SUMMARY OF INDONESIAN LABOR LAW

NO 13 OF 2003

LEGAL
NO ARTICLE KLAUSUL CONTENT REGULATION
SANCTIONS
Foreign workers must have written permission from
the Minister or appointd official, which load
information:
a. reasons for using foreign workers;
b. position of foreign workers in the company's
organizational structure concerned;
c. the period of use of foreign workers; and Criminal Prison: 1-4
TKA (Foreign Worker) - Year Fines 100 - 400
1 42 paragraph 1 d. appointment of Indonesian citizens as labor
Permit million
assistants foreigners employed
- Employers who employ foreign workers must
repatriate foreign workers to their home countries
after their employment ends.
-Foreign workers whose work period is finish and
cannot be extended can be replaced by other foreign
workers.
Criminal Prison: 1-4
Individual Entrepreneurs are prohibited from
2 42 paragraph 2 TKA - Prohibition Year Fines 100-400
employing foreigners
million
Confinement 1-12
3 45 paragraph 1 TKA - Assistance Appoints foreign labor companion Months
Fines 10-100 million

PKWT (Specific Time

Work Agreement Certain times cannot require a
4 58 Work Agreement) - Cancel For Law
period work trial
Prohibition of Trial
Period
Can be held for a maximum of 2 (two) years and can
PKWT - Contract only be extended 1 (one) time for a maximum period
5 59 paragraph 4 Period N/A
of 1 (one) year

OUTSOURCING – Outsourcing is only for supporting activities that are

6 66 paragraph 1 General Term not related to the production process (main worker) N/A

Criminal Prison: 1-4

CHILD LABOR -
7 68 Employers are prohibited from employing Children Years Fines 100-40 0
General Prohibition
million
CHILD LABOR - Children aged 13-15 years can be employed for light Criminal Prison: 1-4 Yrs
8 69 paragraph 2 Requirements work with certain conditions Fines 100-400 million
CHILDREN'S WORK - Criminal Prison: 2-5 Yrs.
9 74 It is prohibited to employ children in the worst jobs
Special Prohibition Fines 200-500 million

Women aged less than 18 years and pregnant

women (according todoctors working at night is
dangerous) are prohibited from working at 23:00 to 1-12 Months
WOMEN WORKERS -
10 76 07:00 Working women 23:00 - 07:00 must be confinement
Regulation
provided shuttle transportation Fines 10-100 million

WORK TIME - 7 hours / day and 40 hours / week for 6 working

11 77 Minimum working hours days / week;
WORK OVERTIME - Overtime must be with the approval of the employee
12 78 paragraph 1 Regulation and no more than 3 hours / day and 14 hours / week Fines 5 - 50 million
Confinement 1–12
WORK OVERTIME -
13 78 paragraph 2 Employer to pay overtime Months
Responsibility
Fines 10 -100 million

Employers must give workers time off and leave;

Break between work hours;
Weekly rest 1 day every 1 week; Confinement 1–12
LEAVE - General 12 days annual leave every 1 year; Months
14 79
Provisions 2 month long leave every 6 years. Fines 10-100 million

Every worker who uses the right to rest (Article 79

paragraph 2 b-d, 80 and 82) has the right to receive
15 84 LEAVE - Rights N/A
full wages
Criminal Prison: 1-4
MINIMUM WAGES - Employers are prohibited from paying wages lower
16 90 paragraph 1 Years Fines 100-400
Prohibition than the UMR or UMK
million
composes the structure and scale of wages by taking
MINIMUM WAGE- into account groups, positions, years of work,
Structure and Scale of education and competence, where provisions this
17 92 N/A
Employee Wages will be further regulated by KepMen
MINIMUM WAGE - Principle no work no pay, except for things that have Criminal Prison: 1-4 Yrs
18 93 verse 1 No Work No Pay been regulated by law, KKB and PP fine 100- 400 million
In terms of wage component consists of basic
wages and fixed allowances, the principal wage
MINIMUM WAGES –
19 94 amount is at least 75% of the basic wage and fixed N/A
Basic Salary
allowances
STRATEGY AND PLANNING DIVISION
 SUMMARY OF INDONESIAN LABOR LAW
NO 13 OF 2003

LEGAL
NO ARTICLE KLAUSUL CONTENT REGULATION
SANCTIONS
MINIMUM WAGES - Demands payment wage and all that
Expiration of Wage payment arisefrom relationship work to be expired
20 96 Demands after reaching 2year
N/A
N/A
Workers / Labor Unions have the function of carrying
LABOR UNION - out job in accordance with their obligations, maintain
order for the continuity of production, channel
Function and
aspirations in a democracy, develop skills and
Obligations
102 paragraph expertise and participate in realizing the company
21 and fighting for the welfare of members and their
2
families

Employers have a function to create a partnership, to

103 paragraph LABOR UNIONS - develop the business, expanding employment, and N/A
22 Role of Employers provide welfare openly , democracy and justice
3

COOPERATION SHEET - Company that employs 50 people is obliged to Administrative Sanctions

