The Job Creation Law (Omnibus Law / Undang-Undang Cipta Kerja) as Convention No. 10 of 2020 regulated November 2, 2020, was one of the most highlighted Indonesian regulations these days. This convention provides allows Indonesian Ministries and Governmental agencies to create new regulations to be in accordance with the directions in Omnibus Law. To rapidly, create new governed regulations under the Omnibus Law. The Job Creation Law revises various provisions in cross-sectoral laws, including Law No. 13 of 2003 on Labor (“Labor Law”).
As one of the most affected authorities, the Ministry of Manpower, alongside the other related governmental institutions, created a new regulation under the Omnibus Law called Government Regulation (Peraturan Pemerintah) Number 35 of 2021. This regulation enforced by considering Article 81 and Article 185 concerning the Job Creation Law regarding the Fixed-Term Employment Contract, Outsourcing, Working Hours & Recess Hours, and Employment Termination. As for today’s review, we will straightly provide you with the latest information on the Fixed-Term Employment Contract (Perjanjian Kerja Waktu Tertentu), and how to terminate it.
Previously, Labor Law number 13 of 2003 was the regulation for the manpower sector in Indonesia. All sectors entwined, based on the necessity of having proper employment terms, regulated in the previous Labor Law. The next action taken by the Government after the enforcement of Omnibus Law is to have the latest enforced Law taken into consideration.
|DETAILS||Law (Undang-Undang) No. 13 / 2003|
|Government Regulation (Peraturan Pemerintah) No. 35 / 2021 |
|Working Period||“2-1-2” rule: 2 years maximum in the first term |
1-year extendable period (once)
2 years maximum contract renewal (after 30 days “clean break” period)
|Fixed period of time / on completion of a specified project as written in employment agreement|
|Termination||Period / termination request||Period and/or project completion / termination request|
|COMPENSATION||NONE||1 year salary for 12 months fixed-term working period|
The Labor Law of 2003 is not ignored in performing the employment-related issue despite Government regulation, the mutual agreement between the company and the employee has to be a part of the rules set for employment conditions. Moreover, as explained in Article 65 of Government Regulation Number 35 of 2021. The previous Labor Law of 2003 can be carried out, as long as it doesn’t contradict the regulated terms in the Government Regulation.
These regulations clearly put Labor on the “winning” side, the Government must pay attention to the impact it may have on business especially during this time of recession. Employers are now given the option of hiring temporary or permanent employees for their Company. They both have benefits and drawbacks of doing business; permanent employers get no compensation; after compliance with the terms specified, the employee continues to be entitled to the Company’s severance pay.
And this newly regulated Government regulation helps the employer to give more time upon employment status consideration; in whichever must be suitable to the needs and in accordance to the Law. For a more complete regulation insight please contact Double M. Phone: +62 21 2789 9882 or Email: email@example.com