Employment Law in Indonesia

In general, the vast majority of Indonesian workers are not unionized.  This may in part be attributable to the fact that the Indonesian employment standards legislation provides very generous benefits and requires Labour Court approval for all employee terminations except where the employee accepts the termination by written agreement or resignation.

Any group of at least 10 employees can register a union.  One or more unions representing more than 50% of all employees have the right to negotiate a Collective Labour Agreement which is binding on all employees.  Bargaining in Indonesia takes place at the company level as industry level negotiations are not well developed.

Employment Law in Indonesia

The Manpower Law protects all employees which is any person working in return for a salary or compensation in another form. Certain rights, such as overtime pay, are not available to manager-level employees.  The statutory minimum termination benefits are not payable to an employee who is a shareholder (excluding employees holding shares due to employee stock benefit plans).

The main sources of employment law in Indonesia are :

1. Law No. 13 of 2003 (March 25, 2003) on Manpower (the Manpower Law), as amended by Constitutional Court decision No. 012/PUU-I/2003 of October 28, 2004.
2. Law No. 2 of 2004 (January 14, 2004) on Industrial Relations Dispute Settlement (Law No. 2) and
3. Law No. 21 of 2009 (August 4, 2000) on Labour Unions (Law No. 21).

Only fixed-term employment agreements have to be in writing and in the Indonesian language. If there is a written employment agreement, it must at least contain the following :

1. Name, address and type of business of the company.
2. Name, gender, age and address of the employee.
3. Position or type of work.
4. Place of work.
5. Amount of salary and method of payment.
6. Employment conditions containing employer and employee’s rights and obligations.
7. Commencement date and term of effectiveness of employment agreement.
8. Pace and date of the employment agreement was made and
9. Signatures of the parties to the employment agreement.