New Wage Regime: Detail Keypoints & Potential Problems

Wage gap

  • In the Minister of Manpower Decree No. 104/2021, the government emphasized that as long as the company is affected by the COVID-19 pandemic, which resulted in laying off workers/laborers, workers still have a working relationship with the entrepreneur even if they are furloughed.
  • Although the Minister of Manpower Decree No. 104/2021 is quite good, as it aims to make workers still get wages/salaries even though they are furloughed, the implementation is not necessarily effective. The provision does not contain sanctions for companies that continue to furlough workers/laborers but do not pay wages. Without sanctions, whether written warnings or administrative sanctions, there is no guarantee that workers/laborers will still receive wages even if they are furloughed.
  • Both Law No. 13/2003 on Manpower (Labor Law) and Law No. 11/2020 on Job Creation, which amends some of the provisions of the Manpower Act, do not specifically regulate furloughed workers. If the employee does not work, the Job Creation Law uses the term rest daily or weekly, leave, or long rest.

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