THE PRESIDENT

REPUBLIK INDONESIA

GOVERNMENT OF THE REPUBLIC OF INDONESIA REGULATION

NUMBER 35 OF 2021

CONCERNING

EMPLOYMENT AGREEMENT FOR A SPECIFIED PERIOD OF TIME,

OUTSOURCING, WORKING TIME AND REST TIME, AND TERMINATION OF
EMPLOYMENT

WITH THE GRACE OF THE GOD ALMIGHTY

PRESIDENT OF THE REPUBLIC OF INDONESIA,

Considering : whereas in order to implement the provisions of Article 81 and

Article 185 letter b of Law Number 11 of 2020 concerning Job
Creation, it is necessary to stipulate a Government Regulation
concerning Employment Agreements for Specified Period of Time,
Outsourcing, Working Time and Rest Time, and Termination of
Employment;

In view of :
1. Article 5 paragraph (2) of the 1945 Constitution of the
Republic of Indonesia;

2. Law Number 13 of 2003 concerning Manpower (State

Gazette of the Republic of Indonesia Year 2003 Number 39,
Supplement to the State Gazette of the Republic of
Indonesia Number 4279);

3. Law Number 11 of 2020 concerning Job Creation (State

Gazette of the Republic of Indonesia Year 2020 Number
245, Supplement to State Gazette of the Republic of
Indonesia Number 6573);
 THE PRESIDENT
REPUBLIK INDONESIA

HAS DECIDED:

To stipulate : GOVERNMENT REGULATION CONCERNING

EMPLOYMENT AGREEMENT FOR A SPECIFIED PERIOD OF
TIME, OUTSOURCING, WORKING TIME AND REST TIME,
AND TERMINATION OF EMPLOYMENT.

CHAPTER I

GENERAL PROVISIONS

Article 1

In this Government Regulation what is meant by:

1. Employment Relationship shall be a relationship between an

employer and a worker/laborer based on an Employment
Agreement, which has elements of work, wages and orders.

2. Worker/Laborer shall be any person who works by receiving

wages or other forms of remuneration.

3. Employer shall be:

a. individuals, associations, or legal entities operating

their own company;

b. individuals, associations, or legal entities independently

operating companies that do not belong to them;

c. individuals, associations, or legal entities who are in

Indonesia, representing companies as referred to in
letters a and b which are domiciled outside the territory
of Indonesia.
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REPUBLIK INDONESIA

4. Company shall be:

a. any form of business, either a legal entity or not,

belongs to an individual, a partnership, or a legal entity,
either privately owned or state owned, which employs
Workers/Laborers by paying Wages or other forms of
remuneration;

b. Social enterprises and other businesses that have

management and employ other people by paying
Wages or other forms of remuneration.

5. Trade Union/Labor Union shall be an organization

established from, by, and for Workers/Laborers both within
and outside the Company, which is free, open, independent,
democratic, and responsible for fighting for, defending and
protecting rights and interests of Workers/Laborers and
improving the welfare of Workers/Laborers and their
families.

6. Wages shall be workers’/laborers’ rights received and

expressed in cash as compensation from the employer to
workers/laborers, set and paid according to an employment
agreement, agreement, or laws and regulations, including
allowances for Workers/Laborers and their families for a job
and/or service that has been or will be performed.

7. Overtime shall be working time exceeding 7 (seven) hours a

day and 40 (forty) hours in 1 (one) week for 6 (six) working
days in 1 (one) week or 8 (eight) hours a day and 40 (forty)
hours in 1 (one) week for 5 (five) working days in 1 (one)
week or working time on weekly rest days and/or on official
holidays stipulated by the government.

8. Overtime pay shall be the wage paid by an employer to a

worker/laborer who performs a job during overtime.
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REPUBLIK INDONESIA

9. Employment agreement shall be an agreement between a

Worker/Laborer and an enterpreneur or employer which
contains the working conditions, rights and obligations of the
parties.

10. Perjanjian Kerja Waktu Tertentu (Employment agreement for

a Specified Period of Time), hereinafter referred to as PKWT,
shall be an Employment agreement between a
Worker/Laborer and an Employer to establish an
Employment Relationship for a specified period of time or for
a certain job.
11. Perjanjian Kerja Waktu Tidak Tertentu (Employment
agreement for Unspecified Period of Time), hereinafter
referred to as PKWTT, shall be an employment agreement
between a worker/laborer and an employer to establish a
permanent employment relationship.

12. Company Regulations shall be regulations made in writing by

Employers which contain the working conditions and
company rules.

13. Collective Bargaining Agreement shall be an agreement

which is the result of negotiations between a Trade/Labor
Union or several Trade/Labor Unions registered at the agency
responsible for manpower affairs, and an employer, or several
employers or a group of employers, which contains working
conditions, rights and obligations of both parties.

14. Outsourcing Company shall be a business entity in the form

of a legal entity that meets the requirements to perform
certain jobs based on an agreement agreed with the job
providing company.

15. Termination of Employment shall be the termination of an

employment relationship due to certain reasons resulting in
the termination of rights and obligations between
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REPUBLIK INDONESIA

Workers/Laborers and their employers.

16. National Government shall be the President of the Republic

of Indonesia who holds the governmental power of the
Republic of Indonesia, assisted by the Vice President and
ministers as referred to in the 1945 Constitution of the
Republic of Indonesia.

17. Labor Inspectors shall be civil servants who are fully

assigned for the duties, responsibilities, powers and rights by
the authorized official to conduct the activities of assisting,
examining, testing, investigating and developing the labor
inspection system in accordance with the provisions of laws
and regulations.

18. Minister shall be the minister administering the government

affairs in the manpower sector.

CHAPTER II

EMPLOYMENT AGREEMENT FOR A SPECIFIED PERIOD OF

TIME

Part One

General

Article 2

(1) Employment relationship shall occur upon the occurence of

an employment agreement between an employer and a
worker/laborer.
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REPUBLIK INDONESIA

(2) An employment agreement shall be made either in writing or

orally.

(3) An employment agreement made in writing shall be

implemented in accordance with the provisions of laws and
regulations.

(4) An employment agreement shall be made either for a

specified period of time or for an unspecified period of time.

Article 3

PKWTT shall be implemented in accordance with the provisions of

laws and regulations.

Part Two

Implementation of Employment Agreement for a Specified Period

of Time

Article 4

(1) PKWT shall be based on:

a. Period of time; or

b. completion of a certain job.

(2) PKWT may not be held for jobs that are permanent in nature.

Article 5
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REPUBLIK INDONESIA

(1) PKWT based on the period of time as referred to in Article 4

paragraph (1) letter a shall be made for certain jobs, namely:

a. jobs which are estimated to be completed in the not too

long time;

b. jobs that are seasonal in nature; or

c. jobs related to new products, new activities, or

additional products that are still in trial or exploration
period.

(2) PKWT based on the completion of a certain job as referred to

in Article 4 paragraph (1) letter b shall be made for certain
jobs, namely:

a. one-time jobs; or

b. jobs that are temporary in nature.

(3) In addition to certain jobs as referred to in paragraph (1) and

paragraph (2), PKWT may be implemented for other certain
jobs whose types and nature or activities are not permanent.

Article 6

The jobs which are estimated to be completed in the not too long
time as referred to in Article 5 paragraph (1) letter a shall be
performed for a period of no longer than 5 (five) years.

Article 7

(1) Jobs that are seasonal in nature as referred to in Article 5

paragraph (1) letter b shall be jobs whose implementation
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REPUBLIK INDONESIA

depends on:

a. season or weather; or

b. certain conditions.

(2) Jobs whose implementation depends on the seasons or

weather as referred to in paragraph (1) letter a may only be
performed in certain seasons or certain weather.

(3) Jobs whose implementation depends on certain conditions as

referred to in paragraph (1) letter b shall be additional jobs
performed to fulfill certain orders or targets.

Article 8

(1) PKWT based on the period of time as referred to in Article 5

paragraph (1) may be made for a period of no longer than 5
(five) years.

(2) In the event that the PKWT period as referred to in paragraph

(1) will be expired and the job performed has not been
completed, an extension of the PKWT may be made for a
period of time in accordance with the agreement between the
Employer and the Worker/Laborer, on the condition that the
total period of the PKWT and its extension shall be no longer
than 5 (five) years.

