Severance pay is calculated based on the employee’s length of service and the reason for termination. The formula includes severance pay, service appreciation pays (if applicable), and compensation for untaken leave or other rights as per Government Regulation No. 35 of 2021.
Minimum wages are set by the government and vary by region. Employers must ensure that wages paid to employees are at least equal to the regionally established minimum wage. Failure to comply can result in sanctions and penalties.
Employees are entitled to 12 days of paid annual leave after completing one year of continuous service with the same employer. This entitlement is separate from public holidays and must be provided in compliance with company regulations or employment contracts.
The standard working hours in Indonesia are 40 hours per week, with either 7 hours per day for 6 days a week or 8 hours per day for 5 days a week. Overtime is allowed, but it should not exceed 4 hours per day or 18 hours per week, and overtime pay must be provided as per Government Regulation No. 35 of 2021.
Employees who are terminated are entitled to severance pay, long-service pay (if applicable), compensation rights, and other benefits as mandated by Government Regulation No. 35 of 2021. The amount depends on the reason for termination and the employee’s length of service.
Yes, probationary periods are allowed under Indonesian labor law but can only last up to three months. During this time, the employment contract must clearly state the probationary nature of the work and the expectations for successful completion.
Labor disputes are typically resolved through bipartite negotiations, mediation, and tripartite through Local Manpower institution. If these measures fail, disputes may be escalated to the Industrial Relations Court.
Mutual agreements between employers and employees to terminate an employment relationship must be documented in writing and signed by both parties. It is a voluntary process, and the employer typically offers compensation or severance payments in line with government regulations.
A CLA is a negotiated agreement between the employer and a registered labor union, outlining terms of employment for the union members. It covers salaries, benefits, dispute resolution mechanisms, and working conditions. CLAs must be registered with the Ministry of Manpower.
