave due to religious obligations, with no certain restrictions other than the different leave period as well as the work benefits and the payment of salary (ie paid or unpaid).
There are currently no possible new manifestations in the field of “new work”. It is not foreseen that the government will issue any laws or regulations to this effect.
Even so, companies in Indonesia have introduced the usage of certain new practices, such as desk sharing, clean desk policy, hybrid/remote working, and/or having an office with open space. As these practices are not regulated, their implementation is subject to each company’s internal policies or the agreement between the employer and the employee.
Rules related to labour unions are contained primarily in Law No 21 of 2000 on Employees/Labour Unions. In order for a labour union to be recognised, following its establishment, a labour union must:
A recognised labour union is entitled to:
Other than labour unions, Indonesian employment law also recognises bipartite co-operation bodies (BCB). Employers that employ more than 50 employees are obliged to establish a BCB.
A BCB functions as a communication and consultative forum between an employer and representatives of a labour union and employees, in order to improve industrial relations.
Members of a BCB comprise representatives of the employer and employees/labour union (with equal composition, and at least six members).
Indonesian employment law recognises collective labour agreements as instruments for collective bargaining between a registered labour union or several registered labour unions with an employer, or several employers or employer organisations. Collective labour agreements are valid for two years from execution, extendable for one year. Collective labour agreements must be registered with the Manpower Agency with jurisdiction over the work location.
Collective labour agreements contain the rights and obligations of the employer, labour union and employees, but in more detail. As a general rule, the quality and quantity of the conditions of employment stipulated in the collective labour agreements must not be less beneficial than those regulated under the prevailing laws and regulations.
Although there are some instances where bargaining takes place at industry level, the majority of bargaining over collective labour agreements takes place within companies.
Reason for termination of employment must be clearly stated in the written notice for termination. An employer may initiate termination of an employee for reasons related to an individual employee or for business-related reasons.
For Reasons Related to an Individual Employee
Employment may be terminated in the following circumstances:
For Business-Related Reasons
Employment may be terminated in the following circumstances:
There are no different procedures for specific grounds for termination. All terminations will experience the same procedure, including collective redundancy.
A written notification of termination must be served by the employer on the employee and labour union (if the concerned employee is a member) at least 14 business days prior to the intended date of termination. The employee may reject the termination in writing, within seven business days of receipt of the notice of termination.
If, after being notified, the employee rejects termination, settlement must be reached by way of bipartite negotiation. If that fails, it is subject to the industrial relations dispute settlement mechanism under law. These include:
Employees are entitled to compensation upon termination, comprising severance pay, service appreciation pay, and compensation of entitlements. The amount in compensation depends on the length of service and the reason for termination. Employees may be suspended on full pay during a termination process.
Indonesian employment law recognises termination of employment for reasons of urgency, which must be further detailed in the employment agreement, company regulations or collective labour agreements. Urgent reasons may include serious cause, or even a criminal act.
Unlike regular termination of employment, termination for reasons of urgency does not require a notice of termination or minimum notice period. Employees terminated for urgent reasons will not be entitled to severance pay and service appreciation pay.
Termination agreements are permissible under Indonesian law and, upon execution, must be registered with the Industrial Relations Court. There are no specific requirements or limitations on the terms of a termination agreement.
There is no specific protection against dismissal for particular categories of employee. However, employees cannot be terminated for the following reasons:
Wrongful dismissal is regarded as termination of employment without valid reasons (as stipulated under the Job Creation Law) or if the termination is not carried out through proper procedure.
The consequences of wrongful dismissal claims may include:
Indonesia has ratified ILO Convention No 111 of 1958 on Discrimination in Respect of Employment and Occupation. Thus, discrimination regulated in this Convention is sufficient grounds for an anti-discrimination claim. In other instances, it can encompass:
The burden of proof for anti-discrimination claims follows the general civil procedural law, as it lies with the claimant.
Under the Manpower Law, anyone applying for a job has the same opportunity to obtain the job without being discriminated against on grounds of gender, ethnicity, race, religion, or political orientation, in accordance with the person’s interest and capability. Equal treatment also applies to persons with disabilities.
Further, employees have the right to receive equal treatment without discrimination from their employer and employers are obliged to provide their employees with equal rights and responsibilities, free from discrimination on the basis of gender, ethnicity, race, religion, skin colour or political orientation.
Indonesian employment law imposes administrative sanctions on the violation of the discrimination rules. However, it does not specifically stipulate the damages/relief applicable in an anti-discrimination claim. Nevertheless, under general tort provision in the Indonesian Civil Code, a person who commits an unlawful act that causes harm to another person must compensate that person for the damages caused.
Alternatively, if an employee opts to file an employment termination claim with an Industrial Relations Court, they may receive a severance package should the claim be accepted by that court.
Electronic court or e-court system has been established in Indonesian courts as a follow-up to Supreme Court Decree No 7 of 2022 on the Amendment to Regulation of the Supreme Court No 1 of 2019 on the Administration of Cases and Legal Proceedings in Courts Via Electronic Means, which stated that the administration and legal proceedings via electronic means shall apply to special civil law cases, including those under the Industrial Relations Court. The regulation of e-court only applies to court proceedings before the Industrial Relations Court and does not regulate further regarding employment disputes undergoing bipartite negotiation, mediation, conciliation, or arbitration.
In practice, the implementation of the e-court proceedings at the Industrial Relations Court of Jakarta is still in development and is generally subject to the discretion of the judges handling the respective cases.
Industrial relations disputes are settled via a three-tier mechanism, namely:
An appeal to the Supreme Court may be filed by any of the parties against a decision of the Industrial Relations Court.
There are no specific rules on class action for an employment dispute, nor has this ever been tested via class action. However, in regular Industrial Relations Court proceedings, there is no limitation on the number of plaintiffs. In practice, it could be hundreds in a mass termination case.
Parties to an industrial relations dispute may act on their own behalf, be represented by attorneys, or by a labour union or an employer’s organisation of which they are a member.
Arbitration is a possible alternative resolution method for settlement of an industrial relations dispute. However, specifically, it is only allowed for:
As a matter of general Indonesian arbitration law, pre-dispute arbitration agreements are enforceable. Nevertheless, agreements to arbitrate, post-dispute, are also recognised.
Attorneys’ fees cannot be awarded to the other party; under the civil procedural law, attorneys’ fees are borne by those who utilise them.
Graha CIMB Niaga 24th Floor
Jalan Jenderal Sudirman Kav. 58
Jakarta 12190
Indonesia
+62 21 250 5125
+62 21 250 5001
info@abnrlaw.com www.abnrlaw.comIndonesia’s New Guidelines on the Prevention and Management of Workplace Sexual Harassment: Adapting to Current Conditions
As part of the Indonesian government’s commitment to eliminate all forms of sexual violence, a comprehensive legal framework has been introduced to address the issue of sexual harassment in the workplace. The Ministry of Manpower (MOM) has taken the initiative to update its Decree No SE.03/MEN/IV/2011 of 2011 on Sexual Harassment Prevention Guidelines in the Workplace (“Decree 3/2011”). The decision to update Decree 3/2011 gained further momentum after a disturbing incident of workplace sexual harassment was widely covered by the Indonesian media. A female employee working in an industrial area in West Java reported in early May 2023 that her manager ordered her to sleep with him on a “staycation” as a requirement to extend her employment contract. The female employee filed a police report against the manager.
Following a public outcry, the MOM on 29 May 2023 issued Decree No 88 of 2023 on Guidelines for the Prevention and Management of Sexual Harassment in the Workplace (“Guidelines 88/2023”).
Sexual Violence Crimes Law
Addressing the pressing need for safety and assurance for victims of sexual harassment, the Indonesian government has issued Law No 12 of 2022 on Sexual Violence Crimes (“Law 12/2022”). This comprehensive legislation comprises extensive provisions aimed at preventing all forms of sexual violence, protecting and rehabilitating victims, enforcing the law against the perpetrators, fostering sexual harassment-free environments, and preventing future instances of sexual harassment. Under Law 12/2022, sexual harassment is classified into various types, including the following:
In addition to the above, sexual violence crimes encompass a broader range of offences, including rape, obscene acts, sex with minors, child pornography, domestic sexual violence, and money laundering associated with funds derived from sexual violence.
There are various criminal sanctions introduced under Law 12/2022, including the following.
Law 12/2022 also places significant emphasis on the protection of victims, with the following measures.
Regulation of sexual harassment under Decree 3/2011: pre-update framework
Decree 3/2011 was formulated based on the fundamental principle of decent work for all and the principle of non-discrimination recognised under Indonesian constitutional law and the Manpower Law. Within Decree 3/2011, five types of sexual harassment were recognised:
Under Decree 3/2011, employers had an obligation to establish and communicate a clear policy on sexual harassment in the workplace, as well implementing effective and reasonable restorative measures in case of any incidents.
