The Indonesian Government has issued a regulation to revoke and replace the Job Creation Law following the Constitutional Court ruling ordering the government to amend parts of law within two years.
Effective as of December 30, 2022, Government Regulation in Lieu of Law No. 2 Year 2022 ("Perppu No. 2") revokes and replaces Law No. 11 Year 2020 (the "Job Creation Law").
Specifically for the Indonesian employment sector, Perppu No. 2 introduces some important changes from the Job Creation Law, including outsourcing arrangements and minimum wage requirements. We look briefly at some of these major changes.
| Issue | Job Creation Law | Perppu No. 2 |
| Outsourcing | Deletes Article 64 of the Manpower Law (Law No. 13 of 2003) allowing a company to outsource part of its work to another company under a written agreement. | (1) Allows a company to hand over part of the execution of its work to another company through an outsourcing agreement made in writing. (2) The government shall determine which work or type of work can be outsourced to another company. (3) Further provisions regarding the determination of outsourceable work shall be regulated in a Government Regulation. |
| Variables used to calculate minimum wage | Maintains Article 88D paragraph (2) of the Manpower Law, which stipulates that the formula for calculating minimum wage includes economic growth or inflation variables. | The formula for calculating the minimum wage takes into... |
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