LABOUR

 

MANPOWER

The Ministry of Manpower is the government agency that regulates all employment, maintains harmony between employers and labor unions through collective labor agreements, and oversees the development of manpower training and work safety programs.

LABOR CONTRACT

Labor unions and employers are free to negotiate on a voluntary basis and enter into collective agreements concerning wages and conditions of employment. Such agreements must be approved by the government and are to be valid for a maximum time period of three years.

It is usual to engage employees on the basis of a 3 (three) months trial period. If the employee is found to be unsatisfactory during that period of time, he/she may be dismissed.

It is a common practice to give an employee 3 (three) written warnings prior to termination of service. In the case of a serious offense such as theft or other crimes, the employee may be terminated without warning. However, incompetence is not normally a valid reason for a termination of service. Warning expires after the following time periods:

First warning - 6 months
Second warning - 9 months
Third warning - 12 months

Upon termination of service, an employee is entitled to 1 (one) to 2 (two) months wages for each year of service up to 4 (four) years, plus 1 (one) to 2 (two) months pay for each year of subsequent 5 (five) years of service. An employee who resigns is not entitled to termination payment.

 

WORK HOURS AND OVERTIME

Work Hours

Basic working week is not more than 40 hours. It is usual for the hours of work to be either 8 (eight) hours per day from Monday to Friday, or 7 (seven) hours per day from Monday to Friday and 5 (five) hours on Saturday. Working 5 (five) days from Monday to Friday is becoming more popular.

Overtime

Under labor regulations overtime is payable.

 

LEAVES AND HOLIDAYS

An employer is required to allow an employee the following paid leave benefits:
Annual leave of at least two weeks per annum.
Sick leave for a period of up to twelve months.
Maternity leaves of 3 months.
In addition to that, employees are entitled to enjoy national holidays determined by the government.

 

SOCIAL SECURITY

Indonesia does not have a special social security system as such, therefore the burden of providing for the health and well being of employees rests with the employer. However, a practical insurance program called JAMSOSTEK (Jaminan Sosial Tenaga Kerja - Social Guarantee for Workers) has been implemented. The management of JAMSOSTEK rests with PT. JAMSOSTEK.

The JAMSOSTEK program applies to those companies having at least 10 (ten) employees or spending a total monthly wage of at least Rp 1 million.

 

LABOR UNION

All Indonesia Labor Federation commonly referred to as SPSI (Serikat Pekerja Seluruh Indonesia) was established in 1973. There are labor unions representing 21 different industrial sector under the auspices of SPSI. Membership in SPSI is not compulsory.

Labor strikes are not prohibited in Indonesia. However, there is a "tripartite" institution consisting of labor representatives or SPSI branch in the company involved, the management of the company, and local government authorities, which based on the "Pancasila" spirit, the Five Principles National Philosophy.