Draft Omnibus Law: Manpower Chapter
The highly anticipated Omnibus Bill (“the “Bill”) is taking its first step as the first draft was recently submitted to the House of Representatives. The Bill will amend (or simplify) various regulations on from licensing procedures, investment requirements, manpower, immigration, export-import, land procurement to special economic zones with the main focus being creating jobs. Discussion of the Bill is aimed to be concluded within 100 working days, which should fall sometime in August or early September.
In this edition of M&T Advisory, we highlight some of the manpower aspects proposed in the draft Bill. What are the changes? Will the Bill be more balanced between employers’ and employees’ rights? How will it affect foreign workers? What are the formulae for determining the minimum wage?
Below are some issues that we can highlight in the draft Bill. It will be interesting to see how the following developments progress.
The Bill emphasizes the exception from the required RPTKA approval for several positions, including members of the Boards of Directors and Commissioners who hold a certain percentage of shares, and foreigners in start-up businesses. According to the Bill, the positions which foreign manpower can fill will be regulated under a presidential regulation (in the current Manpower Law, they are regulated under a Ministry Regulation). It will also be interesting to see whether this will affect the current implementing regulations on the positions that foreigners may fill.
Fixed Term Employment Contracts (FTC)
The term of a FTC under the Bill depends on the agreement between the parties and removes the current limit. Therefore, the term of a FTC will be agreed to or will end upon the completion of the work. The Bill intends to expand the coverage and flexibility of FTCs as opposed to the current implementing regulation (Minister of Manpower Decree No. 100 of 2004) which limits FTCs for the following works:
- of a one-off (not continuing) or temporary nature;
- estimated to be completed within 3 years;
- seasonal in nature; or
- work which is related to a new product, activity, or ancillary product which is on trial.
The existing sanction causing FTCs which are not entered into in writing and in the Indonesian language to be deemed permanent contracts is removed under the Bill. However, as Ministry of Manpower Decree No.100 of 2004 provides for the same sanction, it is yet to be seen whether new implementing regulations will be issued to replace or supersede the existing ones.
Compensation (the amount of which will be regulated further) in the event of the completion of the work or the expiry of the term for those who have worked for at least 1 year with the employer is also a novelty under the Bill.
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