The Indonesian government has issued four implementing regulations on 2nd February 2021, as a follow up to the issuance of Law No. 11 of 2020 on Job Creation (“Job Creation Law”) which was issued on 2nd November 2020, whereby these implementing regulations shall accommodate the changes to Law No. 13 of 2003 on Manpower (“Manpower Law”), specifically as follows with the relevant highlights.
|Restrictions on the utilisation of TKA||Concurrent position rules|
|Employed in an employment relationship for a certain position and period||Employers can employ the foreign workers who are already employed by other foreign workers|
|Prohibited from holding an HR-related positions||The term of expatriate who concurrently holds a position is no longer than the period of ratification of the Manpower Planning of Foreign Workers (RPTKA) of the first employer|
|The positions that may be occupied are determined by the minister||Concurrent positions as:|
|Based on the period||Based on completion of a certain work||Based on other certain works/daily work/casual work|
|Work with an estimated completion in a relatively short time.|
Work that is seasonal, or applicable under certain conditions.
Work that is in relation with new products, new activities, in the experimental or try-out phase.
The maximum term is 5 years, this is including the extension of the contract.
|Work that will be completed at once.|
The period is based on the agreement between the parties and can be extended for a certain period until the work is completed.
|The work of which the type and nature, or its activities are not fixed, subject to the terms of time and volume.|
The workday is less than 21 days in a month.
Regulation 35 requires employers to pay compensation to a definite period employee when the PKWT ends (“Compensation Pay“). The amount of Compensation Pay will depend on the employment period of the relevant definite period employee.
The formula for calculating the Compensation Pay is as follows:
|Completed contract period||Amount of compensation pay|
|12 months consecutively||1-month wages|
|1 month or more but less than 12 months||(Work period (in months) / 12) x 1-month wages|
|More than 12 months|
The Compensation Pay must be paid upon the expiry of the PKWT. If the PKWT is extended, the Compensation Pay for the initial contract period must be paid when the initial contract period expires. The Compensation Pay covering the period of extension must be paid when the extension expires.
If the work is completed earlier than the end of the intended contract period under the PKWT, the Compensation Pay is calculated based on the actual work period the employee has completed (not the intended contract period).
If a party terminates the PKWT prior the expiry of the intended contract period, the employer is obliged for the Compensation Pay calculated based on the employee’s period of employment until the early termination of the PKWT.
For currently ongoing PKWTs, the Compensation Pay will be calculated from 2 November 2020, which is the date the Omnibus Law became effective.
Regulation 35 requires employers to carry out online registration of a PKWT within three working days from the date of signing of the PKWT. If the online registration is not yet available, manual registration can be made at the Local Employment Office at the latest seven working days from the date of signing of the PKWT.
Regulation 35 recognises normal working hours that are less than 40 hours per week. These normal working hours of less than 40 hours per week can be implemented by companies that have one of the following characteristics:
There is a significant change to the termination procedure in Indonesia. Previously, the general rule was that termination of employment requires prior court approval (except in certain circumstances and if the termination is mutually agreed by a bipartite forum). The Regulation 35 requires an employer to give notice to the employee (and the union, if one exists) in writing that the employer intends to terminate the employee.
The notice of termination is to be issued at the latest 14 days before the effective date of termination. If the employee is still on probation, the written notice must be issued at the latest 7 days before the effective date of termination.
A written notice of termination must include at least:
If workers/labourers have been notified and rejects the termination of employment, settlement of termination of employment must be conducted through bipartite forum between the employer and workers/labourers and/or workers union/labor union.
If the bipartite forum fails to reach an agreement, the termination of employment shall be conducted through the next stage in accordance with the process of industrial relationship dispute settlement.
If the employee has no objection to the termination, the employer must report the termination to the Local Employment Office/Disnaker.
In general, the termination pay components in accordance with Regulation 35 is less than the formula previously set out in Manpower Law No. 13 of 2003. This is due to adjustments on the multipliers of the termination pay components subject to the reasons of termination.
In compliance with the relevant implementing regulation specifically Regulation 35, the Employer is required to revisit and make relevant changes of the existing provisions stipulated in the PKWT, Company Regulation/Peraturan Perusahaan (PP), or Collective Labor Agreement/Perjanjian Kerja Bersama (PKB), also for the compliance for the PKWT registration at the Ministry of Manpower local office/Dinas Ketenagakerjaan (Disnaker).
In addition, the workers also entitled for non-wage income, a mandatory form of this type of income is Religious Festive Allowance/Tunjangan Hari Raya (THR), which must be paid by employers to their workers at least 7 days prior to the relevant annual religious festive days.
For a non-mandatory form, employers may also provide other optional non-wage income such as incentives, bonus, work facility replacement money, service money for certain business.
(only applies to part-time workers)
|Based on agreements between workers and employers, on condition that determined wage amounts cannot be lower than the results of hourly-wage calculations that are based on the following formula:|
Hourly Wage = Monthly Wage / 126
|Daily||For a six-day working-week system:|
Daily Wage = Monthly Wage / 25
For a five-day working-week system:
Daily Wage = Monthly Wage / 21
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