Minimum Working Conditions
Employers practically establish a Company Regulation (“CR”) or Collective Labour Agreement (“CLA”) if they intend to regulate particular terms and conditions that are not mentioned in the individual employment agreement. An employer who employs, at least, 10 employees is required to establish a CR, which becomes effective after being approved by MoM or an authorized official. However, if a company already has a CLA in place, the preparation of a CR is not required (Article 108 of Manpower Law).
The CR is prepared and remains the responsibility of the employer, taking into account input from employee representatives or labour union (Article 109 and Article 110 of Manpower Law).
As stipulated under Article 2 of MoM 28/2014, a CR must, at least, include:
- rights and obligations of the employer;
- rights and obligations of the employee;
- terms and conditions of employment;
- company code of conduct;
- the validity period of the CR; and
- any further conditions as regulated by the Manpower Law.
(“CR Minimum Requirements”).
Provisions in the CR must not conflict with the applicable laws and regulations. In case of any inconsistency, the prevailing laws and regulations shall apply. The CR is valid for not more than 2 years and must be renewed upon expiration (Article 111 paragraph 1 and 2 of the Manpower Law).
Regarding the CLA, labour unions may negotiate with an employer or several employers to establish a CLA through mutual deliberation. The CLA must be made in writing, using Latin letters and the Indonesian language, and only one CLA may be applied within a company to cover all employees (Article 116 paragraphs 1 and 2 in conjunction with Article 118 of the Manpower Law). If the negotiation fails, the dispute shall be resolved through the industrial relations dispute settlement procedure (Article 117 of the Manpower Law).
A CLA is valid for a maximum period of 2 years and may be extended for up to 1 year based on a written agreement between the employer and the union (Article 123 paragraphs 1 and 2 of the Manpower Law). A CLA must, at least, contain:
- rights and obligations of the employer;
- rights and obligations of the union and the worker/labourer;
- validity period and effective date of the CLA; and
- signatures of the parties to the CLA.
(“CLA Minimum Requirements”) (Article 124 paragraph 1 of the Manpower Law).
Additionally, a CLA becomes effective on the date of signing unless stated otherwise in the CLA. Once signed, the CLA must be registered by the employer with the relevant manpower office (Article 132 of the Manpower Law).
In the CR or CLA, it is also necessary to regulate working hours, wages, and occupational health and safety, as further discussed below.
Salary
Pursuant to Article 7 paragraph 1 of GR 36/2021, an employee’s wage consists of one of the following components:
- wages without allowances;
- basic wage and fixed allowances (the basic wage shall be, at least, 75% of the total);
- basic wage, fixed allowances, and non-fixed allowances (the basic wage shall be, at least, 75% of the total basic wage and fixed allowances); or
- basic wage and non-fixed allowances.
The components of wages above can be stipulated in the employment contract, CR, or CLA (Article 7 paragraph 4 of GR 36/2021).
In Indonesia, each province sets its own Provincial Minimum Wage (UMP) or City Minimum Wage (UMK) guidelines. The determination of UMP and UMK are based on economic conditions and the cost of decent living for the average individual in that area (Article 88C paragraph 4 of the Manpower Law in conjunction with Article 6 paragraph 1 of GR 36/2021). Accordingly, the employer must comply with the relevant UMP or UMK where the business is located. (Article 88E paragraph 2 of the Manpower Law and Article 23 paragraph of GR 36/2021)
Maximum Working Week
Pursuant to Article 77 paragraph 1 of the Manpower Law, normal working hours in Indonesia are limited to 40 hours per week, with the following arrangements:
- 8 hours per day for a 5-day workweek; or
- 7 hours per day for a 6-day workweek.
An employee is considered to be working part-time if their working hours are less than 7 hours per day and 35 hours per week. Wages for part-time employees may be calculated on an hourly basis (Article 16 paragraph 1 of GR 36/2021).
