Introduction
Employment law in Indonesia is primarily governed by Law No. 13 of 2003 on Manpower, as most recently amended by Law No. 6 of 2023 on ratification of Government Regulation in Lieu of Law No. 2 of 2022 on Job Creation (“Manpower Law”) and its implementing regulations (i.e. Government Regulations and Ministry of Manpower Regulations). This regulation establishes the fundamental principles of employment relations, including the one that requires every employment to be based on an employment contract, equality of opportunity, prohibition of discrimination, fair wages, and protection of worker welfare.
While the specialised Industrial Relation Court is the court assessing and ruling industrial disputes in Indonesia, Law No. 2 of 2004 on Settlement of Industrial Relation Disputes (“IRC Law”) encompasses the procedure of industrial relation disputes.
Legal Framework
The key laws of manpower matter in Indonesia include, inter alia:
- Manpower Law serves as the main legislative foundation for labour relations, covering employment, working conditions, rights, and obligations;
- IRC Law regulates the settlement of industrial relations disputes through bipartite, mediation, and judicial processes;
- GR 35/2021 implements provisions on fixed-term employment, outsourcing, working hours, and termination procedures;
- Government Regulation No. 36 of 2021 on Wage governs wage determination and is the basis of UMP and UMK (“GR 36/2021”);
- Government Regulation (“GR”) No. 34 of 2021 on Utilisation of Foreign Workers (“GR 34/2021”);
- Ministry of Manpower (“MoM”) Regulation No. 8 of 2021 on Implementing Regulation of GR 34/2021 (“MoM Reg. 8/2021”);
- MoM Regulation No. 5 of 2021 on Implementation Work Accident Insurance, Death Insurance, and Old Age Insurance as lastly amended by MoM Regulation No. 1 of 2025 (“MoM Reg 5 2021”); and
- Other government and MoM regulations governing manpower provisions not mentioned above.
New Developments
MoM has recently introduced several key instruments in 2025 that address matters such as discouraging recruitment discrimination, provisions on wage subsidies, social security requirements, and establishing digital manpower systems. These changes, introduced through multiple ministerial regulations and circulars, are aligned with the national strategy to enhance transparency, employment accessibility, and equitable labour standards across Indonesia.
A major development in recruitment fairness is reflected in MoM Circular Letter No. M/5/HK.04.00/V/2025 on Prohibition of Withholding Diplomas and/or Personal Documents of Workers. This circular enforces Articles 5 and 6 of the Manpower Law, which prohibit employment discrimination. Employers are expressly not allowed to withhold diplomas or personal documents, obstruct workers’ mobility, or set discriminatory employment terms. Exceptions allowing temporary submission of diplomas are permitted if the education or training was financed by the employer and under written agreement, emphasizing fairness and transparency during recruitment.
To address wage disparity and provide social protection amid rising living costs, MoM enacted Regulation No. 5 of 2025 (“MoM Reg 5/2025”) amending MoM Reg No. 10 of 2022 on Wage Subsidies (Bantuan Subsidi Upah or “BSU”). The updated scheme provides subsidies of IDR600,000 over two months for workers earning less than or equal to IDR3.5 million per month and registered under the BPJS employment program. The recalibrated eligibility criteria, prioritisation system, and refined disbursement mechanisms aim to ensure that assistance reaches vulnerable workers efficiently, strengthening BSU’s role as an adaptive social safety net during economic pressures.
Digital transformation in manpower administration was reinforced through MoM Regulation No. 17 of 2024 (“MoM Reg 17/2024”) establishing the SIAPkerja platform under the One Data Indonesia initiative. This platform integrates employment data nationwide and provides access to job placement, training, industrial relations, and occupational safety services (Articles 2–4 of MoM Reg 17/2024). Since May 2025, registration through SIAPkerja has been mandatory for participation in job fairs and entrepreneurship programs, marking a shift toward a centralised, technology-driven manpower ecosystem aimed at reducing unemployment and improving workforce skills.
Further, MoM Regulation No. 1 of 2025 (“MoM Reg 1/2025”) amends MoM Reg No. 5 of 2021 to expand the definition of “work accidents” to include physical violence and sexual assault occurring in the workplace (Article 7 paragraph 2, point g). These incidents, when supported by a police report and medical forensic evidence, now qualify for Work Accident Insurance coverage, strengthening protection against workplace harassment.
Finally, the government issued Government Regulation No. 6 of 2025 amending GR No. 37 of 2021 on Job Loss Security (“GR 6/2025”), reducing the Job Loss Security premium from 0.46% to 0.36%, ensuring mandatory health insurance enrolment for all enterprises, and extending claim filing periods from three to six months. Collectively, these reforms underscore Indonesia’s continued commitment to modernising its labour system through stronger social protection, equitable employment practices, and digital integration.