23 106 Bipartite establish a collaborative agency bipartite

108 paragraph COMPANY

REGULATIONS - Employers must make company regulations (> 10 Fines of 5–50 million
24 1 and
Requirements people) and explain to employees
114

Collective Labor Agreement (PKB / KKB) can only be N/A

25 118 KKB - Requirements made 1 (one) for all employees

DISPOSAL OF Industrial Relations Dispute Settlement must be

INDUSTRIAL conducted by deliberation to reach consensus, if it is N/A
26 136 RELATIONS - not reached, it must go through procedures regulated
discussion by the Law. (UU)

STRIKE - Basic Rights Strikeas a basic right that can be done legally, orderly Criminal Prison: 1-4 Yrs
27 137 of Workers and peacefully as a result of the failure negotiations fine 100-400 million

Employee / Labor Unions may invite other workers Criminal Prison: 1-4 Yrs.
138 paragraph
28 STRIKE -Participation to strike as long as they do not break the Law Fines 100 -400 million
1

Strike on a company that serves the public interest or

activities that endanger the safety of the human life is Criminal Prison: 1-4 Yrs.
STRIKE - Regulation regulated in such a way as not to disturb or endanger Fines 100 -400 million
29 139
people

7 days previously notified, in writing to the company

and the authorized agency; N/A
30 140 STRIKE - procedure Contains time, place, reason for breaking down;
Signed by the chairman & secretary

In the time before or during the strike, the agency

resolves the problem
If it is completed: an agreement is deal N/A
If the dispute is not submitted to the institution or a
31 141 STRIKE - Settlement court of industrial relations dispute and strike can be
continued, suspended or terminated completely

Strike that does not fulfill the provisions of article 139

STRIKE – Legitimate & 140 is an illegal strike, where the legal N/A
32 142 Strike Provisions consequences will be regulated by KepMen

Anyone cannot prevent workers / trade unions from Criminal Prison: 1-4 Fines
using the right to strike which is carried out legally, 100-400 million
33 143 verse 1 STRIKE - Freedom orderly, peacefully

STRIKE - Prohibition Arrest and / or detention is prohibited as long as Criminal Prison: 1-4 Yrs
34 143 verse 2 workers carry out legal strikes, peacefully orderly fine 100-400 million
of detention
As long as employees strike legally in an orderly and confinement of 1–12
STRIKE – Prohibition for
35 144 peaceful manner, it is forbidden to replace workers months.
entrepreneurs
from outside Fines 10–100 million

Employees who strike legally in carrying out

normative demands that are truly violated by the N/A
36 145 STRIKE - Wage Rights company are entitled to pay

STRATEGY AND PLANNING DIVISION

 SUMMARY OF INDONESIAN LABOR LAW
NO 13 OF 2003

LEGAL
NO ARTICLE KLAUSUL CONTENT REGULATION
SANCTIONS

Lock Out is the basic right of employers to reject

workers partly or wholly due to the failure of
LOCK OUT - negotiations; N/A
37 146 Employers' Rights and Companies are not allowed to lock out as retaliation
Obligations due to normative demands from employees

Lock out is prohibited from being carried out in

hospitals, PDAMs, Telecommunications, PLN, Oil & N/A
38 147 LOCK OUT - Prohibition
Gas, Railways;

Entrepreneur must inform about lock outs to

employees and instance 7 days before;
Contain time begins and ends company closure and Fines 5–50 million
LOCK OUT -
39 148 the reasons why
Notification
Created proof of receipt

Before and during the lock out, the employment

agencies resolved the problem that caused the lock
out by negotiating:
If completed: an agreement is made; N/A
LOCK OUT - If Not completed: submitted to institutional dispute
Negotiations by resolution / court;
40 149
Disnaker It can be negotiated about lock outs being continued,
suspended or stopped.

PHK (Termination of Termination of employement negotiations must be N/A

41 151 verse 2 employment) - negotiated between employers and workers
Negotiation

If it is not completed, it’ll be delegated to a settlement N/A

151 paragraph
42 PHK - Settlement or court of dispute industrial relations
3

Entrepreneurs are prohibited for termination of

employements by the reasons:
continuous illness (12 months continuously), state N/A
PHK – Prohibition for duties, religiously ordered worship, marriage,
43 153 Entrepreneur pregnancy / childbirth, womb death, breastfeeding
their babies, blood ties / marital ties, disagreement.

156, SEVERANCE - Minimum N/A

44 Limit Severance pay at least 1 to 9 months' salary
paragraph 2
156, LONG SERVICE PAY – N/A
45 Minimum Limit Long service pay : 2 to 10 months' salary
paragraph 3

Reimbursement rights:
Annual leave that has not been taken;
COMPENSATION PAY – N/A
Costs of returning workers and families; Housing
156 paragraph Minimum Limit
46 replacement, medication, treatment: 15% of
4
severance benefits plus years of service

SEVERANCE - Changes to severance pay, work period awards and

156 paragraph compensation rights are stipulated by Company N/A
47 Calculation
5 Change Regulations

Termination of employements due to severe mistakes

can only be obtained with compensation (Article 156
paragraph 4) with support: N/A
PHK (Termination of
158 paragraph Workers caught red-handed;
48 Employment) – Severe
3 There is recognition from workers;
Mistake
Other evidence: witnesses at least 2 people.
In the case of workers being detained by the
authorities because a criminal offense is not a
complaint from the employer, it is obligatory to pay
assistance to the family they bear: N/A
1 person: 25% wage / 6 months;
160 paragraph PHK - Detained by the
49 Obligatory 2 people: 35% wages / 6 months;
1
3 people: 45% wages / 6 months;
1 4 people: 50% wages / 6 months.