(3) The service period of Workers/Laborers in the event of the

extension of the PKWT period as referred to in paragraph (2)
shall be counted from the time the Employment Relationship
based on PKWT is occured.

Article 9
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REPUBLIK INDONESIA

(1) PKWT based on the completion of a certain job as referred to

in Article 5 paragraph (2) shall be based on the agreement of
the parties as stated in the Employment agreement.

(2) The agreement of the parties as referred to in paragraph (1)

shall contain:

a. the scope and limitations of a job is declared complete;

and

b. the time frame for completion of the job adjusted to the

completion of the job.

(3) In the event that certain job agreed upon in the PKWT can be
completed faster than the agreed time frame as referred to in
paragraph (2) letter b, the PKWT will terminate by law upon
the completion of the job.

(4) In the event that the certain job agreed upon in the PKWT
cannot be completed within the agreed time frame as referred
to in paragraph (2) letter b, the period of the PKWT shall be
extended to a certain time limit until the completion of the
job.

(5) The service period of Workers/Laborers in terms of the

extension of the PKWT period as referred to in paragraph (4)
shall be counted from the time the Employment Relationship
based on PKWT is occured.

Article 10

(1) PKWT that can be implemented for other certain jobs whose
types and nature or activities are not permanent as referred to
in Article 5 paragraph (3) shall be in the form of certain jobs
that are changing in terms of time and volume of work and
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REPUBLIK INDONESIA

payment of Workers/Laborers’ wages is based on attendance.

(2) PKWT as referred to in paragraph (1) may be implemented

by means of daily Employment agreements.

(3) The daily employment agreement as referred to in paragraph

(2) shall be implemented on condition that the
Worker/Laborer works for less than 21 (twenty one) days in 1
(one) month.

(4) In the event that a Worker/Laborer works for 21 (twenty one)

days or more for 3 (three) consecutive months or more, the
daily Employment agreement as referred to in paragraph (2)
shall be invalid and the Employment Relationship between
the Employer and the Worker/Laborer by law changes based
on PKWTT.

Article 11

(1) An employer who employs a Worker/Laborer in the job as

referred to in Article 10 paragraph (1) shall make a daily
Employment agreement in writing with the Worker/Laborer.

(2) The daily employment agreement as referred to in paragraph

(1) may be made collectively and shall at least contain:

a. name/address of the company or the employer;

b. name/address of the Worker/Laborer;

c. type of job performed; and

d. Wage rate.

(3) The employer as referred to in paragraph (1) shall be required

to fulfill the rights of the Worker/Laborer, including the right
 THE PRESIDENT
REPUBLIK INDONESIA

to the social security program.

Article 12

(1) PKWT may not require a probationary period.

(2) In the event that a probationary period is required, the required

probationary period shall be legally null and void and the
working period is still calculated.

Article 13

PKWT shall at least contain:

a. name, address of the company, and type of business;

b. name, sex, age and address of the Worker/Laborer;

c. Occupation or type of job;

d. place of work;

e. Wage rate and method of payment;

f. rights and obligations of the employer and the worker/laborer

in accordance with the provisions of laws and regulations
and/or work conditions stipulated in the company regulations
or collective labor agreement;

g. commencement and validity period of the PKWT;

h. place and date the PKWT is made; and

i. signatures of the parties in the PKWT

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REPUBLIK INDONESIA

Article 14

(1) PKWT shall be registered by the Employer with the ministry

administering the governmental affairs in the manpower
sector online no later than 3 (three) working days from the
signing of the PKWT.

(2) In the event that the online PKWT registration is not yet
available, the registration of PKWT shall be made by the
Employer in writing at the district/city office administering
the governmental affairs in the manpower sector, no later
than 7 (seven) working days from the signing of the PKWT.

Part Three

Provision of Compensation Money

Article 15

(1) Employers shall be required to provide compensation money

to Workers/Laborers whose employment relationship is based
on PKWT.

(2) The provision of compensation money shall be made upon

the expiration of the PKWT.

(3) The compensation money as referred to in paragraph (1) shall

be provided for Workers/Laborers who have worked for no
less than 1 (one) month continuously.

(4) In case the PKWT is extended, the compensation money shall

be provided upon the expiration of the PKWT period before
the extension, and for the period of PKWT extension the next
compensation money shall be provided after the extension of
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REPUBLIK INDONESIA

the PKWT period is expired or completed.

(5) The compensation money shall not apply to foreign workers

who are employed by the employer in an employment
relationship based on PKWT.

Article 16

(1) The rate of compensation money provided shall be in

accordance with the following provisions:

a. PKWT for 12 (twelve) months continuously, shall be

provided with 1 (one) month of Wage;

b. PKWT for 1 (one) month or more but less than 12

(twelve) months, shall be calculated proportionally by
the formula of:

Service period
x 1 (one) month of Wage;
12
c. PKWT for more than 12 (twelve) months, shall be
calculated proportionallyby the formula of:

Service period
x 1 (one) month of Wage;
12
(2) The wage as referred to in paragraph (1) which is used as the
basis for calculating the payment of compensation money
shall consist of the basic Wage and fixed allowances.

(3) In case the Wages in a Company do not use the components

of the basic Wage and fixed allowances, the basis for
calculating the payment of compensation money shall be
Wages without allowances.

(4) In case the Wages in the company consist of the basic Wage
and non-fixed allowances, the basis for calculating the
 THE PRESIDENT
REPUBLIK INDONESIA

compensation money shall be the basic Wage.

(5) In the event that a PKWT based on the completion of a job is

completed faster than the time frame agreed in the PKWT,
the compensation money shall be calculated until the time
when the job is completed.

(6) The rate of compensation money for Workers/Laborers in

micro and small businesses shall be provided based on an
agreement between the employer and the worker/laborer.

Article 17

In the event that one of the parties terminates the employment

relationship prior to the expiration of the period stipulated in the
PKWT, the employer shall be required to provide compensation
money as referred to in Article 15 paragraph (1), the rate of which
is calculated based on the PKWT period that has been worked by
the Worker/Laborer.

CHAPTER III

OUTSOURCING

Article 18

(1) The employment relationship between the outsourcing

company and the employed workers/laborers shall be based
on PKWT or PKWTT.

(2) PKWT or PKWTT as referred to in paragraph (1) shall be be

made in writing.
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REPUBLIK INDONESIA

(3) Protection of Workers/Laborers, Wages, welfare, working

conditions, and disputes arising shall be implemented in
accordance with the provisions of laws and regulations and
become the responsibility of the Outsourcing Company.

(4) Protection of Workers/Laborers, Wages, welfare, working

conditions, and disputes arising as referred to in paragraph
(3) shall be regulated in an Employment agreement,
Company Regulation, or Collective Bargaining Agreement.

Article 19

(1) In the event that the Outsourcing Company employs

Workers/Laborers based on PKWT, the Employment
agreement shall require the transfer of rights protection for
the Workers/Laborers in the event of a change of Outsourcing
Company and as long as the object of work remain existed.

(2) The requirements for transferring rights protection as referred

to in paragraph (1) shall constitute a guarantee for the
continuity of work for Workers/Laborers whose employment
relationship is based on PKWT in the Outsourcing Company.

(3) In the event that Workers/Laborers are not guaranteed for the
continuity of work as referred to in paragraph (2), the
Outsourcing Company shall be responsible for the fulfillment
of Workers/Laborers’ rights.

Article 20

(1) The outsourcing company shall be be in the form of a legal

entity and shall comply with the business licensing issued by
the National Government.
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REPUBLIK INDONESIA

(2) The requirements and procedures for obtaining a business

license shall be implemented in accordance with the
provisions of laws and regulations regarding the norms,
standards, procedures and criteria for business licensing
stipulated by the National Government.

CHAPTER IV

WORKING TIME AND REST TIME

Part One

General

Article 21

(1) Every Employer shall be required to implement the

provisions of working time.

(2) The working time as referred to in paragraph (1) shall

include:

a. 7 (seven) hours in 1 (one) day and 40 (forty) hours in 1

(one) week for 6 (six) working days in 1 (one) week; or

b. 8 (eight) hours 1 in (one) day and 40 (forty) hours in 1

(one) week for 5 (five) working days in 1 (one) week.

(3) The provisions of working time as referred to in paragraph

(2) shall not apply to certain business sectors or jobs.

(4) The implementation of working time for Workers/Laborers in

the company shall be regulated in an Employment agreement,
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REPUBLIK INDONESIA

Company Regulation, or Collective Bargaining Agreement.

