Indonesia has enacted Law No. 27 of 2026 on Employment Protection (“Employment Protection Law”), which came into effect on 28 October 2026. The Employment Protection Law revokes Law No. 13 of 2003 on Manpower (“Law 13/2003”), as well as certain provisions of Law No. 6 of 2023 on the Enactment of Government Regulation in Lieu of Law No. 2 of 2022 on Job Creation into Law and implement the Constitutional Court’s considerations in Decision No. 168/PUU-XXI/2023.

The Employment Protection Law aims to harmonize Indonesia’s employment regulatory framework, strengthen legal certainty and protect workers’ rights, while adapting to developments in the employment sector, including informal employment and evolving working arrangements.

The general overview of the Employment Protection Law are, among others:

1. Apprenticeship

Article 38 of the Employment Protection Law introduces changes to the apprenticeship requirements, as follows:

Minister of Manpower (“MoM”) Regulation No. 6 of 2020 on Implementation of Domestic Apprenticeship Programs (“MoM 6/2020”)	Employment Protection Law
Maximum apprenticeship period of 1 (one) year.	Maximum apprenticeship period of 6 (six) months.
Working hours following the company’s working hours.	Working hours of no more than 8 (eight) hours per day and 40 (forty) hours per week.
Theoretical instruction and simulation practice accounting for 10% - 25% of the apprenticeship programme.	Proportionate allocation between practical training and theoretical instruction, as specified in the apprenticeship agreement.

2. Informal Sector Workers

The Employment Protection Law introduces new statutory protections for informal sector workers/tenaga kerja sektor informal, including digital platform workers (Article 102).

Under Articles 58 to 61, employers are required to:

1. provide fair and reasonable wages and/or compensation, taking into account working hours, occupational risks, and operational costs borne by the workers;
2. ensure access to social security protection in accordance with applicable laws and regulations; and
3. provide social security contribution assistance for vulnerable informal sector workers, funded by the Central Government and/or Regional Governments, covering at least Work Accident Insurance/Jaminan Kecelakaan Kerja (“JKK”) and Death Insurance/Jaminan Kematian (“JKM”).

Article 59 further provides that disputes arising from agreements between informal workers and employers must first be resolved through deliberation and consensus. If no agreement is reached, the dispute may be referred to the District Court.

3. Usage of Foreign Employees

Plan to Use Foreign Employee/Rencana Penggunaan Tenaga Kerja Asing (“RPTKA”) is currently exempted with certain conditions under Article 62.4 of Employment Protection Law, which are:

1. Diplomatic and consular officials at foreign state representative offices;
2. Foreign employees required by the employer for types of production activities that are halted due to emergency conditions, business visits, and research for a certain period of time; and/or
3. Foreign employees who are still bound in a legal marriage for at least 5 (five) years with an Indonesian citizen.

In relation thereto, the said Law also permits the foreign employee/tenaga kerja asing (“TKA”) who is the child of a legal marriage between a foreign citizen and an Indonesian citizen to be employed in Indonesia, subject to a specific plan and approval regarding the use of TKA (Article 63.1). This provision will be further regulated in a Government Regulation.

4. Employment Relationship

• Employee Documents

Employers are now prohibited from requiring employees to submit and/or withholding employees’ diplomas and/or personal documents as security in an employment relationship (Article 78.1).

An exception applies to diplomas and/or personal documents obtained through education or training funded by the employer, provided that the funding is based on a written employment agreement (Article 78.2).

• Fixed-Term Employment Agreement

Article 82 of Employment Protection Law introduces new changes to the maximum duration and extension of a fixed-term employment agreement/perjanjian kerja waktu tertentu (“PKWT”), with comparison as follow:

Government Regulation No. 35 of 2021 on Fixed-Term Employment Agreements, Outsourcing, Working Hours and Rest Periods, and Termination of Employment (“GR 35/2021”)	Employment Protection Law
Maximum total period of 5 (five) years, including extensions.	Maximum period of 2 (two) years and may only be extended 2 (two) times, wich each extension limited to a maximum of 1 (one) year.

