Indonesian company regulations (Peraturan Perusahaan) must cover employer and employee rights, working conditions, workplace rules, and their period of validity. Companies employing at least 10 workers generally must establish these regulations unless they have an applicable collective labor agreement (Perjanjian Kerja Bersama or PKB).
Company regulations apply across the workforce and are separate from individual employment agreements.
What Employment Terms Must Indonesian Company Regulations Include?
Working Hours, Rest Periods, and Overtime
Company regulations should specify normal working schedules, weekly rest days, and overtime procedures.
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Indonesia generally permits two standard working arrangements: seven hours per day over six working days or eight hours per day over five working days, with a normal working week of 40 hours. Different arrangements may apply to certain sectors.
Overtime provisions should address authorization procedures, applicable limits, and compensation in accordance with statutory requirements.
Salaries, Allowances, and Employee Benefits
The regulations should establish salary payment schedules, allowance arrangements, and employee benefits.
They should distinguish between fixed and non-fixed allowances where relevant, as these classifications can affect statutory employment payments.
Companies must comply with applicable minimum wage requirements and mandatory religious holiday allowances (Tunjangan Hari Raya or THR).
Additional benefits, such as performance bonuses or private health insurance, should specify employee eligibility and payment conditions.
Leave and Social Security Entitlements
Company regulations should address annual leave, long-service leave, sick leave, maternity leave, and other statutory absences.
Employees are entitled to at least 12 working days of annual leave after completing 12 consecutive months of service. Under Law No. 27 of 2026, employees also receive 30 calendar days of long-service rest after five consecutive years of employment and at each subsequent five-year interval. Employees taking long-service rest do not receive annual leave for that year.
Where a company implements government-designated collective leave (cuti bersama), those days cannot be deducted from employees’ annual leave entitlements.
Company regulations should specify leave application procedures and supporting documentation requirements. Employers must also comply with applicable BPJS Kesehatan and BPJS Ketenagakerjaan registration and contribution requirements.
What Employer and Employee Responsibilities Must Be Covered?
Company regulations should establish procedures for reporting workplace accidents, unsafe conditions, and other incidents requiring management attention.
Employee responsibilities may include complying with workplace safety instructions, protecting confidential business information, and reporting unauthorized access to company records.
For PT PMAs handling customer information, financial records, or proprietary technology, the regulations may establish restrictions on information disclosure, access to internal systems, use of company equipment, and the return of company property when employment ends.
What Workplace Conduct and Disciplinary Rules Should Be Included?
Company regulations should identify prohibited conduct, including unauthorized absences, harassment, workplace violence, and misuse of company assets.
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Under Government Regulation No. 35 of 2021, termination for ordinary violations may follow three consecutive written warnings. Each warning generally remains valid for six months, unless the applicable employment documents provide otherwise. Termination may follow if the employee commits another violation while the third warning remains valid.
Employment documents may also establish a first-and-final warning procedure for specified violations.
For urgent violations expressly identified in the applicable employment documents, employers may terminate employment without following the ordinary warning sequence. Article 52(3) also provides an exception to the usual termination notification requirement.
What Termination and Resignation Provisions Should Company Regulations Address?
Employee Resignation
Company regulations should specify resignation procedures, including written notice and employee handover obligations.
Under Government Regulation No. 35 of 2021, employees voluntarily resigning generally must provide written notice at least 30 days before their intended resignation date and meet other applicable conditions.
Qualifying employees are entitled to compensation of rights and separation pay, with the separation pay amount determined by the employment agreement, company regulations, or collective labor agreement.
Employment Termination
Company regulations should establish procedures for issuing termination notices, receiving employee objections, and referring unresolved disagreements to the applicable employment dispute resolution process.
Different termination grounds may require different procedures. For example, prolonged unauthorized absence is subject to specific statutory conditions, while misconduct-related termination follows the disciplinary provisions established in the applicable employment documents.
Severance and Other Termination Payments
Company regulations should address severance pay, long-service payments, compensation of rights, and separation pay where applicable.
Employees terminated for urgent violations remain entitled to compensation of rights and applicable separation pay, with the separation pay amount determined by the relevant employment documents.
How Long Are Indonesian Company Regulations Valid?
Company regulations remain valid for a maximum of two years. Under Ministry of Manpower Regulation No. 28 of 2014, employers must submit renewal applications no later than 30 working days before expiry.
Employers must consider suggestions from the relevant trade union or employee representatives when preparing the regulations.
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The regulations require approval from the competent manpower authority. If a complete and compliant submission is not approved within 30 working days, it is deemed approved.
Employers must explain the regulations to employees and provide accessible printed or electronic copies, including any subsequent amendments.
Changes made before the regulations expire require agreement between the employer and employee representatives, followed by approval from the competent authority.
Failure to renew company regulations after expiry may result in written warnings, administrative fines, or restrictions on business activities.
Where collective labor agreement negotiations remain ongoing at expiry, employers may apply for an extension of up to one year, subject to applicable requirements.
Ensure Employment Compliance with MAP Resources Indonesia
MAP Resources Indonesia assists foreign investors with HR administration, payroll, and employment compliance in Indonesia.For assistance with your company’s employment regulations, email info@mapresourcesindonesia.com.