Article 22

Employers who employ Workers/Laborers during working time as

referred to in Article 21 paragraph (2) shall be required to provide
weekly rest time for the Workers/Laborers, including:

a. weekly rest of 1 (one) day for 6 (six) workin g days in 1 (one)

week; or

b. weekly rest of 2 (two) days for 5 (five) working days in 1

(one) week.

Part Two

Working Time in Certain Business Sectors or Jobs

Article 23

(1) Companies in certain business sector or jobs may apply

working time that are less or more than the provisions as
referred to in Article 21 paragraph (2).

(2) Companies in certain business sectors or jobs that apply

working time less than the provisions as referred to in
paragraph (1) shall have the following characteristics:

a. completion of work in less than 7 (seven) hours in 1

(one) day and less than 35 (thirty five) hours in 1 (one)
week;

b. flexible working time; or

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REPUBLIK INDONESIA

c. the job can be performed outside of the work site.

(3) Companies in certain business sectors or jobs that apply

working time more than the provisions as referred to in
paragraph (1), its implementation shall be in accordance with
the working time stipulated by the Minister.

Article 24

(1) In the event that there is a need for working time and rest
time other than those stipulated by the Minister as referred to
in Article 23 paragraph (3), the Minister may stipulate the
working hours and rest time in other certain business sectors
or jobs.

(2) Further provisions regarding working time and rest time in

certain business sectors or jobs as referred to in paragraph (1)
shall be regulated by a Ministerial Regulation.

Article 25

(1) The implementation of working time and working hours for

Workers/Laborers employed in certain business sectors or
jobs that apply working time less than the provisions as
referred to in Article 21 paragraph (2), shall be regulated in
an Employment agreement, Company Regulation or
Collective Bargaining Agreement.

(2) The implementation of working time and working hours for

Workers/Laborers employed in certain business sectors or
jobs that apply working time more than the provisions as
referred to in Article 21 paragraph (2), shall be regulated in
an Employment agreement, Company Regulation, or
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REPUBLIK INDONESIA

Collective Bargaining Agreement.

Part Three

Overtime Working Time

Article 26

(1) Overtime working time may only be applied no longer than 4

(four) hours in 1 (one) day and 18 (eighteen) hours in 1 (one)
week.

(2) The provisions for Overtime Working Time as referred to in

paragraph (1) shall not include overtime performed during
weekly rest time and/or official holidays.

Article 27

(1) Employers who employ Workers/Laborers exceeding the

working time as referred to in Article 21 paragraph (2) shall
be required to pay Overtime pay.

(2) The obligation to pay Overtime pay shall be exempted for

Workers/Laborers in certain occupations.

(3) Workers/Laborers in certain occupations shall have the

responsibility of being thinkers, planners, implementers,
and/or controllers of the running of the Company, whose
working hours cannot be limited and receive higher Wages.

(4) Arrangements for certain class of occupations shall be

regulated in an Employment agreement, Company
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REPUBLIK INDONESIA

Regulation, or Collective Bargaining Agreement.

(5) In case a certain occupation class is not regulated in an

Employment agreement, Company Regulation, or Collective
Bargaining Agreement, the Employer shall be required to pay
Overtime pay.

Article 28

(1) To implement Overtime Working Time, there shall be an

order from the Employer and the approval of the
Worker/Laborer concerned in writing and/or through digital
media.

(2) Orders and approvals as referred to in paragraph (1) may be

made in the form of a list of Workers/Laborers willing to
work overtime, signed by the Workers/Laborers concerned
and the Employer.

(3) The Employer as referred to in paragraph (2) shall prepare a

list of the implementation of overtime work containing the
names of the Workers/Laborers who work overtime and the
length of the Overtime Hours.

Article 29

(1) Companies that employ Workers/Laborers during Overtime

Working Time shall be required to:

a. pay overtime pay;

b. provide the opportunity to rest sufficiently, and

c. provide food and drinks of at least 1,400 (one thousand

and four hundred) kilo calories, if the overtime work is
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REPUBLIK INDONESIA

worked for 4 (four) hours or longer.

(2) The provision of food and drink as referred to in paragraph

(1) letter c may not be replaced in the form of money.

Article 30

provisions of overtime shall apply to all companies, except for

companies in certain business sectors or jobs as referred to in
Article 23 paragraph (3) and Article 24.

Part Four

Overtime Pay

Article 31

(1) Companies that employ Workers/Laborers exceeding the

working time as referred to in Article 21 paragraph (2) shall
be required to pay Overtime pay with the following
provisions:

a. for the first overtime working hour, it is 1.5 (one point

five) of hourly wages; and

b. for each subsequent overtime working hour, it is 2

(two) times of hourly wages.

(2) Companies that employ Workers/Laborers as referred to in

paragraph (1) shall be required to pay Overtime pay, if the
overtime work is performed on an weekly rest day and/or an
official holiday for 6 (six) working days and 40 (forty) hours
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REPUBLIK INDONESIA

a week, with the following provisions:

a. The calculation of Overtime pay shall be made as

follows:

1. the first hour until the seventh hour, it is paid 2

(two) times of an hourly wage;

2. the eighth hour, it is paid 3 (three) times of an

hourly Wage; and

3. . the ninth hour, the tenth hour, and the eleventh

hour, it is paid 4 (four) times of an hourly Wage;

b. in case the official holiday falls on the shortest working

day, the calculation of Overtime pay shall be made as
follows:

1. the first hour until the fifth hour, it is paid 2 (two)

times of an hourly wage;

2. the sixth hour, it is paid 3 (three) times of an

hourly wage; and

3. The seventh hour, the eighth hour, and the ninth

hour, it is paid 4 (four) times of an hourly wage.

(3) Companies that employ Workers/Laborers as referred to in

paragraph (1) shall be required to pay Overtime pay, if
overtime work is performed on weekly rest days and/or
official holidays for 5 (five) working days and 40
(forty)hours a week, on the condition that the calculation of
Overtime pay is made as follows:

a. the first hour until the eighth hour, it is paid 2 (two)

times of an hourly wage;

b. the ninth hour, it is paid 3 (three) times of an hourly

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REPUBLIK INDONESIA

wage; and

c. the tenth hour, the eleventh hour, and the twelfth hour,
it is paid 4 (four) times of an hourly wage.

Article 32

(1) Calculation of Overtime pay shall be based on the monthly

Wage.

(2) The method of calculating an hourly Wage shall be 1/173

(one hundred seventy-three) times of a monthly Wage.

(3) In the event that the Wage component consists of the basic
Wage and fixed allowances, the basis for calculating the
Overtime pay shall be 100% (one hundred percent) of the
Wage.

(4) In the event that the Wage component consists of the basic
Wage, fixed allowances and non-fixed allowances, if the
basic Wages plus fixed allowances are still less than 75%
(seventy five percent) of the total Wages, the basis for
calculating the Overtime pay shall be equal to 75% (seventy
five percent) of the total Wage.

Article 33

(1) In the event that Workers/Laborers’ Wages are paid daily, the
calculation of the monthly Wage shall be made with the
following provisions:

a. Daily wage multiplied by 25 (twenty five), for

Workers/Laborers who work 6 (six) working days in 1
(one) week; or
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REPUBLIK INDONESIA

b. Daily wage multiplied by 21 (twenty one), for

Workers/Laborers who work 5 (five) working days in 1
(one) week

(2) In the event that the Workers/Laborers’ Wages are paid on

the basis of the output unit calculation, the monthly Wage
shall be equal to the average income in the last 12 (twelve)
months.

(3) In the event that the monthly Wage as referred to in

paragraph (2) is lower than the minimum Wage, the monthly
Wage used for the calculation of Overtime pay shall be the
minimum Wage applicable in the area where the
Worker/Laborer works.

Article 34

(1) In the event that the Company has paid the Overtime pay
with another name and the rate of the Overtime pay
calculation is equal to or higher than it, the Overtime pay
calculation will still apply.

(2) The overtime pay with other names and the calculation rate
that has been made by the Company as referred to in
paragraph (1) shall become Overtime pay in accordance with
the provisions of this Government Regulation.

(3) The payment of Overtime pay as referred to in paragraph (1)

and paragraph (2) shall be regulated in an Employment
agreement, Company Regulation, or Collective Bargaining
Agreement.

