New Regulation Concerning About Manpower Wage


January 20, 2016

New Regulation Concerning About Manpower Wage

The Indonesian Government has issued a new regulation to protect the Indonesian manpower due to the economic regression in Indonesia. Main new provisions are, among others: (i) new formula to calculate the minimum wage workers, (ii) obligation of the employer to fulfill the rights of workers, and (iii) employers’ sanction for any incompliance to this regulation.   


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In October 23rd 2015, the Government issued Government Regulation No. 78 of 2015 on Manpower Wage (“GR 78/2015”) which revoked the Government Regulation No. 8 of 1981 on Protection of Wages. The aim of such regulation is improving the manpower’s welfare. The main new provisions are, among others (i) new formula for determining the minimum wage and (ii) obligation and administrative sanction for the employer.


According to GR 78/2015, the minimum wage shall be established on the basis of proper standard of living with due observance to the productivity and economic growth including inflation. The component of proper standard living is reviewed once in every 5 (five) years.


Furthermore, obligations for the employer are also regulated. Those are, among others the obligation to: (i) provide allowances for the worker, (ii) the obligation to give an overtime pay, (iii) make available the structure and scale of wages, and (iv) pay the wages to worker on time.


Another highlight is administrative sanction for any violation done by the employer. Such sanction are in the form of (i) written warning, (ii) restriction of business activities, (iii) temporary termination of part or all of production facilities, and (iv) termination of business activities.

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