Comparative Guides

Welcome to Mondaq Comparative Guides - your comparative global Q&A guide.

Our Comparative Guides provide an overview of some of the key points of law and practice and allow you to compare regulatory environments and laws across multiple jurisdictions.

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4. Results: Answers
Labour and Employment
Legal framework
Are there statutory sources of labour and employment law?

Answer ... In general, Indonesian employment law is governed by the Labour Law (13/2003), dated 25 March 2003. The two other main statutes are the Law on Industrial Relations Dispute Settlement (2/2004), dated 14 January 2004, and the Law on Labour Unions (21/2009), dated 4 August 2000.

For more information about this answer please contact: Fahrul S. Yusuf from SSEK Indonesian Legal Consultants
Is there a contractual system that operates in parallel, or in addition to, the statutory sources?

Answer ... In addition to the laws referred to in question 1.1, employers and employees are subject to company regulations (or work rules) or a collective labour agreement, if applicable, as well as to the express provisions of the employment agreement between the employer and the employee.

For more information about this answer please contact: Fahrul S. Yusuf from SSEK Indonesian Legal Consultants
Are employment contracts commonly used at all levels? If so, what types of contracts are used and how are they created? Must they be in writing must they include specific information? Are implied clauses allowed?

Answer ... Employment contracts are commonly used at all levels of employment. However, directors and commissioners are not generally employees of a company, unless stated otherwise contractually.

The employment relationship between employee and employer must be documented in a contract; no implied clauses are allowed. Generally, an employment contract in Indonesia can be either a fixed-term (definite) or indefinite-term (permanent) contract. Fixed-term employment agreements are subject to stricter requirements than indefinite-term employment agreements. A fixed-term employment agreement must be in writing, in the Indonesian language and using the Roman alphabet, as subject to Minister of Manpower and Transmigration (MOMT) Decree KEP.100/MEN/VI/2004 on Technical Provisions on Employment Agreements for a Specified Period, dated 21 June 2004. If it is not made in writing, a fixed-term employment agreement is deemed an indefinite-term employment agreement. Additionally, a fixed-term employment agreement cannot include a probationary period. Indefinite-term employees are employees who do not fall into the category of fixed-term employees. Indefinite-term employees are also known as permanent workers.

As an implementing regulation of the Labour Law (Articles 65(2) and 66(2)), Constitutional Court Decision 27/PUU-IX/2011 emphasises that outsourcing is possible under a fixed-term contract if the contract contains a clause that guarantees the employment relationship will continue with the successor outsourcing company or the company that uses the labour of the outsourced workers (the ‘successors’). The successors must continue to employ the workers from the original company if the outsourced work persists. The successors cannot amend the previous employment agreement except by mutual consensus for the benefit of the outsourced workers. If the outsourced work persists but there is no guarantee of the employees’ rights in the fixed-term contract, the employment relationship will be deemed an indefinite-term contract.

For more information about this answer please contact: Fahrul S. Yusuf from SSEK Indonesian Legal Consultants
Labour and Employment