Indonesian Labor Law and the Hospitality Industry

Legal Updates
Indonesian Labor Law and the Hospitality Industry
27 March 2015

By Richard D. Emmerson

Indonesia's hospitality industry is enjoying strong growth. Both domestic and foreign operators are opening new hotels and Indonesia's National Statistics Board reported that foreign tourist arrivals to Indonesia between January and November 2014 reached 8.52 million, an increase of 7.29 percent from the same period in 2013. There were 251 million trips by domestic tourists during that same period.

As hospitality companies enter the Indonesian market, it is important that they understand the employment law regime and how it applies to the hospitality industry. Below is a primer on Indonesian labor law and the hospitality industry.

Generous Termination Benefits in Indonesia: Basic Severance Pay: Maximum = 9 months for 9-plus years of service Service Pay: Maximum = 10 months for 24-plus years of service Compensation:

  • Accrued annual Leave
  • Relocation expenses, if any
  • Additional benefits, if any, under contract
  • 15% of the above-noted severance plus service entitlements

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