Part Five
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REPUBLIK INDONESIA

Prolonged Rest

Article 35

(1) Certain companies may provide a prolonged rest .

(2) The certain companies as referred to in paragraph (1) shall be

companies that can provide prolonged rest and the
implementation of which is regulated in an Employment
agreement, Company Regulation, or Collective Bargaining
Agreement.

CHAPTERV

TERMINATION OF EMPLOYMENT

Part One

Procedure for Termination of Employment

Article 36

Termination of employment may occur for the following reasons:

a. Companies are merging, consolidating, taking over, or

separating the Company and the Workers/Laborers are not
willing to continue the Employment Relationship or the
Employer is not willing to accept the Workers/Laborers;

b. The company take a measure of efficiency, either followed by

the closure of the company not followed by the closure of the
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REPUBLIK INDONESIA

company, due to the company suffering from a loss;

c. The company closes because the company has suffered from

a continuous loss for 2 (two) years;

d. The company closes due to force majeure;);

e. The company is in a state of postponement of debt payment

obligations;

f. The company suffers from bankruptcy;

g. There is an application for termination of employment

submitted by the Worker/Laborer on the grounds that the
employer has committed the following actions:

1. torturing, rudely abusing, or threatening the

Worker/Laborer;

2. persuading and/or ordering the Worker/Laborer to

commit an act in contrary to laws and regulations;

3. not paying Wages on time at the stipulated time for 3

(three) or more consecutive months, even though the
Employer pays the Wages on time afterwards;

4. not performing the obligations promised to the

Worker/Laborer;

5. ordering the Worker/Laborer to do a job outside the one

agreed upon; or

6. providing a job that endangers the life, safety, health

and morality of the Worker/Laborer, while the job is
not included in the Employment agreement;

h. there is a decision by an industrial relations dispute

settlement institution stating that the Employer has not
committed the actions as referred to in letter g with regard to
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REPUBLIK INDONESIA

the application submitted by the Worker/Laborer and the

Employer decides to terminate the employment relationship;

i. Workers/Laborers resign of their own accord and must meet

the following requirements:

1. submitting an application for resignation in writing no

later than 30 (thirty) days prior to the date of
resignation;

2. not being bound by any commitment to work for the

employer (ikatan dinas); and

3. continuing to perform their obligations until the date of

resignation;

j. Workers/Laborers are absent for 5 (five) or more working

days consecutively without written information accompanied
by valid evidence and have been properly summoned by the
Employer 2 (two) times in writing;

k. Workers/Laborers violate the provisions stipulated in the

Employment agreement, Company Regulation, or Collective
Bargaining Agreement and have previously been given the
first, second, and third reprimands, each of which valids for a
maximum of 6 (six) months unless otherwise stipulated in the
Employment agreement, Company Regulation, or Collective
Bargaining Agreement;

l. Workers/Laborers are unable to perform work for 6 (six)

months due to being detained by the authorities for allegedly
committing a criminal act;

m. Workers/Laborers suffer from prolonged illness or disability

due to occupational accidents and are unable to perform their
work after exceeding the limit of 12 (twelve) months;
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REPUBLIK INDONESIA

n. Workers/Laborers reach the retirement age; or

o. Workers/Laborers die.

Article 37

(1) Employers, Workers/Laborers, Trade Unions/Labor Unions,

and the Government shall make every effort to prevent
termination of employment from occuring.

(2) In the event that Termination of Employment Relations is

unavoidable, the Employer shall notify the purpose and
reasons for the termination of employment to the
Worker/Laborer and/or Trade Union/Labor Union in the
Company in case the Worker/Laborer concerned is a member
of the Trade Union/Labor Union.

(3) An employment termination notification shall be made in the

form of a notification letter and submitted legally and
properly by the Employer to the Worker/Laborer and/or
Trade Union/Labor Union no later than 14 (fourteen)
working days prior to the termination of employment.

(4) In the event that the employment termination is made during

the probationary period, a notification letter shall be
submitted no later than 7 (seven) working days prior to the
termination of employment.

Article 38

In the event that a Worker/Laborer has received a notification letter

and does not refuse the Termination of Employment, the Employer
shall report the Termination of Employment to the ministry
administering the government affairs in the manpower sector
 THE PRESIDENT
REPUBLIK INDONESIA

and/or the provincial and district/city offices administering the

government affairs in the manpower sector.

Article 39

(1) Workers/laborers who have received a letter of termination of

employment and declares refusing, he or she shall prepare a
letter of rejection attached by the reasons no later than 7
(seven) working days after receiving the notification letter.

(2) In the event of a dispute regarding the Termination of

Employment, the settlement of the Termination of
Employment shall be made through bipartite negotiations
between the Employer and the Worker/Laborer and/or the
Trade Union/Labor Union.

(3) In the event that the bipartite negotiation as referred to in

paragraph (2) does not reach the settlement, the next stage of
the settlement of termination of employment shall be made
through the industrial relations dispute settlement mechanism
in accordance with the provisions of laws and regulations..

Part Two

Rights Arising from the Termination of Employment

Article 40

(1) In the event of termination of employment, the Employer

shall be required to pay severance pay and/or long service
pay, and compensation for rights that should have been
received.
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REPUBLIK INDONESIA

(2) The severance pay as referred to in paragraph (1) shall be

provided with the following provisions:

a. for service period of less than 1 (one) year, 1 (one)

month of wage;

b. for service period of 1 (one) year or more but less than

2 (two) years, 2 (two) months of Wage;

c. for service period of 2 (two) years or more but less than

3 (three) years, 3 (three) months Wage;

d. for service period of 3 (three) years or more but less

than 4 (four) years, 4 (four) months of Wage;

e. for service period of 4 (four) years or more but less

than 5 (five) years, 5 (five) months of Wage;

f. for service period of 5 (five) years or more, but less

than 6 (six) years, 6 (six) months of Wage;

g. for service period of 6 (six) years or more but less than

7 (seven) years, 7 (seven) months of Wage;

h. for service period of 7 (seven) years or more but less

than 8 (eight) years, 8 (eight) months of Wage; and

i. for service period of 8 (eight) years or more, 9 (nine)

months of Wage.

(3) The long service pay as referred to in paragraph (1) shall be

provided with the following provisions:

a. for service period of 3 (three) years or more but less

than 6 (six) years, 2 (two) months of Wage;

b. for service period of 6 (six) years or more but less than

9 (nine) years, 3 (three) months of Wage;
 THE PRESIDENT
REPUBLIK INDONESIA

c. for service period of 9 (nine) years or more but less

than 12 (twelve) years, 4 (four) months of Wage;

d. for service period of 12 (twelve) years or more but less

than 15 (fifteen) years, 5 (five) months of Wage;

e. for service period of 15 (fifteen) years or more but less

than 18 (eighteen) years, 6 (six) months of Wage;

f. for service period of 18 (eighteen) years or more but

less than 21 (twenty one) years, 7 (seven) months of
Wage;

g. for service period of 21 (twenty one) years or more but

less than 24 (twenty four) years, 8 (eight) months of
Wage; and

h. for service period of 24 (twenty four) years or more, 10

(ten) months of Wage.

(4) The compensation for rights that should have been received
as referred to in paragraph (1) shall include:

a. annual leave that has not been used and has not been
expired;

b. costs or fees to return home for Workers/Laborers and

their families to the place where Workers/Laborers are
employed; and

c. other matters stipulated in the Employment agreement,

Company Regulation, or Collective Bargaining
Agreement.

Article 41

An Employer may terminate the employment relationship of a

 THE PRESIDENT
REPUBLIK INDONESIA

Worker/Laborer for the reason that the Company is merging,

consolidating or separating the Company and the Worker/Laborer
is not willing to continue the employment Relationship or the
Employer is not willing to employ the Worker/Laborer, for which
the Worker/Laborer shall be entitled to:

a. severance pay of 1 (one) time of the provision of Article 40

paragraph (2);

b. long service pay of 1 (one) time of the provision of Article 40

paragraph (3); and

c. Compensation for rights in accordance with the provision of

Article 40 paragraph (4).

Article 42

(1) An Employer may terminate the employment relationship of

a Worker/Laborer for the reason of taking over the Company,
for which the Worker/Laborer shall be entitled to:

a. severance pay of 1 (one) time of the provision of

Article 40 paragraph (2);

b. long service pay of 1 (one) time of the provision of

Article 40 paragraph (3); and

c. Compensation for rights in accordance with the

provision of Article 40 paragraph (4).

