Introduction

On 5 October 2020, the House of Representatives and the Indonesian Government passed the Omnibus Law Bill which has been enacted as Law No. 11 of 2020 on Job Creation (“Job Creation Law”). Almost 30 days after being passed, on 2 November 2020, the Indonesian President signed the draft bill. The Job Creation Law amends (with the intention of simplifying) various regulations on licensing procedures, investment requirements, manpower, immigration, exportimport requirements, land procurement and special economic zones, with the main focus being on creating jobs.

Principal changes to the Manpower Law

Whilst the Job Creation Law impacts upon a number of employment areas, including social security, immigration and migrant workers, in this M&T Advisory, we highlight and summarize the important employment-related changes made by the Job Creation Law to Law No. 13 of 2003 on Manpower (“Manpower Law”). These changes are noted in table format in the pdf.

Conclusions

The current practice and understanding of Indonesian employment matters, as set out under the Manpower Law, have certainly been changed by relevant provisions of the Job Creation Law. Companies will now need to look into how their manpower-related actions, and in particular their termination practice and procedures, will be changed and they will also need to adjust to the Job Creation Law. However, it is likely that these adjustments may only be possible (and most likely only prudent) once the government regulations on the amended provisions of the Job Creation Law have been issued. Until such time as this occurs, there remains some uncertainty on the effect and applicability of the manpower provisions of the Job Creation Law and how these may be viewed by the authorities prior to further clarification under relevant implementing regulations. In due course, we foresee that most employers will likely need to amend their employment contracts, as well as their Company Regulations or Collective Labor Agreement, as applicable. Acquiring knowledge now of the recent changes will be important and whilst anticipating the precise scope and extent of implementation will be difficult, care should be taken to ensure that professional guidance is obtained when dealing with manpower matters in the period prior to further and final clarification. If you have any questions or concerns about any of the above issues, please reach out to your usual contacts at Makarim & Taira S. to obtain specific advice. This advisory is not intended to serve as and should not be relied on as legal advice or as a substitute for legal advice in individual cases.