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
3.
Employment benefits
3.1
Is there a national minimum wage that must be adhered to?
Indonesia

Answer ... Minimum wages apply to probationary, regular and contract employees, regardless of whether the employee is paid on a daily or monthly basis. The applicable minimum wage varies, depending on the nature and location of the business. In 2019, based on Jakarta Governor Regulation 114/2018 on the Provincial Minimum Wage for 2019, dated 26 October 2018, the monthly minimum wage for Jakarta is IDR 3,940,973.

The monthly minimum wage is determined annually by the governor of the particular province based on a recommendation from the Provincial Council on Wages. Minister of Manpower and Transmigration (MOMT) Regulation 15/2018 on the Minimum Wage, dated 23 November 2018, stipulates that the new minimum wage formula is based on the sum of Indonesia’s inflation and GDP growth over the past 12 months. The minimum wage is now calculated using the following formula:

New minimum wage = current minimum wage + [current minimum wage x (inflation + % GDP annual increase)].

For more information about this answer please contact: Fahrul S. Yusuf from SSEK Indonesian Legal Consultants
3.2
Is there an entitlement to payment for overtime?
Indonesia

Answer ... Overtime is regulated under MOMT Decree KEP.102/MEN/VII/2004 on Overtime Work and Overtime Pay, and is payable from either the seventh hour or the eighth hour, depending on the length of a company’s normal working day. Overtime is payable at the rate of 1.5 times the hourly wage for the first hour and double the hourly wage thereafter. Overtime pay is calculated as 1/173 of the monthly wage.

Certain employees who may be regarded as thinkers, planners, implementers and controllers of the company’s operations, and whose working hours cannot be limited, are not entitled to overtime pay, provided that they receive higher salaries than employees who do not fall within this category. Generally, those employees with responsibilities at or above management level are considered to fall within this category.

For more information about this answer please contact: Fahrul S. Yusuf from SSEK Indonesian Legal Consultants
3.3
Is there an entitlement to annual leave? If so, what is the minimum that employees are entitled to receive?
Indonesia

Answer ... Each employee is entitled to one day of paid leave for every 23 working days, up to a maximum of 12 days per year. Leave may be taken in parts, but one part must be a period of at least six uninterrupted working days. Leave must also be taken within six months after accrual or it is forfeited. These provisions also apply to contract employees.

For more information about this answer please contact: Fahrul S. Yusuf from SSEK Indonesian Legal Consultants
3.4
Is there a requirement to provide sick leave? If so, what is the minimum that employees are entitled to receive?
Indonesia

Answer ... Employees on sick leave are entitled to:

  • 100% pay for the first four months of sick leave;
  • 75% for the next four months;
  • 50% for the following four months; and
  • 25% until the employer terminates employment.

Social security contributions are deducted from pay. Only employees who suffer prolonged illness or permanent injury as a result of a work accident, and who cannot work for a period exceeding 12 months, can apply for termination of the employment relationship. Such employees shall be eligible for a payment including double severance pay, double service pay and single compensation pay.

Female employees are not obliged to work on the first and second days of menstruation if they feel unwell and inform their employer. However, this provision should be further regulated in the employment agreement, company regulation or collective labour agreement.

For more information about this answer please contact: Fahrul S. Yusuf from SSEK Indonesian Legal Consultants
3.5
Is there a statutory retirement age? If so, what is it?
Indonesia

Answer ... There is no explicit regulation that prescribes a retirement age in Indonesia. Employers are free to specify a retirement age in the company regulation or collective labour agreement, the latter of which must be agreed to by the labour union. In practice, it is common to set the retirement age by referring to the applicable retirement age stipulated in Government Regulation 45/2015 on the Management of the Pension Security Programme and Government Regulation 46/2015, as amended by Government Regulation 60/2015 on the Management of the Old-Age Security Programme, which regulate the pension security and old-age security programmes in Indonesia. The MOMT issued MOMT Regulation 19/2015 on the Procedures and Requirements of Old-Age Benefit Payments as an implementing regulation for Government Regulation 46/2015 (the ‘Social Security Law’). As of 1 January 2019, the retirement age under the Social Security Law is 57 and is expected to rise by an additional year every three years until it reaches 65 in 2043.

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