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 However, the outdated Manpower Law is affecting investor confidence in running their business and it has been as the one of big and complex issues in Indonesia.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:
|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.|
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)
|Marry of their children|
|Childred got circumcised|
|Children get baptized|
|Wife gives birth|
|Spouse, parent, parent in law, childred or children in law dies|
|Member of household dies|
HOW CAN SMART LEGAL CONSULTING HELP YOU?
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: