Indonesia Labor Law and Employment Policy Overview

Employment Law Overview

• Key Legislation:
  • Labor Law No. 12 of 1948
  • Social Security Law No. 13 of 2003
  • Human Resource Management Law No. 13 of 2004
• Legal Characteristics:
  • Aims to protect employee rights and promote employment opportunities
  • Stipulates minimum wages, working hours, leave entitlements, and social security benefits

Employment Contract Requirements

• Contract Types:
  • Fixed-term contracts
  • Indefinite-term contracts
• Contractual Provisions:
  • Must include job description, compensation, working hours, benefits, and termination terms
• Language and Currency:
  • Indonesian language and Indonesian Rupiah

Working Hours Regulations

• Standard Working Hours:
  • 40 hours per week, 7 hours per day (6-day workweek)
  • 40 hours per week, 8 hours per day (5-day workweek)
• Rest Days and Breaks:
  • At least 1 rest day per week
  • At least 30 minutes break per day

Leave Policy

• Annual Leave:
  • 12 days, increasing to 1 month after 6 years of continuous service
• Public Holidays:
  • 21
• Special Leave:
  • Sick leave: with medical certificate
  • Maternity leave: 3 months prenatal, 1.5 months postnatal
  • Paternity leave: 2 days
  • Family leave: for specific events (e.g., circumcision, baptism, marriage, death)

Employee Severance and Contract Termination

• Notice Period:
  • 1 month (less than 1 year of employment)
  • 2 months (1 year or more of employment)
• Severance Pay:
  • Calculated based on years of service, up to 9 months' salary
• Unfair Dismissal Protection:
  • Employees can file a complaint with the Labor Court

Tax Laws

• Personal Income Tax:

  • Salary Range (IDR)	Tax Rate
    0 - 50,000,000	5%
    50,000,000 - 250,000,000	15%
    250,000,000 - 500,000,000	30%
    500,000,000 and above	35%

• Social Security Contributions:

  • Employee: 10.24%~11.74%
  • Employer: 10.24%~11.74%

Health Insurance

• Insurance Policy:
  • Employees must participate in the National Health Insurance Program (BPJS Kesehatan)
• Insurance Coverage:
  • Basic medical services, hospitalization, medication

Compensation and Benefits

• Minimum Wage:
  • Varies by region
• Compensation Structure:
  • Basic salary, bonuses, allowances

Work Permits and Visas

• Permit Requirements:
  • Foreigners require a work permit
• Application Process:
  • Apply through the Indonesian Immigration Office

Confidentiality and Non-Compete Clauses

• Enforceability:
  • Confidentiality and non-compete clauses are enforceable in Indonesia
• Common Provisions:
  • Protection of trade secrets, client lists, and intellectual property

Training and Development

• Legal Requirements:
  • Safety training, skills enhancement
• Government Support:
  • Government-funded training programs

Workplace Diversity and Inclusion

• Legal Requirements:
  • Prohibits discrimination based on race, religion, gender, or disability
• Enforcement Measures:
  • Government agencies responsible for enforcing the law

Remote Work Policy

• Legal Framework:
  • No specific legal framework
• Tax and Insurance Implications:
  • Remote work may impact tax and social security contributions

Authoritative Website Addresses

• Indonesian Ministry of Manpower: https://kemnaker.go.id/