In addition, employees are entitled to a minimum rest break of 30 minutes after working for 4 consecutive hours, and this rest period is separated from the working hours (Article 79 paragraph 2 of the Manpower Law). Therefore, employers are typically required to provide approximately 1 hour of daily rest time as the standard rest period for employees in Indonesia who work 8 hours or more.
Overtime
Under Article 78 paragraph 1 of the Manpower Law and Article 26 paragraph 1 and Article 28 paragraph 1 of GR 35/2021, the maximum allowable overtime is 4 hours per day, and 18 hours per week. Overtime work may only be performed upon the employer’s instruction and with the employee’s consent, in writing or through digital means. Employees who work overtime are entitled to receive overtime pay, and employers must provide adequate rest periods and a meal containing, at least, 1,400 calories if overtime work lasts for 4 hours or more (Article 29 paragraph 1 of GR 35/2021).
Employer’s Obligation to Provide a Healthy and Safe Workplace
The Manpower Law requires employers to ensure occupational safety and health (Keselamatan dan Kesehatan Kerja or “K3”) to achieve optimal work productivity. This obligation is fulfilled through preventive measures against workplace accidents and occupational diseases, controlling potential hazards in the work environment, promoting health, and providing medical and rehabilitation services for employees (Article 86 paragraphs 1 and 2 of the Manpower Law). In addition, companies are required to implement a K3 Management System (Sistem Manajemen K3 or “SMK3”) that is integrated in the company’s overall management system to control work-related risks and create a safe, efficient, and productive workplace (Article 87 paragraph 1 of the Manpower Law).
However, as stipulated under Article 5 paragraph 2 of GR No. 50 of 2012 on the Implementation of SMK3 (“GR 50/2012”), the obligation to implement SMK3 applies only to companies that:
- Employ, at least, 100 employees; or
- have high safety risks.
Furthermore, pursuant to Article 1 paragraph 1 and Article 9 paragraph 1 of Law No. 1 of 1970 on Occupational Safety (“Occupational Safety Law”), every safety leader (“Leader”) is required to provide new employees with information on:
- workplace conditions and potential hazards;
- security systems and required protective equipment;
- personal protective equipment to be used; and
- safe working procedures and behaviour.
(“Training Requirements”).
Accordingly, the Leader may only allow employees to start working after ensuring that they fully understand all Training Requirements. The leader must also conduct regular training sessions on accident prevention, fire response, K3 improvements, and first aid.
Complaint Procedures
In principle, employees have the right to refuse to perform work that does not comply with K3 standards or lacks proper personal protective equipment (Article 12 points d and e of Occupational Safety Law).
Moreover, employers must be supported by adequate K3 human resources, facilities, and infrastructure to implement K3 plans. These K3 supports include the establishment of operational/work procedures, information systems, reporting mechanisms to the government, and proper documentation (Article 10 paragraphs 2- and 4-point c of GR No. 50 of 2012 on Implementation of SMK3 [“GR 50/2012”]).
Protection from Retaliation
Employers are required to provide protection to workers, which includes ensuring their welfare, safety, and physical and mental health. Violations of this obligation may result in criminal sanctions in the form of imprisonment for 1 month to 4 years and/or a fine ranging from IDR 10 million to IDR 400 million (Article 35 paragraph … and Article 186 paragraph 1 of the Manpower Law). Accordingly, if an employer fails to implement K3 measures, such as not providing personal protective equipment, resulting in serious injury or death of a worker, the employer may be subject to criminal prosecution for such negligence.
In addition, employers cannot terminate employees who suffer permanent disabilities or illnesses caused by work accidents, or occupational diseases where the recovery period cannot yet be determined based on the medical certificate. If an employer, nonetheless, proceeds with termination on such grounds, the termination is deemed null and void by law, and the employer is obliged to re-employ the employee (Article 153 paragraphs 1 point j and paragraph 2 of the Manpower Law).