(2) In the event of a company takeover which results in a change

in working conditions and the Worker/Laborer is not willing
to continue the Employment Relationship, the Employer may
terminate the employment relationship and the
Worker/Laborer shall be entitled to:
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REPUBLIK INDONESIA

a. severance pay of 0.5 (zero point five) time of the

provision of Article 40 paragraph (2);

b. long service pay of 1 (one) time of the provision of

Article 40 paragraph (3); and

c. Compensation for rights in accordance with the

provision of Article 40 paragraph (4).

Article 43

(1) An Employer may terminate the employment relationship of

a Worker/Laborer for the reason that the company is taking a
measure of efficiency due to the company suffering from a
loss, for which the Worker/Laborer shall be entitled to:

a. severance pay of 0.5 (zero point five) time of the

provision of Article 40 paragraph (2);

b. long service pay of 1 (one) time of the provision of

Article 40 paragraph (3); and

c. Compensation for rights in accordance with the

provision of Article 40 paragraph (4).

(2) An Employer may terminate the employment relationship of

a Worker/Laborer for the reason that the company is taking a
measure of efficiency in oredr to prevent losses, for which the
Worker/Laborer shall be entitled to:

a. severance pay of 1 (one) time of the provision of

Article 40 paragraph (2);

b. long service pay of 1 (one) time of the provision of

Article 40 paragraph (3); and

c. Compensation for rights in accordance with the

 THE PRESIDENT
REPUBLIK INDONESIA

provision of Article 40 paragraph (4).

Article 44

(1) An Employer may terminate the employment relationship of

a Worker/Laborer for the reason that the company is closed
due to the company suffering continuous losses for 2 (two)
years or suffering not continuously losses for 2 (two) years,
for which the Worker/Laborer shall be entitled to:

a. severance pay of 0.5 (zero point five) time of the

provision of Article 40 paragraph (2);

b. long service pay of 1 (one) time of the provision of

Article 40 paragraph (3); and

c. Compensation for rights in accordance with the

provision of Article 40 paragraph (4).

(2) An Employer may terminate the employment relationship of

a Worker/Laborer for the reason that the company closes not
due to suffering a loss, for which the Worker/Laborer shall be
entitled to:

a. severance pay of 1 (one) time of the provision of

Article 40 paragraph (2);

b. long service pay of 1 (one) time of the provision of

Article 40 paragraph (3); and

c. Compensation for rights in accordance with the

provision of Article 40 paragraph (4).

Article 45
 THE PRESIDENT
REPUBLIK INDONESIA

(1) An Employer may terminate the employment relationship of

a Worker/Laborer for the reason that the company closes due
to force majeure, for which Worker/Laborer shall be entitled
to:

a. severance pay of 0.5 (zero point five) time of the

provision of Article 40 paragraph (2);

b. long service pay of 1 (one) time of the provision of

Article 40 paragraph (3); and

c. Compensation for rights in accordance with the

provision of Article 40 paragraph (4).

(2) An Employer may terminate the employment relationship of

a Worker/Laborer for the reason of a force majeure which
does not lead to the closure of the Company, for which the
Worker/Laborer shall be entitled to:

a. severance pay of 0.75 (zero point seventy five) of the

provision of Article 40 paragraph (2);

b. long service pay of 1 (one) time of the provision of

Article 40 paragraph (3); and

c. Compensation for rights in accordance with the

provision of Article 40 paragraph (4).

Article 46

(1) An Employer may terminate the employment relationship of

a Worker/Laborer for the reason that the Company is in a
state of postponement of debt payment obligations because
the Company suffers a loss, for which the Worker/Laborer
shall be entitled to:
 THE PRESIDENT
REPUBLIK INDONESIA

a. severance pay of 0.5 (zero point five) time of the

provision of Article 40 paragraph (2);

b. long service pay of 1 (one) time of the provision of

Article 40 paragraph (3); and

c. Compensation for rights in accordance with the

provision of Article 40 paragraph (4).

(2) An Employer may terminate the employment relationship of

a Worker/Laborer for the reason the Company is in a state of
postponement of debt payment obligations not because the
Company suffers a loss, for which the Worker/Laborer shall
be entitled to:

a. severance pay of 1 (one) time of the provision of

Article 40 paragraph (2);

b. long service pay of 1 (one) time of the provision of

Article 40 paragraph (3); and

c. Compensation for rights in accordance with the

provision of Article 40 paragraph (4).

Article 47

For termination of employment due to the reason of the company

bankruptcy, the worker/laborer shall be entitled to:

a. severance pay of 0.5 (zero point five) time of the provision of

Article 40 paragraph (2);

b. long service pay of 1 (one) time of the provision of Article 40

paragraph (3); and

c. Compensation for rights in accordance with the provision of

 THE PRESIDENT
REPUBLIK INDONESIA

Article 40 paragraph (4).

Article 48

An Employer may terminate the employment relationship of a

Worker/Laborer for the reason of an application for the
Termination of Employment submitted by the Worker/Laborer on
the grounds that the Employer commits an act as referred to in
Article 36 letter g, for which the Worker/Laborer shall be entitled
to:

a. severance pay of 1 (one) time of the provision of Article 40

paragraph (2);

b. long service pay of 1 (one) time of the provision of Article 40

paragraph (3); dan

c. Compensation for rights in accordance with the provision of

Article 40 paragraph (4).

Article 49

An Employer may terminate the employment relationship of a

Worker/Laborer for the reason of a decision by an industrial
relations dispute settlement agency stating that the Employer has
not committed the actions as referred to in Article 36 letter g
regarding the application submitted by the Worker/Laborer, for
which the Worker/Laborer shall be entitled to:

a. Compensation for rights in accordance with the provision of

Article 40 paragraph (4); and

b. separation pay, the rate of which is regulated in an

Employment agreement, Company Regulation, or Collective
 THE PRESIDENT
REPUBLIK INDONESIA

Bargaining Agreement.

Article 50

Workers/Laborers who resign on their own accord and meet the

requirements as referred to in Article 36 letter i, shall be entitled to:

a. Compensation for rights in accordance with the provision of

Article 40 paragraph (4); and

b. separation pay, the rate of which is regulated in an

Employment agreement, Company Regulation, or Collective
Bargaining Agreement.

Article 51

An Employer may terminate the employment relationship of a

Worker/Laborer for the reason that the Worker/Laborer is absent
for 5 (five) or more working days consecutively without any
written information, attached by valid evidence and has been
properly summoned by the Employer 2 (two) times in writing, for
which the Worker/Laborer shall be entitled to:

a. Compensation for rights in accordance with the provision of

Article 40 paragraph (4); and

b. separation pay, the rate of which is regulated in an

Employment agreement, Company Regulation, or Collective
Bargaining Agreement.

Article 52

(1) An Employer may terminate the employment relationship of

 THE PRESIDENT
REPUBLIK INDONESIA

a Worker/Laborer for the reason that the Worker/Laborer

violates the provisions stipulated in the Employment
agreement, Company Regulation, or Collective Bargaining
Agreement and has previously been given the first, second,
and third reprimands in succession, for which the
Worker/Laborer shall be entitled to:

a. severance pay of 0.5 (zero point five) time of the

provision of Article 40 paragraph (2);

b. long service pay of 1 (one) time of the provision of

Article 40 paragraph (3); and

c. Compensation for rights in accordance with the

provision of Article 40 paragraph (4).

(2) An Employer may terminate the employment relationship of

a Worker/Laborer for the reason that the Worker/Laborer
commits an urgent violation stipulated in the Employment
agreement, Company Regulation, or Collective Bargaining
Agreement, for which the Worker/Laborer shall be entitled
to:

a. Compensation for rights in accordance with the

provision of Article 40 paragraph (4); and

b. separation pay, the rate of which is regulated in an

Employment agreement, Company Regulation, or
Collective Bargaining Agreement.

(3) An Employer may terminate the employment relationship as

referred to in paragraph (2) without notification as referred to
in Article 37 paragraph (2).

