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Labor and Employment

Employment law in Indonesia is regulated in UU No. 13 of 2003 on Employment. The labor law regulates everything related to the workforce before, during, and after work. The purpose of the employment law is to:

  • empowering and utilizing the workforce optimally and humanely;
  • creating equal employment opportunities and the provision of workforce that is suitable for national and regional development needs;
  • provide protection to the workforce in creating well-being; and
  • improve the well-being of the workforce and their families

In addition, labor law also regulates the relationship between labor and employers. The work relationship occurs due to the existence of a work agreement between the employer and the employee/laborer. The work relationship consists of two types, namely the work relationship based on the Fixed Time Work Agreement (PKWT) and the work relationship based on the Indefinite Work Time Agreement (PKWTT). The work agreement made can be done in writing or verbally. Work agreements that are required in writing must be implemented in accordance with applicable laws and regulations. Regarding the work relationship, it is regulated in Chapter IX Article 50-66 of Law No. 13 of 2003 on Employment. The work agreement formed between the employer and the employee/labor must be based on and in accordance with the substance of Law No.

In carrying out company activities, entrepreneurs have an obligation to fulfill the rights of every employee. The employee’s rights include the right to receive equal treatment without discrimination on any basis, the right to develop work competence, the right to worship according to one’s religion and belief, the right to receive a wage or income that is in line with human dignity and worth, the right to receive protection, well-being, health, and work safety.

When employees feel that their rights are protected and regulated in Law No. 13 of 2003 on Employment is felt to be unfulfilled and ignored by the employer, then it will cause certain disputes between the employer and the employee. If the dispute occurs, then the legal regulations in Indonesia have regulated it in UU No. 2 of 2004 on the Settlement of Industrial Relations Disputes. Industrial Relations Disputes are differences of opinion that result in conflict between employers or a combination of employers and workers/laborers or workers’ unions/labor unions due to disagreements about rights, conflicts of interests, disputes over termination of employment and disputes between workers’ unions/labor unions in one company.

Indonesia