SMART Legal Consulting

What are 4 Company Obligations to Its Employees? (1)

Employee is important asset in every business therefore Indonesian government regulates this issues through Law No.13 of 2013 on Manpower Law (“Manpower Law”). However, the outdated Manpower Law is affecting investor confidence in running their business and it has been as the one of big and complex issues in Indonesia.

We understand problems arising from a Manpower Law are a series of costly obligations for employers. It can be seen from the annual trend in which both foreign and local companies in Indonesia have been protested or have been sued to the Industrial Court  by its employees and/or got sanctioned from the Indonesian Government because that Companies are failed to meet their obligations on Manpower Law.

Therefore, In this article we sum up Company obligations to its Employee into 4 items:

(1) To Hire and Give Equal Treatment

Principally every company is free to determine what kind of employee they want  and how they will treat their employee as long as it does not come with any discrimination.  The discrimination in this context refer to discrimination against sex, ethnicity, race, religion, political orientation and in accordance with the person’s interest and capability, including the provision of equal treatment to the disabled which has effect of nullifying or impairing equality of opportunity or treatment in employment.  (Article 5 & 6 Manpower Law and ILO Convention No. 111 which already ratified through Law No. 21 of 1999 on ILO Convention Concerning Discrimination in Respect of Employment and Occupation).

This provision also related to Company obligation to give its employees  opportunity to perform their religious obligations peacefully. One of examples of religious activities is Salah (pray) for Muslim employee. Everyday, Muslim employee has religious obligation to perform 5 times Shalah. The Company should give opportunity to the Muslim to perform such activities.

(2) To Provide Decent Salary

Chapter III, Article 88 until 98 Manpower Law specifically regulated how the Company should pay their Employee. At least 3 (three) important issues when it gives salary to its employees, as follows:


Salary Item



 Minimum Wages The Company must pay its employee’s salary higher than the minimum salary as set out on Provincial or district/city-based minimum wages and Provincial or district/city-based sectoral minimum salary.

The Provincial minimum salary is changed every year and is adjusted with the decent living standard in Indonesia. Therefore we suggest every company to update this provincial regulation every year.


 Overtime Pay If the Company requires Employee to work longer than normal working hours than it must pay overtime pay.


 Paid-salaries during absence If the employee is absence from work because of the following reasons, they still have rights to be paid.

  1. Get sick so they cannot perform their work
  2. The female employee is ill on her first and second menstruation period
  3. The employees have to absent because they get married, marry of their childred, has their sun circumcised, baptized or his wife gives birth or husband or childred or children-in-law(s) or parent (s) or parent-in-law(s) of the employees or member of the employees’s household dies
  4. Has to fulfill its obligation for the State
  5. Performing religious obligations
  6. During the rest period
  7. Performing activities on trade union duties (if get permission from the company)
  8. Undergoing education program that is required by the Company
  9. The Employees want to fulfill their works however get threatened by the Company activities.


The payable salary during the absence also can be detailed on internal company regulation, however special for Sick Absence and Specific Absence as mentioned above, the Manpower Law gives the following guidance:

A. An Amount of Salaries During Sick Absence

Period of Absence

Payable Salaries (%)

 For the first 4 months  100% of the salaries
 For the second4  months  75%  of the salaries
 For the third 4 months  50% of the salaries
 For subsequent months  24% of the salaries prior to the termination of  employment by the Company

B. An Amount of Salaries During Absence as Specified Reasons


Reason of Absence

Payable Salaries (days)


 Get married

3 days


 Marry of their children

2 days


 Childred got circumcised

2 days


 Children get baptized

2 days


 Wife gives birth

2 days


 Spouse, parent, parent in law, childred or children in law dies

2 days


 Member of household dies

1 day



SMART Legal Consulting has extensive experience in helping employers/companies (both local and foreign company) to arrange Employment Arrangement (Company Regulation, Employment Contract and so forth). So, the company’s employment arrangement will comply with prevailing Indonesian law and regulations.

if you need consultation about employers or companies, please arrange meeting with SMART Legal Consulting at:


H: +62821-1234-1235

Leave a Comment

%d bloggers like this: