Employment Laws in Indonesia

Topics: Employment, Trade union, Organizational studies and human resource management Pages: 11 (3891 words) Published: June 25, 2012
http://blog.ssek.com/index.php/2011/10/a-guide-to-employment-law-in-indonesia/ TERMS & CONDITIONS OF EMPLOYMENT
1. What are the main sources of employment law?
The main sources of employment law in Indonesia are:
* 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; * Law No. 2 of 2004 (January 14, 2004) on Industrial Relations Dispute Settlement (Law No. 2); and * Law No. 21 of 2009 (August 4, 2000) on Labour Unions (Law No. 21). 2. What types of workers are protected by employment law? How are different types of workers distinguished? 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). 3. Do contracts of employment have to be in writing? If not, do employees have to be provided with specific information in writing? 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: * name, address and type of business of the company;

* name, gender, age and address of the employee;
* position or type of work;
* place of work;
* amount of salary and method of payment;
* employment conditions containing employer and employee’s rights and obligations; * commencement date and term of effectiveness of employment agreement; * place and date of the employment agreement was made; and * signatures of the parties to the employment agreement.

For permanent employment, the Manpower Law simply requires an employer to issue a letter of appointment as an employee (article 63 of the Manpower Law). 4. Are any terms implied into contracts of employment?

Yes, all statutory rights pursuant to the prevailing laws and regulations are effectively considered to be implied into contracts of employment. 5.  Are any minimum terms and conditions set down by law that employers have to observe? There are minimum terms and conditions set down by law including the following: * mandatory termination benefits;

* minimum annual leave (12 days);
* minimum wages are stipulated by regional government decrees based on location and industry; * Religious Holiday Allowance (Tunjangan Hari Raya or “THR”):  The THR payment is payable to employees who have worked for at least three consecutive months.  The THR is paid prorata if an employee has worked for three months but less than 12 months.  If an employee has worked for 12 months, he/she will get the full THR payment in the amount of 1 month salary (basic salary plus fixed cash allowances); * Manpower Social Security Scheme (Jaminan Sosial Tenaga Kerja or “Jamsostek”): Under Law No. 3 of 1992 Regarding Jamsostek all employers employing ten or more employees are required to participate in the Jamsostek program.  Under this Law, those employers are obligated to cover their employees through the Jamsostek program and make contributions to the programs for the benefit of the employees: (i) Work or Occupational Accident Security; (ii)  Death Security; (iii) Old Age Security; and (iv) Healthcare Security. An employer who has implemented its own healthcare program for workers with benefits better than the basic healthcare package under the Jamsostek program is not obligated to participate in the Healthcare security.  The other three programs are mandatory. 6. To what extent are terms and conditions of employment agreed through collective bargaining? Does bargaining usually take place at company or industry level? In general, the vast majority of Indonesian workers are not unionized.  This may in part be attributable to the fact...
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