Introduction

For HR leaders in Indonesia, the legal landscape is shifting. Recent Constitutional Court rulings and legislative activity signal that employment law will undergo further change in the next few years. Forward-thinking companies are assessing how to adapt now to ensure compliance, retain talent, and protect reputation.

Key Issues / Concepts

Some of the main legal developments to watch include:

• Judicial review outcomes that nullify or require amendment of certain clauses in the Job Creation Law (Law No. 6 of 2023) especially related to termination, severance, outsourcing, and foreign workers. Nusantara DFDL+2ARMA Law+2
• Regulation of PKWT (fixed-term contracts): limitations on duration, renewal, and conversion to permanent status. Nusantara DFDL+2ARMA Law+2
• Clarification of outsourcing rules and defining which job functions may or may not be outsourced. Nusantara DFDL+1
• Stronger protections for workers in terms of leave, wages, severance and rights in dispute resolution. Nusantara DFDL+2Kompas+2
• Requirement for court decision in terminations: The Constitutional Court has ruled that any termination now requires a binding court decision. chambers.com
• Working Committee for law revision: A process is underway to revise Manpower Law No. 13/2003 (as amended) to better balance employer and worker interests. Kompas+1

Legal Framework in Indonesia

Relevant legal instruments and recent rulings include:

• Law No. 13 of 2003 on Manpower, as amended by Law No. 11/2020 (Job Creation Law), and further by Law No. 6 of 2023. ela.law+1
• Constitutional Court Decision No. 168/PUU-XXI/2023 (October 31, 2024), which partially amended the Manpower Law following judicial review. Nusantara DFDL+2chambers.com+2
• Government and parliamentary initiatives: working committees to revise the third amendment of the Manpower Law. Kompas

Real Case

A concrete example: under Decision No. 168/PUU-XXI/2023, a company that relied on certain clauses in the Job Creation Law for termination without a court decision must now review its HR policy. These companies must adjust practices so that terminations are enforceable only with a binding court ruling, or risk legal challenge. Another example is fixed-term contracts: where previously renewal or extension practices led to indefinite renewals in practice, those are now under stricter limits.

Best Practices for Employers

To future-proof your HR strategy, consider these:

1. Audit current HR policies: especially on termination procedures, severance, fixed-term contracts, and outsourcing arrangements.
2. Update contracts and templates to reflect the Court’s rulings (e.g. court-approved termination requirement).
3. Monitor law revision process: engage via employer associations or unions to contribute to discussions of the new Manpower Law.
4. Train HR and legal teams on how changing rules affect everyday operations.
5. Prepare for enforcement: maintain good records, documentation, warnings, etc., so that any termination or dispute can stand up under new legal expectations.

Conclusion

Legal change in Indonesia’s employment law is no longer hypothetical—it is ongoing and has real implications. Employers who anticipate changes, align policies early, and build flexible HR frameworks will be those that thrive under the new legal climate.

References

• Constitutional Court Decision No. 168/PUU-XXI/2023 (judicial review of Law No. 6/2023) Nusantara DFDL+1
• Law No. 13 of 2003 on Manpower, as amended (Omnibus Law / Law No. 6/2023) ela.law+1
• Working Committee for Revision of Manpower Law, DPR RI (2025) Kompas