Last updated on: February 6th, 2023
On December 30, 2022, the Indonesian government issued a Government Regulation Substituting Law No. 2 of 2022 on Job Creation (Regulation) to replace Law No. 11 of 2020 on Job Creation (Job Creation Law).
The Labour Law in Indonesia is regulated mainly by Law No. 2 of 2022 on Job Creation (Regulation) and Government Regulation 35/2021. The Regulations govern the terms and conditions of employment such as working hours, holidays, rest periods, wages, overtime, leave and termination of employment, etc.
Hours & Pay Regulations
An employee who has been in continuous employment with the same employer for 12 consecutive months is entitled to 12 days of paid leave annually. The employer can allow such leaves to be taken in one or more short periods but one such period of leave shall be of 6 consecutive days.
Previously, an employee who completes 6 years of continuous service with an employer is entitled to 1 month of paid leave (rest) which will be provided by the employer in both the seventh and eighth year. However, such an employee will not be entitled to regular annual leave in those two current years. An employee will be entitled to such a rest period after completing every 6 year period with the same employer.
However, such extra vacation has been removed from the legislation and can be provided if agreed between employer and employee and made binding through a collective agreement, employment agreement, etc. Law No. 2 of 2022 on Job Creation (Regulation), Article 79(2), and Law No. 11 of 2020 on Job Creation (“Omnibus Law”).
Minimum wages in Indonesia are set at the provincial level. The current minimum wage in the province of Jakarta(the Capital city) is 4,641,854 rupiah per month.
An employee who is not able to perform work due to illness is entitled to paid leave in the below manner:
- For the first 4 months, an employee shall be entitled to 100% of their wages;
- For the second 4 months (5th to 8th month), an employee shall be entitled to 75% of their wages;
- For the third 4 months (9th to 12th month), an employee shall be entitled to receive 50% of their wages;
- For subsequent months, an employee shall be entitled to receive 25% of their wages prior to the termination of employment.
The law does not define the duration of sick leave. Law No. 2 of 2022 on Job Creation (Regulation), Article 93(2) and 93(3).
An employee is entitled to paid leave of 1.5 months before and after the birth of a child respectively. An employee who suffers miscarriage is entitled to a period of rest for 1.5 months or a period as stated in the medical statement issued by a doctor.
Employers shall also allow female employees to take paid breaks for breastfeeding during working hours. Indonesian Law No. 2 of 2022 on Job Creation (Regulation), Article 82.
An employee whose wife gives birth to a baby or suffers a miscarriage is entitled to 2 days paid leave from work. Indonesian Law No. 2 of 2022 on Job Creation (Regulation), Article 93(4)(e).
An employee is entitled to 3 days paid leave in case of their own marriage and 2 days paid leave to marry their son/daughter. Indonesian Law No. 2 of 2022 on Job Creation (Regulation), Article 93(4)(a) and 93(4)(b).
An employee whose spouse or parent, parents in law or children, children in law dies is entitled to 2 days of paid leave and in case of death of a household member, the employee shall be entitled to 1 day of paid leave from work. Law No. 2 of 2022 on Job Creation (Regulation), Article 93(4)(f)(g).
An employee who has their son circumcised or their children baptized shall be entitled to paid leave of 2 days from work respectively.
A female employee who feels pain during their menstrual period and who informs their employer, are not required to come to work on the first and second day of menstruation.
Tunjangan Hari Raya (THR Leave)
An employee who has completed one month of service with an employer is entitled to Religious Holiday Allowance. Employers must pay THR once a year in accordance with the respective Religious holidays of each employee. Religious holidays shall mean the following:
- Idul Fitri for Muslim employees
- Christmas Day for Christian employees
- Hindu Day for Hindu employees
- Buddhist Waisak Day for Buddhist employees
- Chinese New Year for Confucian employees
THR is equal to a minimum of one month’s salary for employees with a minimum of 12 months of service. Employees with more than one month but less than 12 months of service will receive THR on a pro-rata basis based on the following formula – Employment period/12 x 1 month of wage. THR must be paid by the employer no later than 7 days before the Religious Holiday takes place.
Employees are entitled to paid leave for the following purposes:
- To fulfil obligations to the State;
- To perform religious obligations;
- To undergo educational program required by the employer;
- To perform union duties with the permission of the employer; and
- The employees are willing to do the work that they have been promised to but the employer does not employ or require them to do the job, because of the employer’s own fault or because of reasons that the entrepreneur should have been able to avoid.
Law No. 2 of 2022 on Job Creation (Regulation), Article 93(2), 93(4)(c), 93(4)(d), 81 and Minister of Manpower Regulation No. 6 of 2016 (Regulation 6/2016) Article 1 – 5.