Employers were also required to create an in-house mechanism at the company level to prevent and address sexual harassment cases. The mechanism should include the following:
Moreover, Decree 3/2011 recognises two sexual harassment settlement mechanisms in the workplace: informal and formal procedures. These mechanisms involve an internal ad-hoc team (a special committee) formed by the employer, which is different from the Task Force team (which must be permanently established by the employer) indicated in the new Guidelines. “Sexual harassment report procedures” (below) will elaborate further on the settlement mechanism under Guidelines 88/2023 and Decree 3/2011.
While the provisions mentioned above are still applicable, Decree 3/2011 faced implementation challenges during its enforcement, mainly because the specific law on sexual violence had not been issued at that time. Consequently, the effectiveness of Decree 3/2011 in addressing sexual harassment reports within companies was limited. In most cases, companies chose to follow their internal procedures to manage and handle reports of sexual harassment, rather than fully utilising the provisions outlined in Decree 3/2011.
Defining workplace sexual harassment under the Guidelines
Guidelines 88/2023 recognise the types of sexual harassment defined by Law 12/2022, including non-physical sexual harassment, physical sexual harassment, and electronic-based sexual harassment in the workplace. These categories are described as follows.
Compared to Decree 3/2011, the definitions of sexual harassment under Guidelines 88/2023 are broader and reflect recent developments regarding the types of sexual harassment.
Guidelines 88/2023 are applicable to various stakeholders involved in the prevention and management of workplace sexual harassment. These stakeholders include employers, employees, labour unions and MOM officials.
Regarding the workplace scope, it includes all areas, whether enclosed or open, where employees work or commonly access for work-related purposes. This includes rooms, fields and spaces directly associated with business activities, as well as surrounding areas within the workplace premises. Additionally, locations connected to the workplace, such as company shuttle bus services, are also covered by Guidelines 88/2023.
Workplace sexual harassment prevention guidelines for employers
Guidelines 88/2023 outline several key roles and tasks for employers in preventing workplace sexual harassment, as summarised below.
Sexual harassment task force
Guidelines 88/2023 also introduce a groundbreaking requirement for employers. Employers now must form an internal sexual harassment task force as one of the preventative measures against sexual harassment in the workplace. For companies with a bipartite co-operation body (Lembaga Kerja Sama Bipartit – “Bipartite LKS”), which is mandatory for companies with at least 50 employees, the task force can be part of the organisational structure of the Bipartite LKS.
The task force’s duties include the following:
The task force should have a minimum total of three members, composed of representatives of the company, as well as the employees or labour union members.
Sexual harassment report procedures
Guidelines 88/2023 provide the following procedures for submitting and handling sexual harassment reports.
Comparison to Decree 3/2011
Decree 3/2011 provides for both informal and formal grievance procedures.
Disciplinary measures and sanctions for sexual harassment should be fair and may include:
Rehabilitation and support for sexual harassment victims
As retaliations against victims are likely to occur, it becomes the employer’s responsibility to take preventative measures, including:
Employers can provide various forms of rehabilitation to the victims, including:
The imposed sanctions must correspond with the type of harassment and comply with the relevant provisions in the employment agreement, company regulations, or collective labour agreement. The sanctions do not diminish the victim’s right to file a police report.
Comparison to Decree 3/2011
Under Decree 3/2011, a set of specific follow-up actions must be taken by senior managers to ensure that the perpetrator does not engage in further harassment. The focus is on restoring the victim’s rights and situation. Additional protective and remedial measures may include a requested apology from the perpetrator; granting sick or annual leave to the victim; and compensation for losses incurred by the victim, including medical expenses.
What Is Next
Following the issuance of Guidelines 88/2023, companies should actively prepare and implement their own sexual harassment policy or update their existing policy. As Guidelines 88/2023 are relatively recent, the exact enforcement mechanisms remain uncertain. However, numerous employers are already actively seeking legal counsel to review their existing policies and ensure they align with Guidelines 88/2023, as certain obligations are more stringent compared to Decree 3/2011.
Furthermore, given the recent surge in public awareness and concern about sexual harassment, it is safe to say that companies are strongly encouraged to adopt and apply Guidelines 88/2023 accordingly.
It is also worth noting that adjustments to existing employment agreements, company regulations and collective labour agreements will be necessary to demonstrate compliance with this latest development.
Summitmas I, 16th & 17th floors
Jl. Jend. Sudirman Kav. 61–62
Jakarta 12190
Jakarta
Indonesia
+6221 5080 8300, 252 1272
info@makarim.com www.makarim.com