---
title: Indonesia Labour Law & Job Creation Law Guide
url: https://www.gadjian.com/en/indonesia-labour-law
language: en-US
type: guide
last_updated: 2026-07-24
---
# HR Guide: Labor Law and Job Creation Law in Indonesia
> Indonesia's Labor Law is the legal framework governing employment relations, currently made up of Law No. 13 of 2003 and Law No. 6 of 2023 (Job Creation Law). Together they govern wages, working hours, employment contracts, and termination (PHK).
## What is Indonesia's Labor Law?
Indonesia's Labor Law is the body of regulations governing the relationship between employers and workers, covering wages, working time, types of employment agreements, and termination of employment (PHK). Two laws currently apply together: Law No. 13 of 2003 on Manpower and Law No. 6 of 2023 on the Stipulation of the Job Creation Perppu into Law (Job Creation Law). The Job Creation Law revises part of Law No. 13 of 2003, so articles that were not amended remain in force. Implementing details are set out further through Government Regulations (PP) and Minister of Manpower Regulations.
## Who is this guide for?
- Company HR & payroll teams: to ensure wage policy, employment contracts, and terminations comply with applicable law.
- Business owners & management: to understand legal obligations as employers, including wage structure/scale and severance pay.
## Key Points
"| Topic | Brief explanation | Relevant for |
|---|---|---|"
| Wages & Minimum Wage | Minimum wage (UMP/UMK), wage structure & scale, and overtime pay are regulated under Law No. 6 of 2023 & Government Regulation No. 36 of 2021 | Payroll teams, management |
| Employment Agreements (PKWT/PKWTT) | Fixed-term contracts (PKWT, max. 5 years) and indefinite-term contracts (PKWTT, probation up to 3 months) | HR, legal, business owners |
| Working Time & Rest | Working hours, overtime limits (max. 4 hours/day, 18 hours/week), and 12 working days of annual leave | HR, operations teams |
| Termination of Employment (PHK) | Layoff mechanism, 15 permitted reasons & 10 prohibited reasons, and severance rights | HR, legal |
## How is this labor law applied in a company?
1. Identify the topic relevant to your needs (wages, employment contracts, working time, or termination) via this guide's navigation.
2. Match your company's internal HR policy against the provisions of Law No. 13 of 2003 and Law No. 6 of 2023 relevant to that topic.
3. Refer to the relevant implementing regulations (Government/Ministerial Regulations) for technical detail, e.g. Government Regulation No. 35 of 2021 for overtime and severance.
4. Apply automation through HRIS software such as Gadjian to calculate wages, overtime, and termination entitlements in line with regulations, without manual calculation.
## What labor laws currently apply in Indonesia?
Two labor laws apply in Indonesia: Law No. 13 of 2003 on Manpower and Law No. 6 of 2023 on Job Creation (Cipta Kerja). The Job Creation Law revises only part of Law No. 13 of 2003, so articles of the older law that were not amended remain fully in force. Technical rules are set out in Government Regulations and Ministerial Regulations. (note: Indonesian labor regulations are frequently revised — verify the current number and year with an official source before publishing)
## Comparison
"| | Manual calculation/application | Using Gadjian |
|---|---|---|"
| Regulatory updates | HR team must monitor changes to laws, government regulations, and ministerial regulations independently | The system follows the latest wage & labor regulation updates |
| Overtime & severance calculation | Calculated manually, with risk of formula errors | Calculated automatically following the Government Regulation No. 35 of 2021 formula |
| Employment contract records | Scattered across separate files/archives | Employee data & contracts stored in one system |
## Data & references
- Law No. 13 of 2003 on Manpower (note: Indonesian labor regulations are frequently revised — verify the current number and year with an official source before publishing)
- Law No. 6 of 2023 on the Stipulation of the Job Creation Perppu into Law (Job Creation Law), including Article 81 Numbers 12-16, 23-25, 27, 33, 43, and 45 (note: verify the current number and year with an official source before publishing)
- Government Regulation No. 36 of 2021 on Wages; Government Regulation No. 51 of 2023 on Amendments to the Wage Regulation (minimum wage); Government Regulation No. 35 of 2021 (overtime, PKWT compensation, severance, outsourcing); Minister of Manpower Regulation No. 1 of 2017 on Wage Structure and Scale (note: verify the current number and year with an official source before publishing)
## FAQ
**Is Law No. 13 of 2003 still valid after the Job Creation Law?**
Yes. Law No. 13 of 2003 is still in force. Law No. 6 of 2023 (Job Creation) only revised certain articles, so any articles of Law No. 13 of 2003 not mentioned in the Job Creation Law remain fully valid.
**What is the difference between PKWT and PKWTT?**
PKWT (Fixed-Term Employment Agreement) is a contract for a specific period or task, with contract-employee status, lasting a maximum of 5 years including extensions and with no probation period. PKWTT (Indefinite-Term Employment Agreement) has no time limit for permanent work, with permanent-employee status, and may include a probation of up to 3 months.
**Can an employer carry out termination (PHK) unilaterally?**
No. Termination cannot be done unilaterally and must follow the procedure set by law. Termination is allowed only for 15 types of reasons under Law No. 6 of 2023 Article 81 Point 45, and is prohibited for 10 types of reasons under Article 81 Point 43. The process begins with a termination notice stating the reasons.
## Next steps
- [Try Gadjian free for 14 days](https://www.gadjian.com/en/demo)
Source: https://www.gadjian.com/en/indonesia-labour-law · Last updated: 2026-07-24