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Asia-Pacific law bulletin 2024


New omnibus law on job creation

In November 2021, a year after the Government of Indonesia (GoI) had passed the far-reaching Law No.11 of 2020 on Job Creation (2020 Omnibus Law), its validity was challenged in the Constitutional Court. The 2020 Omnibus Law had brought in sweeping reforms to over 75 laws, including the employment law.  In response to the challenge, the Constitutional Court returned the law to the GoI to fix a number of defects within a two-year period; if the GoI failed to remedy the law within this time, the 2020 Omnibus Law would be “permanently unconstitutional” and therefore null and void, including all the numerous implementing and derivative regulations that had come into force in 2021.

Some of the main employment law reforms introduced by the 2020 Omnibus Law and its implementing regulations include:

  • Termination: simplification of the termination procedures; a greater range of regulated termination events (including summary dismissal under certain circumstances) and reduced severance package payments for most employees upon termination;
  • Fixed-term employees: extensive changes to the fixed-term employment regime, including the maximum term, and mandatory compensation paid to employees at the end of their fixed-term employment;
  • Foreign workers: increased administrative flexibility for employers who wish to engage foreign nationals;
  • Outsourcing: relaxation of the restrictions on the type of work a company can outsource;
  • Overtime: increased maximum permissible overtime hours, subject to employee consent; and
  • Minimum wage: new regulations on the government’s power to regulate the minimum wage.

On 31 March 2023 the GoI passed a new iteration of the 2020 Omnibus Law (Law No.6 of 2023 on the Determination of Government Regulation in lieu of Law No.2 of 2022 on Job Creation to Become Law (2023 Omnibus Law)).

Even though the 2023 Omnibus Law comes with only minimal changes to the 2020 Omnibus Law’s substance, its enactment provides invaluable legal stability and removes the threat of legal, economic and administrative chaos.

New guidelines on the handling and prevention of workplace sexual harassment

There has been a significant rise in workplace sexual violence and abuse (WSV) in Indonesia, underscoring the inadequacy of the existing regime.  In response to this, the Ministry of Manpower (Ministry) issued Decree No.88 of 2023 on the Prevention and Handling of Sexual Harassment in the Workplace (Guidelines) on 29 May 2023. The Guidelines address both employers and employees and are intended to create a safe and secure workplace environment, free from sexual violence/abuse and harassment.

The Guidelines require employers to take action against WSV, including:

  • implementing policies to prevent and handle WSV, including sanctions on perpetrators, and such policies should be included in employment agreements and company regulations or collective labour agreements;
  • providing education and training programs to increase awareness of WSV;
  • providing adequate work facilities and infrastructure to prevent WSV;
  • initiating campaigns to end or prevent WSV; and
  • establishing a WSV Task Force, which must prepare and implement policies, activities and programs that have been designed to prevent WSV, receive and resolve WSV complaints, and assist victims.

Mandatory job vacancy reporting

The Presidential Regulation No. 57 of 2023 on Mandatory Reporting of Job Vacancies (Job Vacancy Regulation) took effect on 25 September 2023. Its primary goal is to expand the availability of information on job vacancies to those looking for jobs. Therefore, it obliges employers to report vacant positions in their companies to the Ministry via a central online system known locally as the Manpower Information System (Sistem Informasi Ketenagakerjaan). The Manpower Information System is accessible by employers and employees (including job seekers) alike.

The job vacancy reporting obligation arises both when a company announces a job vacancy and again when the job vacancy has been filled. The reports must include various regulated details, including the employer’s identity and information on the vacant position.  Failure to comply with this reporting requirement may result in administrative sanctions, including warning letters issued by the Ministry. Further regulations specifying details of the job vacancy reporting obligations are expected to be issued.

Given the absence of further regulations to implement the new Job Vacancy Regulation, the new job vacancy reporting mechanism has not yet become fully operational. We therefore anticipate that the GoI will continue to implement new policies to fill the current regulatory gaps until it is able to publish new regulations to develop the job vacancy reporting framework.

Looking ahead

It is likely more changes are on the way in 2024.  Employers are therefore advised to carefully monitor future amendments to existing regulations and regulatory guidance from the Ministry.

Employers and employees should also stay on top of the GoI’s ever-evolving policies on job-seeking mechanisms and initiatives to support employment development. Reviewing regular updates from GoI agencies and local lawyers can assist stakeholders in staying abreast of any movements or developments in Indonesian employment law during the coming year.

Soemadipradja & Taher: Retno Muljosantoso, Robert Reid, Dimas Koencoro Noegroho, and  Aveninta Maria Rosalin