Indonesia Employment Issues During COVID-19

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  • The Jakarta government has issued several measures in dealing with human resource issues amid the COVID-19 pandemic.
  • One such measure has been to halt the activities of non-essential businesses in the city.
  • Businesses, however, are reminded to continue paying the full wages of employees unless an agreement between the two parties has been reached regarding salary deductions or termination.

With the onset of the COVID-19 pandemic, the Indonesian government and regional governments have implemented various measures for businesses in dealing with human resource concerns during these uncertain times.

This article will focus on the Special Region of Jakarta, where the capital is located, as it has become the epicenter of the virus in the country with more than 50 percent of total infections. The city is the center of business and trade in Indonesia, contributing to one-fifth of the country’s GDP.

The Jakarta government has issued regulations that will temporarily halt business activities, employee wages, and sick leave.

Foreign investors should seek the help of registered local advisors to help understand how these latest changes will affect their operations.

Halting business activities

From April 10, 2020, the Jakarta government will implement its Large Scale Social Restriction policy (PSBB), an escalation of the current social distancing policy.

Under these measures, non-essential businesses must implement work-from-home measures, as much as possible. Only selected business sectors will be allowed to operate. Healthcare, communications, food and beverage, energy, financial services, and logistics are among the ‘strategic’ sectors identified as crucial for the people’s needs, and will remain open.

The PSBB will be implemented for 14 days and could be extended depending on the scale of the outbreak. In addition to the closure of non-essential businesses, public facilities such as parks, meeting halls, and museums will be closed.

Public transport will also be reduced and restricted.

Working from home

The government has stipulated three approaches to working from home. These are:

  • The temporary closure of the business with employees working from their respective homes;
  • The temporary reduction in working hours, the number of employees working, and reduction in business operations; or
  • Businesses that are unable to fulfil the previous two obligations because they have a direct impact in relation to vital sectors, such as health services, energy, food and beverages, among others.

Employment wages

Under the circular – Letter of Republic of Indonesia Ministry of Manpower No. M/3/HK.04/III/2020 on Worker/Labor Protection and Business Continuity for the Prevention and Control of COVID-19 – employers must continue paying the full wages of employees working from home unless an agreement between the two parties says otherwise.

Employees who are under the ODP (monitored) status will still be entitled to full salaries. An ODP status means the person has a travel history of entering a COVID-19 hotspot and came in contact with possible COVID-19 patients, and thus have to go into self-isolation.

Employees who are under the PDP status (surveillance) are those that have displayed symptoms of COVID-19, such as fever, respiratory problems, and dry coughs and are undergoing self-isolation – they will be categorized as being on sick leave. The company will then have to adhere to the Law No. 13 of 2003 (Labor Law).

Under the Labor Law, the employee on sick leave is entitled to:

  • 100 percent of wages during the first four months of sick leave;
  • 75 percent of wages during the second four months of sick leave;
  • 50 percent of wages during the third four months of sick leave; and
  • 25 percent of wages during each subsequent month of sick leave (until the termination of employment is agreed upon).

Termination of employment

The central government and regional governments have not issued any impending regulations with regard to the termination of employment, specifically during the COVID-19 pandemic. Companies should therefore, follow the regulations stipulated in the Labor Law.


About Us

ASEAN Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia and maintains offices throughout ASEAN, including in SingaporeHanoiHo Chi Minh City and Jakarta. Please contact us at asia@dezshira.com or visit our website at www.dezshira.com

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