Article 53
 THE PRESIDENT
REPUBLIK INDONESIA

(1) In the event that a Worker/Laborer is detained by the

authorities because he or she is suspected of committing a
criminal act, the Employer shall not be required to pay the
Wage, but shall be required to provide assistance to the
Worker/Laborer’s family member(s) who depend on him or
her, with the following provisions:

a. for 1 (one) dependent person, it is 25% (twenty five

percent) of the Wage;

b. for 2 (two) dependents, it is 35% (thirty five percent) of

the Wage;

c. for 3 (three) dependents, it is 45% (forty five percent)

of the Wage;

d. for 4 (four) or more dependents, it is 50% (fifty

percent) of the Wage.

(2) The assistance as referred to in paragraph (1) shall be

provided for a period of no longer than 6 (six) months from
the first day the Worker/Laborer is detained by the
authorities.

Article 54

(1) An Employer may terminate the employment relationship of

a Worker/Laborer for the reason that the Worker/Laborer is
unable to perform the job for 6 (six) months due to being
detained by the authorities for allegedly committing a
criminal act as referred to in Article 36 letter l which causes
loss to the Company, for which the Worker/Laborer shall be
entitled to:

a. Compensation for rights in accordance with the

 THE PRESIDENT
REPUBLIK INDONESIA

provision of Article 40 paragraph (4); and

b. separation pay, the rate of which is regulated in an

Employment agreement, Company Regulation, or
Collective Bargaining Agreement.

(2) An Employer may terminate the employment relationship of

a Worker/Laborer for the reason that the Worker/Laborer is
unable to perform the job for 6 (six) months as a result of
being detained by the authorities for allegedly committing a
criminal act as referred to in Article 36 letter l which does not
cause loss to the Company, for which the Worker/Laborer
shall be entitled to:

a. long service pay of 1 (one) time of the provision of

Article 40 paragraph (3); and

b. Compensation for rights in accordance with the

provision of Article 40 paragraph (4).

(3) In the event that the court decides the criminal case prior to
the expiration of the 6 (six) month period as referred to in
paragraph (2) and the Worker/Laborer is found not guilty, the
Employer shall re-employ the Worker/Laborer.

(4) In the event that the court decides the criminal case prior to
the expiration of the 6 (six) month period as referred to in
paragraph (1) and the Worker/Laborer is found guilty, the
Employer may terminate the employment relationship and the
Worker/Laborer shall be entitled to:

a. Compensation for rights in accordance with the

provision of Article 40 paragraph (4); and

b. separation pay, the rate of which is regulated in an

Employment agreement, Company Regulation, or
Collective Bargaining Agreement.
 THE PRESIDENT
REPUBLIK INDONESIA

(5) In the event that the court decides the criminal case prior to
the expiration of the 6 (six) month period as referred to in
paragraph (2) and the Worker/Laborer is found guilty, the
Employer may terminate the employment relationship and the
Worker/Laborer shall be entitled to::

a. long service pay of 1 (one) time of the provision of

Article 40 paragraph (3); and

b. Compensation for rights in accordance with the

provision of Article 40 paragraph (4).

Article 55

(1) An Employer may terminate the employment relationship of

a Worker/Laborer for the reason that the Worker/Laborer has
a prolonged illness or disability due to an occupational
accident and is unable to perform the job after exceeding the
limit of 12 (twelve) months, for which the Worker/Laborer
shall be entitled to:

a. severance pay of 2 (two) times of the provision of

Article 40 paragraph (2);

b. long service pay of 1 (one) time of the provision of

Article 40 paragraph (3); and

c. Compensation for rights in accordance with the

provision of Article 40 paragraph (4).

(2) A Worker/Laborer may apply for Termination of

Employment to the Employer because the Worker/Laborer
has a prolonged illness or disability due to an occupational
accident and is unable to perform the job after exceeding the
limit of 12 (twelve) months, for which the Worker/Laborer
 THE PRESIDENT
REPUBLIK INDONESIA

shall be entitled to:

a. severance pay of 2 (two) times of the provision of

Article 40 paragraph (2);

b. long service pay of 1 (one) time of the provision of

Article 40 paragraph (3); dan

c. Compensation for rights in accordance with the

provision of Article 40 paragraph (4).

Article 56

An Employer may terminate the employment relationship of a

Worker/Laborer for the reason that the Worker/Laborer is reaching
the retirement age, for which the Worker/Laborer shall be entitled
to:

a. severance pay of 1.75 (one point seventy five) times of the

provision of Article 40 paragraph (2);

b. long service pay of 1 (one) time of the provision of Article 40

paragraph (3); and

c. Compensation for rights in accordance with the provision of

Article 40 paragraph (4).

Article 57

Termination of employment due to the reason that the

Worker/Laborer dies, the heirs shall be provided with an amount of
money which is equal to:

a. severance pay of 2 (two) times of the provision of Article 40

 THE PRESIDENT
REPUBLIK INDONESIA

paragraph (2);

b. long service pay of 1 (one) time of the provision of Article 40

paragraph (3); and

c. Compensation for rights in accordance with the provision of

Article 40 paragraph (4).

Article 58

(1) An Employer who enrolls his or her Workers/Laborers to a

pension program in accordance with the provisions of laws
and regulations in the field of pension funds, the
contributions paid by the Employer may be calculated as part
of the Employer’s obligations for severance pay and service
pay and separation pay due to termination of employment as
referred to in Article 41 to Article 52 and Article 54 to Article
57.

(2) If the calculation of the benefits of the pension program as

referred to in paragraph (1) is lower than the severance pay
and service pay and separation pay, the Employer shall pay
the difference.

(3) The implementation of the provisions as referred to in

paragraph (1) shall be regulated in an Employment
agreement, Company Regulation, or Collective Bargaining
Agreement.

Article 59

Employers in micro and small enterprises shall be required to pay

severance pay, long service pay, compensation for rights, and/or
separation pay to Workers/Laborers whose employment is
 THE PRESIDENT
REPUBLIK INDONESIA

terminated in the amount determined based on an agreement

between the employers in the micro and small enterprises and the
workers/Laborers

CHAPTER VI

LABOR INSPECTION

Article 60

The labor inspection on the implementation of the provisions in this

Government Regulation shall be conducted by the Labor Inspector
at the ministry administering the government affairs in the
manpower sector and/or the provincial offices administering
government affairs in the manpower sector.

CHAPTER VII

ADMINISTRATIVE SANCTIONS

Article 61

(1) Employers who violate the provisions of Article 15 paragraph

(1), Article 1 7, Article 21 paragraph (1), Article 22, Article
29 paragraph (1) letter b and letter c, Article 53, and/or
Article 59 shall be subject to administrative sanctions in the
forms of:

a. written reprimand;

b. restrictions on business activities;

 THE PRESIDENT
REPUBLIK INDONESIA

c. temporary cessation of part or all of the means of

production; and

d. suspension of business activities.

(2) The administrative sanctions as referred to in paragraph (1)

shall be imposed in stages.

(3) A written reprimand as referred to in paragraph (1) letter a

shall be a written reprimand of a violation committed by an
Employer.

(4) The restrictions on business activities as referred to in

paragraph (1) letter b shall include:

a. restrictions on the production capacity of goods and/or

services within a certain time; and/or

b. postponement of granting business licenses in one or

more locations for companies running projects in
several locations.

(5) The temporary cessation of part or all of the means of

production as referred to in paragraph (1) letter c shall be in
the form of an action of not operating part or all of the means
of production of goods and/or services within a certain time.

(6) The suspension of business activities as referred to in

paragraph (1) letter d shall be in the form of an action of
suspending the entire process of production of goods and/or
services in the Company within a certain time.

Article 62

(1) The Minister, relevant ministers, governors, regents/mayors,

or officials appointed in accordance with their respective
 THE PRESIDENT
REPUBLIK INDONESIA

powers shall impose administrative sanctions as referred to in

Article 61 paragraph (1) on Employers.

(2) The imposition of administrative sanctions shall be provided

based on the results of the inspection conducted by the Labor
Inspector, based on:

a. complaints; and/or

b. follow-up to the results of the labor inspection.

(3) The follow-up on the results of the inspection conducted by

the Labor Inspector shall be contained in an inspection note.

(4) In the event that the inspection note are not implemented by
the Employer, the Labor Inspector shall submit a report of
non-compliance with the provisions of laws and regulations,
attached with the inspection note, to:

a. the director general of labor inspection at the ministry

administering the government affairs in the manpower
sector, for the Labor Inspector in the ministry
administering the government affairs in the manpower
sector; or

b. the head of the provincial office administersing the

government affairs in the manpower sector, for the
Labor Inspector at the provincial office administering
the government affairs in the manpower sector.

