Scope of Indonesia's Labor Law


2018 Indonesia's minimum wage

UMP (minimum wage set by Upah Minimum Provinsi) in 2018 is 8.71% up, 2017 was 8.25%, so it can be said to be a slight upward trend, but since Daerah Khusus Ibukota Jakarta is Rp 3,648,035 (30,915 Yen 1 Yen = Rp 118), it is 2.5 times of Daerah Istimewa Yogyakarta Rp 1,454,154 (12,323 Yen), everyone wants to come to work.

By the way, I understand that this minimum wage hike will increase the salary of karyawan tetap in the private sector, but to what extent will contract workers (karyawan kontrak), day laborers (karyawan harian), café clerks, SPGs (Sales Promotion Girls) in boutiques, and masseuse's sisters benefit?

This is defined in Section 91 of the Labour Law (UU No 13 Tahun 2003) as "the rules on wages laid down by agreement between management and the workers or trade unions shall not be less than the wage provisions laid down in the prevailing legal rules (Section 89 Minimum Wage in a State or County/City Region). The simple question is, who is the scope of application of the clause, and how enforceable is it?

Coverage of the Labor Law

The entity to comply with the labor law is the employer (Employer = Pemberi Kerja) who is on the side of "any entity owned by an individual, partnership or legal entity, whether taking the form of a legal entity or not, and without distinction of private or public enterprises, that employs workers on the basis of wages or other forms of remuneration (general provisions)" and who is "an individual, manager, legal entity or any other form of entity that employs labor on the basis of wages or other forms of remuneration.

And if the entity happens to be a legal entity (Badan Hukum) with the required documents under the Companies Act, it is a company (Company = Perusahaan), which has management functions and employs workers with wages or other forms of remuneration.

On the other hand, a worker (Pekerja/buruh = worker/labor) refers to "all those who work for wages or other forms of remuneration", so the company is obligated to pay the minimum wage to the employee, the shop owner to the SPG, and the masseur to the sister.

labor law coverage

However, as it is defined in Article 90 of the Labor Law, "the manager who cannot pay the minimum wage may be given a reprieve", in reality, from next year onwards, not all employers of all entities in Jakarta can pay Rp 3,648,035, which is the minimum wage, and workers (employees) want to work anyway, even if it is less than the minimum wage, because of the relationship between supply and demand, the provisions of the Labor Law are not always followed in reality, and there is no penalty.

When an employer fires you for being paid less than the minimum wage and you complain about it, they say, "If you don't like it, quit" and you lose the time and cost of quitting your previous job and finding a new one.

Work Rules and Collective Agreements

If you are a business owner and you want to hire workers, you need to submit your PP (PP = Peraturan Perusahaan) to the nearest Ministry of Labor and Migration (Dinas Tenaga Kerja dan Transmigrasi), known as DISNAKER.

Article 111 of the Labor Law defines the following as content to be included in employment regulations

  1. The Rights and Duties of Employers
  2. The Rights and Duties of Workers
  3. Working conditions
  4. Service Discipline
  5. Employment rules effective for a maximum of two years

However, if there is a separate collective agreement (PKB = Perjanjian Kerja Bersama) between the management and the labor union, there is no need for rules of employment.

When a dismissed worker (PHK = Pemutusan Hubungan Kerja) files a suit against his employer for unfair dismissal, the point of contention is the difference in the interpretation of the rules of employment and the collective agreement.