Criminal Prison: 1-4

160 paragraph PHK – Not Guilty If after the trial is found not guilty, it is mandatory to
50 Year Fines 100-400
4 Verdict re-hire the employee
million

STRATEGY AND PLANNING DIVISION

 SUMMARY OF INDONESIAN LABOR LAW
NO 13 OF 2003

LEGAL
NO ARTICLE KLAUSUL CONTENT REGULATION
SANCTIONS
if the termination of employement because the worker
are found guilty by the court, workers only get:
Criminal Prison: 1-4 Yrs.
160 paragraph long service pay of 1 (one) time; compensation
51 PHK – Guilty Verdict Fines 100-400 million
7 pay.

TerminationEmployment is due to the mechanism of

PHK - Because the SP1, SP2, SP3 then: Criminal Prison: 1-4 Year
Warning Letter severance pay: 1x (Article 156 paragraph 2) Fines 100-400 million
52 long service pay: 1x (Article 156 paragraph 3);
161
Compensation pay: Article 156 paragraph 4

Withdrawal of your own volition, only get:

PHK - Resignation Compensation pay: Article 156 paragraph 4; N/A
53 162 Separance pay: regulated in KKB

Termination because the company is closed due to

PHK - Bankruptcy continuous losses (2 years) or Force Majeure:
Due to Loss or Severance pay: 1x (Article 156 paragraph 2); N/A
164 paragraph Force Majeure long service pay: 1x (Article 156 paragraph 3);
54
1 Compensation pay: Article 156 paragraph 4

termination of employements due to efficiency:

PHK - Efficiency severance pay: 2x (article 156 paragraph 2); N/A
164 paragraph long service pay: 1x (Article 156 paragraph 3);
55
3 Compensation pay: Article 156 paragraph 4

Termination of employements due to bankruptcy:

PHK - Bankruptcy Severance pay: 2x (article 156 paragraph 2); N/A
long service pay: 1x (article 156 paragraph 3);
56 165 Compensation pay: Article 156 paragraph 4

termination of employement due to death heirs

PHK - Death receive: Severance pay: 2x (Article 156 paragraph 2); N/A
long service pay: 1x (Article 156 paragraph 3);
57 166
Compensation pay: Article 156 paragraph 4

employmentretirement due to retirement, if the pension

contribution is paid in full by the company then:
PHK - Pension severance pay: none; N/A
167 paragraph long service pay: no compensation: in
58
1 accordance with article 156 paragraph 4

PENSION - If the pension is smaller than the calculation: (2x

167 paragraph severance pay) + (1x prize money) + replacement N/A
59 Difference in
2 Calculation money rights: the difference is paid by the company

PENSION - Fully Paid If pension contributions are paid by the company and
167 paragraph workers then what is calculated with severance pay is N/A
60 Contributions
3 the contribution paid by the company

PENSION - Other Article 167 verses 1,2 and 3 can be regulated

167 paragraph N/A
61 Arrangements in KKB otherwise in KKB
4

Termination of employementdue to retirement, but not

PENSION - Calculation If
included in the pension plan then: Criminal Prison: 1-5 Years
Not Included in Pension
Severance pay: 2x (Article 156 paragraph 2); Fines 100-500 million
167 paragraph Program
62 long service pay: 1x (Article 156 paragraph 3);
5
Compensation pay: Article 156 paragraph 4

absent 5 consecutive days without written information

PHK – Absent (valid proof) and has been called twice properly and N/A
63 168 written can be terminated because of qualifications to
resign

STRATEGY AND PLANNING DIVISION

 SUMMARY OF INDONESIAN LABOR LAW
NO 13 OF 2003

LEGAL
NO ARTICLE KLAUSUL CONTENT REGULATION
SANCTIONS

Workers can apply for termination of employements

when employer commits:
Severe error;
Not paying wages on time for 3 consecutive
PHK - Entrepreneurs months;
64 169 N/A
Conduct Violations Not performing obligations that have been
promised to workers and others by obtaining:

Severance pay: 2x (Article 156 paragraph 2)

long service pay: 1x (article 156 paragraph 3)
Compensation pay: Article 156 paragraph 4

Termination of employements due to prolonged

illness, work-related disability and unable to do
PHK - Prolonged their work after exceeding 12 months:
65 172 N/A
illness Severance pay: 2x (Article 156 paragraph 2);
long service pay: 1x (Article 156 paragraph 3)
Compensation pay: Article 156 paragraph 4

STRATEGY AND PLANNING DIVISION