(5) The director general or the head of office shall submit

recommendations to the official authorized to impose
administrative sanctions.

(6) The relevant ministers, governors, regents/mayors, or

appointed officials shall notify the imposition of
administrative sanctions to the Minister.
 THE PRESIDENT
REPUBLIK INDONESIA

CHAPTER VIII

TRANSITIONAL PROVISIONS

Article 63

Upon the entry of this Government Regulation into force, PKWT

that has existed and has not been expired shall still be valid until
the expiration of the PKWT.

CHAPTER IX

CLOSING PROVISIONS

Article 64

Upon the entry of this Government Regulation into force:

a. compensation money for PKWT whose period of time has

not expired shall be provided in accordance with the
provisions of this Government Regulation; and

b. The rate of compensation money as referred to in letter a

shall be calculated based on the service period of the
Worker/Laborer whose calculation starts from the date of
promulgation of Law Number 11 of 2020 concerning Job
Creation.

Article 65
 THE PRESIDENT
REPUBLIK INDONESIA

Upon the entry of this Government Regulation into force, all laws
and regulations which constitute the implementing regulations of
Law Number 13 of 2003 concerning Manpower (State Gazette of
the Republic of Indonesia of 2003 Number 39, Supplement to the
State Gazette of the Republic of Indonesia Number 4279)
regulating working hours in certain business sectors or jobs shall
remain in force as long as they are not contrary to this Government
Regulation.

Article 66

This Government Regulation shall come into force on the date of

promulgation.

For public cognizance, ordering the promulgation of this

Government Regulation by placing it in the State Gazette of the
Republic of Indonesia.

Stipulated in Jakarta

at 2 February 2021

THE PRESIDENT OF THE

REPUBLIC OF INDONESIA,

signed
 THE PRESIDENT
REPUBLIK INDONESIA

JOKO WIDODO

Promulgated in Jakarta

at 2 February

THE MINISTER OF LAW AND HUMAN RIGHTS

OF THE REPUBLIC OF INDONESIA,

signed

YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA

YEAR 2021 NUMBER 45

Copy as the original

MINISTRY OF STATE SECRETARIATE

Deputy of Laws and Regulations

Lydia Silvanna DJaman

 THE PRESIDENT
REPUBLIK INDONESIA
 THE PRESIDENT
REPUBLIK INDONESIA

EXPLANATION OF

GOVERNMENT OF THE REPUBLIC OF INDONESIA REGULATION

NUMBER 35 OF 2021

CONCERNING

EMPLOYMENT AGREEMENT FOR A SPECIFIED PERIOD OF TIME,

OUTSOURCING, WORKING HOURS AND REST TIME, AND TERMINATION OF
EMPLOYMENT

I. GENERAL

The dynamics of globalization and the rapidly developing transformation of

information technology have changed the social and economic order, including
changes in the manpower sector. The changes are strategic challenges that demand
the productivity and competitiveness of human resources as the main prerequisites
for the Indonesian workforce to be able to play its role in the global economy.

In order to improve the quality of productive and competitive Indonesian workforce,

the direction of development policy in the manpower sector focuses on efforts to
create the widest possible job opportunities and improve protection of rights and
welfare for Workers/Laborers, both during the employment and after the expiration
of the employment relationship.

Therefore, a regulation is needed that is adaptively able to respond to the challenges

and dynamics of employment, especially on strategic issues concerning the
employment relationship which includes the arragement of the implementation of
PKWT and protection of workers/laborers therein, including PKWT
Workers/Laborers employed in outsourcing activities, arrangement of Working time
and rest time for Workers/Laborers, especially in certain business sectors and types
of work that emphasize occupational safety and health aspects as well as
 THE PRESIDENT
REPUBLIK INDONESIA

arrangements for Termination of Employment mechanisms, including how to ensure

the fulfillment of rights for Workers/Laborers whose employment is terminated.

This Government Regulation contains, among others:

a. PKWT based on the specified period of time or the completion of a certain job;
b. type and nature or work activities, time frame, and deadline for extension of
PKWT;
c. compensation money for PKWT Workers/Laborers;
d. Protection of Workers/Laborers and business licensing in outsourcing
activities;
e. working time in a certain business sector or job;
f. Overtime and Overtime Pay;
g. Limitation for certain Companies that can implement a prolonged rest ;
h. procedures for termination of employment; and
i. Provision of severance pay, long service pay, and compensation for rights.

II. ARTICLE BY ARTICLE

Article 1

Self-Explanatory.

Article 2

Self-Explanatory.

Article 3

Self-Explanatory.

Article 4

Self-Explanatory.

Article 5
 THE PRESIDENT
REPUBLIK INDONESIA

Paragraph (1)

Letter a

Self-Explanatory.

Letter b

Self-Explanatory.

Letter c

What is meant by “new product” is a product that has never

previously been produced or is a development of an existing
product. What is meant by “new activity” is a business that is newly
performed by the Company.

Paragraph (2)

Self-Explanatory.

Paragraph (3)

Self-Explanatory.

Article 6

Self-Explanatory.

Article 7

Self-Explanatory.

Article 8

Self-Explanatory.

Article 9

Paragraph (1)
 THE PRESIDENT
REPUBLIK INDONESIA

Self-Explanatory.

Paragraph (2)

Letter a

What is meant by “the scope and limitation of a job” is the type of

job and the location where the job is performed.

Letter b

Self-Explanatory.

Paragraph (3)

Self-Explanatory.

Paragraph (4)

Self-Explanatory.

Paragraph (5)

Self-Explanatory.

Article 10

Paragraph (1)

Self-Explanatory.

Paragraph (2)

Self-Explanatory.

Paragraph (3)

Self-Explanatory.

Paragraph (4)
 THE PRESIDENT
REPUBLIK INDONESIA

What is meant by “by law” is that when the daily employment agreement
does not apply due to the fulfilled provisions in this paragraph, the
employment relationship between the employer and the worker/laborer
does not require a written agreement or other written decision.

Article 11

Paragraph (1)

Self-Explanatory.

Paragraph (2)

Self-Explanatory.

Paragraph (3)

What is meant by " the rights of the Worker/Laborer” includes, among

others, wages, religious feast allowances, rest, leave, and employment
and health social security programs.

Article 12

Self-Explanatory.

Article 13

Letter a

Self-Explanatory.

Letter b

Self-Explanatory.

Letter c

Self-Explanatory.

Letter d
 THE PRESIDENT
REPUBLIK INDONESIA

Self-Explanatory.

Letter e

Self-Explanatory.

Letter f

What is meant by “work conditions” are the rights and obligations of

Employers and Workers/Laborers that have not been regulated in the
provisions of laws and regulations.

Letter g

Self-Explanatory.

Letter h

Self-Explanatory.

Letter i

Self-Explanatory.

Article 14

Self-Explanatory.

Article 15

Paragraph (1)

Self-Explanatory.

Paragraph (2)

What is meant by “upon the expiration of the PKWT” is when the period
of the PKWT has expired or completed.

Paragraph (3)
 THE PRESIDENT
REPUBLIK INDONESIA

Self-Explanatory.

Paragraph (4)

Self-Explanatory.

Paragraph (5)

Self-Explanatory.

Article 16

Paragraph (1)

Self-Explanatory.

Paragraph (2)

Self-Explanatory.

Paragraph (3)

Self-Explanatory.

Paragraph (4)

Self-Explanatory.

Paragraph (5)

Self-Explanatory.

Paragraph (6)

Self-Explanatory.

Article 17

Self-Explanatory.

Article 18
 THE PRESIDENT
REPUBLIK INDONESIA

Self-Explanatory.

Article 19

Self-Explanatory.

Article 20

Self-Explanatory.

Article 21

Self-Explanatory.

Article 22

Self-Explanatory.

Article 23

Paragraph (1)

Self-Explanatory.

Paragraph (2)

Letter a

Self-Explanatory.

Letter b

What is meant by “flexible working time” is a working time

arrangement which gives more freedom to Employers and
Workers/Laborers in regulating working hours.

Letter c

Self-Explanatory.

Paragraph (3)
 THE PRESIDENT
REPUBLIK INDONESIA

What is meant by “certain business sectors or jobs” includes but is not

limited to business in energy and mineral resources in certain areas,
general mining business sector in certain operating areas, upstream oil
and gas business activities, horticultural agribusiness sector, and farming
sector in certain operating areas.

