Labor and Employment Law in Indonesia – Terms of Employment

Pembaruan Hukum
Labor and Employment Law in Indonesia – Terms of Employment
29 Januari 2020

By Fahrul S. Yusuf

Normal working hours are prescribed by the Indonesian Labor Law as not more than seven hours per day and 40 hours per week based on a six-day working week. With the written agreement of employees (and the union, if the employees are unionized), a five-day working week, with eight hours per day and 40 hours per week, can be used. Wages of employees who work five days per week must not be less than the wages of employees who work six days per week.

The five-day working week has become common among private companies since the government applied a five-day working week for civil servants and employees of state-owned businesses. Regardless, after four hours of continuous work, an employee is entitled to at least 30 minutes of rest time. Employers must also provide reasonable time to perform religious observances, including Muslim prayers, which are performed five times each day.

Overtime Pay

Overtime is regulated under Minister of Manpower (MOM) Decree No. KEP.102/MEN/ VII/2004 (Decree 2012) regarding overtime work and overtime pay, and is payable at the rate of one and one half times the hourly wage for the first hour and twice the hourly wage thereafter. Overtime pay is calculated based on an employee\'s monthly wage, with the hourly wage being equal to 1/173 of the monthly wage.

Under Decree 102, a company is required to pay overtime to all employees. However, certain categories of employees are not entitled to receive overtime payment provided that they receive higher salaries. These employees are, literally translated, employees with responsibili­ties as thinkers, planners, executors and controllers of the company\'s operations whose working hours cannot be limited. It is widely thought that employees with these responsibilities are those at or above the management level or professional employees.

Leave Days

Employees are entitled to one day of leave with pay for every 23 work­ing days, with a minimum of 12 days per year. If the employee does not take his or her leave entitlement within six months of earning it, the vacation leave will be forfeited. The employer can decide a suitable time for the employee to take his or her leave. These provisions also apply to fixed-term employees.

Sick Leave

Full wages must be paid for the first four months of sick leave, 75 percent of the full wage for the second four months, 50 percent for the third four months and 25 percent thereafter until the employer ter­minates the employee.

Further, female employees are not obliged to work on the first and second days of menstruation if they feel sick, and inform the employer. However, this provision should be further regulated in the employment agreement, company regulation or Collective Labor Agreement (CLA).

Paid Leave

In general, the Labor Law allows employees to take paid leave under the following circumstances:

  • marriage: three days;
  • marriage of employee\'s child: two days;
  • circumcision or baptism of employee\'s child: two days;
  • employee\'s wife giving birth or experiencing miscarriage: two days;
  • death of employee\'s spouse, parent, parent-in-law, child or step-child: two days;
  • death of other family member living in employee\'s household: one day;
  • miscarriage: one and a half months; and
  • maternity leave for female employee: one and a half months before the birth and one and a half months after delivery.

The company regulations or CLA may provide additional items under which employees would be allowed to take paid leave.

Reproduced with permission of Law Business Research Ltd. This article was first published in Lexology Getting the Deal Through - Labour & Employment 2019 (Published: June 2019). For further information, please visit

This publication is intended for informational purposes only and does not constitute legal advice. Any reliance on the material contained herein is at the user\'s own risk. You should contact a lawyer in your jurisdiction if you require legal advice. All SSEK publications are copyrighted and may not be reproduced without the express written consent of SSEK.

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