Indonesia Labour Ministry to Adjust Rules on Contracts, Outsourcing, Gig Economy

STUPA ■ JAKARTA — Indonesia's Labour Ministry is adjusting employment regulations to accommodate changing work patterns, including rules governing fixed-term contracts, outsourcing and digital platform-based work, as businesses adopt new models amid the country's digital transformation.

Labour Ministry Secretary-General Cris Kuntadi said the government was seeking to balance businesses' need for flexibility with the protection of workers' rights through more adaptive regulations.

"Labour regulations must be able to keep pace with the dynamics of the workforce. On the one hand, businesses need flexibility, but on the other, workers' rights must remain protected," Cris said at the Digital Transformation Indonesia Human Resources Conference & Expo in Jakarta on Thursday (6/8).

Cris said fixed-term employment contracts, known as PKWT in Indonesia, remain recognised under the country's labour regulations, but their use must be aligned with the nature, type and duration of the work involved.

He said fixed-term contracts should not be used solely as a means of reducing labour costs and must continue to provide legal certainty and protect workers' rights.

The government is also refining rules governing outsourcing, including provisions on the scope of outsourced work, requirements for service providers and standards for worker protection.

Cris said compliance by both companies using outsourced labour and service providers would be crucial to reducing the risk of industrial disputes and ensuring greater certainty for businesses and workers.

The ministry is also examining the implications of the digital economy and the growth of platform-based work, which has created new forms of employment that may require a different regulatory approach from conventional employment relationships.

"We want innovation to continue to grow, but workers must also receive protection for their rights. Therefore, labour policies must be able to keep pace with changes in the world of work," Cris said.

The changes are also reshaping the role of human resources professionals, who are increasingly expected to act as strategic partners in ensuring that company employment policies comply with regulations, from the design of fixed-term contracts and management of outsourced workers to the governance of platform-based labour.

Cris said companies that align their human resources practices with evolving regulations would be better positioned to manage legal risks and maintain sustainable industrial relations as the labour market changes. (Gusti Haes)