• Non-Fixed-Term Employment Agreement

Article 92 introduces new employer obligations during the probationary period under a non-fixed-term employment agreement/perjanjian kerja waktu tidak tertentu (“PKWTT”). Employers are now required to pay employees at least 75% (seventy-five percent) of the applicable wage for the relevant position, provided that such wages are not below the applicable minimum wage.

In addition, Article 94 introduces administrative sanctions, including written warnings, administrative fines, and/or business activity restrictions, for employers who fail to issue a written appointment letter for a verbally concluded PKWTT.

5. Outsourcing

In the previous Manpower regime (i.e., Manpower Law through Government Regulation (“GR”) No. 35 of 2021 on Non-Fixed Term Employment Agreement, Outsourcing, Working Hours and Breaks, and Termination of Employment Relationship (“GR 35/2021”), the outsourcing works is depending on the certain work based on an agreement that is agreed between the employer company and the outsourcing company (Article 1.14 of GR 35/2021).

Currently, Article 95 of Employment Protection Law, provides a limitation on the outsource work to only involve in supporting service activities or activities not directly related to the production process, specifically limited to:

1. Cleaning service businesses;
2. Food provision businesses for employees;
3. Security personnel or security unit businesses; and
4. Transportation provision businesses for employees

Specifically for the mining and petroleum industry and State-owned Enterprises/Badan Usaha Milik Negara (“BUMN”), the Law expressly permits the outsourcing arrangements to be conducted through a subsidiary established as a Limited Liability Company/Perseroan Terbatas (“PT”) (Article 96.2).

If an outsourced employee performs work directly related to the production process, the employment relationship between the employee and the outsourcing company shall, by operation of law, transfer to the employer company pursuant to Article 98.1 of the Employment Protection Law. Consequently, the employer company shall assume responsibility for the employee's employment entitlements, including severance pay, long-service pay, compensation for rights, and/or separation pay.

Additionally, Articles 99.3 and 99.4 of Employment Protection Law regulate the transfer of protection of outsourced employees' rights in the event of a change in the outsourcing company. Specifically, where an outsourcing company employs an employee under a Fixed-Term Employment Agreement/Perjanjian Kerja Waktu Tertentu (“PKWT”), the agreement must provide for the transfer of protection of the employee's rights to the replacement outsourcing company, provided that the work object remains the same.

Following such transfer, the employee's length of service with the previous outsourcing company must be calculated cumulatively with their length of service with the replacement outsourcing company for the purpose of determining the maximum PKWT period under Article 82.2 of Employment Protection Law, provided that the work object remains the same.

6. Prohibition on Employing Children

Article 107 amends the exception under Article 69 of Law 13/2003, changing the eligible age range for children performing light work from 13–15 years to 15–under 18 years, subject to the applicable safety and development requirements.

7. Severance Pay Reserve Fund

Article 253 introduces a new obligation for employers to establish a severance pay reserve fund/dana cadangan pesangon to ensure the payment of employees' severance entitlements upon termination of employment. The fund will be managed by a government institution, with further details on its management mechanism to be regulated by the Government. This obligation does not apply to micro and small enterprises. Employers who fail to comply may also be subject to administrative sanctions, including business activity suspension.

8. Protection of Employees' Unpaid Entitlements

Article 299.1 introduces a new protection whereby unpaid employee entitlements and/or compensation automatically constitute debts secured by all of the employer's assets, once agreed upon in a collective agreement or determined by a final and binding decision of an Industrial Relations Dispute Settlement institution. Furthermore, any person or government institution lawfully holding the employer's assets must prioritize payment of such entitlements from those assets (Article 299.2). Further provisions on the payment mechanism will be regulated by a Government Regulation.

In light of this new regulatory framework, we are of the view that employers should review their existing employment agreements, outsourcing arrangements, and internal employment policies to ensure compliance with the Employment Protection Law. Employers should also further monitor the issuance of implementing regulations for guidance on its implementation.

If you have further questions regarding this matter, please do reach out to us.