Article 24

Self-Explanatory.

Article25

Self-Explanatory.

Article 26

Paragraph (1)

Self-Explanatory.

Paragraph (2)

What is meant by “official holidays” are national holidays, nationally off

days, or holidays stipulated by the Local Government.

Article 27

Self-Explanatory.

Article28

Self-Explanatory.

Article 29

Self-Explanatory.

Article 30

Self-Explanatory.
 THE PRESIDENT
REPUBLIK INDONESIA

Article 31

Self-Explanatory.

Article 32

Self-Explanatory.

Article 33

Paragraph (1)

Self-Explanatory.

Paragraph (2)

Self-Explanatory.

Paragraph (3)

What is meant by “the minimum Wage applicable in the area where the
Worker/Laborer works” is the district/city minimum wage in the event
that the district/city minimum Wage is stipulated in that area.

If the dsitrict/city in the area does not have a stipulation of the

district/city minimum Wage, the provincial minimum Wage applies.

Article34

Self-Explanatory.

Article35

Self-Explanatory.

Article36

Self-Explanatory.

Article 37
 THE PRESIDENT
REPUBLIK INDONESIA

Paragraph (1)

Self-Explanatory.

Paragraph (2)

Self-Explanatory.

Paragraph (3)

The notification letter contains, among others, the purpose and reasons
for Termination of Employment, compensation for Termination of
Employment and other rights for Workers/Laborers that arise as a result
of the Termination of Employment.

Paragraph (4)

Self-Explanatory.

Article 38

Self-Explanatory.

Article 39

Self-Explanatory.

Article 40

Self-Explanatory.

Article 41

Self-Explanatory.

Article 42

Paragraph (1)

Self-Explanatory.
 THE PRESIDENT
REPUBLIK INDONESIA

Paragraph (2)

What is meant by “change in working conditions” is a change in rights

and obligations which is detrimental to the Workers/Laborers.

Article 43

Paragraph (1)

The company suffering fror a loss can be proven, among others, based on
the results of either internal or external audits.

Paragraph (2)

Efficiency to prevent losses is indicated by, among others, the potential

for a decrease in the Company’s productivity or a decrease in profits that
will have an impact on the Company’s operations.

Article 44

Paragraph (1)

What is meant by “the company is closed due to the company suffering

continuous losses for 2 (two) years or suffering not continuously losses
for 2 (two) years” is a company that stops operating or is unable to
continue the production process due to the losses suffered even though
has not reached 2 (two) years.

The company suferred from a loss can be proven, among others, based on
the results of either internal or external audits.

Paragraph (2)

Self-Explanatory.

Article 45

Self-Explanatory.

Article46
 THE PRESIDENT
REPUBLIK INDONESIA

Self-Explanatory.

Article 47

With the determination of the company bankruptcy, the employers do not have
the authority to run the management and/or settlement of the bankrupt
company’s assets.

Therefore, the payment of severance pay, long service pay, and compensation
for rights for Workers/Laborers are made by the curator.

Article48

Self-Explanatory.

Article49

Self-Explanatory.

Article50

Self-Explanatory.

Article 51

Self-Explanatory.

Article 52

Paragraph (1)

Reprimands are issued sequentially, namely:

a. The first reprimand, valid for a period of 6 (six) months.

b. If the Worker/Laborer violates the provisions in the Employment
agreement, Company Regulation, or Collective Bargaining
Agreement again within the grace period of 6 (six) months, the
Employer can issue the second reprimand, which also has a validity
period of 6 (six) months from the date of the issuance of the second
reprimand.
 THE PRESIDENT
REPUBLIK INDONESIA

c. If the Worker/Laborer still violates the provisions in the

Employment agreement, Company Regulation, or Collective
Bargaining Agreement, the Employer can issue the third (last)
reprimand which is valid for 6 (six) months from the issuance of
the third reprimand.

If within the period of the third reprimand the Worker/Laborer violates

the Employment agreement, Company Regulation, or Collective
Bargaining Agreement again, the Employer can terminate the
Employment Relationship.

In the event that the period of 6 (six) months since the issuance of the
first reprimand has expired, if the Worker/Laborer concerned commits
another violation of the Employment agreement, Company Regulation, or
Collective Bargaining Agreement, the reprimand issued by the Employer
is returned as the first reprimand, which is similarly true for the second
and third reprimands.

The Employment Agreement, Company Regulation, or Collective

Bargaining Agreement can contain certain violations that can be provided
with the first and last reprimands.

If the Worker/Laborer violates the Employment agreement, Company

Regulation, or Collective Bargaining Agreement within the grace period
of the first and the last reprimands, the Employer can terminate the
Employment Relationship.

The grace period of 6 (six) month is intended as an effort to educate

Workers/Laborers so that they can make a correction for their mistakes
and, on the other hand, this 6 (six) months is sufficient time for the
Employer to assess the performance of the Workers/Laborers concerned.

Paragraph (2)

The urgent violations can be regulated in an Employment agreement,

Company Regulation, or Collective Bargaining Agreement so that the
 THE PRESIDENT
REPUBLIK INDONESIA

Employer can immediately terminate the employment Relationship of

Workers/Laborers, for example in the case of:

a. commiting fraud, theft or embezzlement of Company property

and/or money;
b. giving false or falsified information that is detrimental to the
Company;
c. being drunk, drinking intoxicating liquor, consuming and/or
distributing narcotics, psychotropic and other addictive substances
in the work environment;
d. engaging in immoral acts or gambling in the work environment;
e. attacking, abusing, threatening, or intimidating co-workers or the
Employer in the work environment;
f. persuading a co-worker or the employer to commit an act that is
contrary to laws and regulations;
g. carelessly or deliberately damaging or leaving the Company’s
property in danger of causing harm to the Company;
h. carelessly or deliberately leaving a co-worker or the employer in
danger in the workplace;
i. revealing or divulging Company secrets that should be kept secret,
except for the state’s interest; or
j. commiting other acts within the Company environment which are
punishable by imprisonment of 5 (five) years or more.

Paragraph (3)

Self-Explanatory.

Article 53

Self-Explanatory.

Article 54

Self-Explanatory.

Article 55
 THE PRESIDENT
REPUBLIK INDONESIA

Self-Explanatory.

Article 56

Self-Explanatory.

Article 57

Self-Explanatory.

Article 58

Paragraph (1)

An example of calculating the fulfillment of employers’ obligations is as

follows:

Severance pay that should be received by Workers/Laborers is IDR

15,000,000.00 (fifteen million rupiah).

The amount of pension benefits according to the pension program is IDR

10,000,000.00 (ten million rupiah).

In the arrangement of the pension program, the contribution that is

charged to the employer is 60% (sixty percent) and the worker/laborer is
40% (forty percent).

The contribution that has been paid by the employer is 60% x IDR
10,000,000.00 = IDR 6,000,000.00.

The contribution paid by the Worker/Laborer is 40% x IDR

10,000,000.00 = IDR 4,000,000.00.

So, the shortfall that still has to be paid by the employer is IDR
15,000,000.00-IDR 6,000,000.00 = IDR 9,000,000.00.

Thus, the money received by a Worker/Laborer at the time of dismissal

consists of:
 THE PRESIDENT
REPUBLIK INDONESIA

a. IDR 6,000,000.00 is compensation from the pension program

provider whose contribution is 60% paid by the Employer;
b. IDR 4,000,000.00 is a benefit from the the pension program
provider, the contribution of which is 40% paid by the
Worker/Laborer;
c. IDR 9,000,000.00 represents the shortage of severance pay that
must be paid by the employer;

the sum of a to c is IDR 19,000,000.00 (nineteen million rupiah).

If the amount of contributions paid by the Employer is higher than the

severance pay, long service pay and separation pay for the
Worker/Laborer, the difference is paid to the Worker/Laborer.

Paragraph (2)

Self-Explanatory.

Paragraph (3)

Self-Explanatory.

Article 59

Self-Explanatory.

Article 60

Self-Explanatory.

Article 61

Self-Explanatory.

Article 62

Self-Explanatory.

Article 63
 THE PRESIDENT
REPUBLIK INDONESIA

Self-Explanatory.

Article 64

Self-Explanatory.

Article 65

Self-Explanatory.

Article 66

Self-Explanatory.

SUPPLEMENT TO STATE GAZETTE OF THE REPUBLIC OF INDONESIA

NUMBER 6647