Sumbawa offers the cheapest coastal land near Bali and almost no competition — with real frontier risks. The honest case, plus how to set up legally.
On 31 October 2024, Indonesia’s Constitutional Court announced a ruling that impacts Indonesian labour law significantly. This decision followed a judicial review petition (No.168/PUU-XXI/2023) challenging Law No. 11 of 2020, also known as the Omnibus Law. The law had introduced extensive changes to Indonesia’s labour regulations. Below are the key changes and what employers should know.
Employers in Indonesia should focus on these areas affected by the new ruling:
This review was filed by prominent labour groups, including:
These groups argued that parts of the Job Creation Law, especially those on manpower and labour, were unconstitutional under Indonesia’s 1945 Constitution. They requested a reinterpretation of these sections to enhance worker protection or reinstate parts of the previous Labour Law. Out of 69 points raised, the Constitutional Court approved and reinterpreted 21, rejecting the remaining 48.
The ruling gives the Minister of Manpower sole authority to approve Foreign Worker Utilisation Plans (RPTKA). Employers must secure an RPTKA before hiring foreign workers. Furthermore, the ruling emphasises prioritising Indonesian nationals for non-specialised roles, ensuring more employment opportunities for locals.
The ruling limits all PKWT agreements to a maximum of five years, including extensions. These agreements must also be in writing, in Indonesian, and use the Latin alphabet. This change aims to provide transparency for both employers and employees.
Outsourcing practices face more scrutiny as well. The Minister of Manpower will establish guidelines on job types suitable for outsourcing. This additional clarity should help companies set up more secure outsourcing arrangements, reducing employee concerns over job stability and benefits.
This Constitutional Court ruling marks a turning point for Indonesian labour law. Employers should carefully review their hiring, wage, and outsourcing practices to ensure compliance. For further assistance in navigating these changes, reach out to SAS’ HR team for expert guidance.
Sumbawa offers the cheapest coastal land near Bali and almost no competition — with real frontier risks. The honest case, plus how to set up legally.
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