Indonesia Expat

What Companies Need to Know about Indonesia’s Salary Structure

In March, the Minister of Labor launched a new policy on salary structure for companies operating in the world’s largest archipelago. Here are some of the latest regulations companies need to watch out for.

The salary structure has been designed to protect workers from underpayment and to bring the policy in line with minimum wage regulations guaranteeing workers across the country are awarded the correct salary.

The new obligation says companies must have a formal salary structure and scale document signed by a director. Employers must directly discuss salary scales and present documents of the structure to the Labor Office when registering the employee regulation, known as the CLA.

With the implementation of the new salary structure, companies are encouraged to be more open and transparent with employees and labor unions. Many companies in Indonesia prefer keeping the salary scale quiet, so the new regulation would encourage companies to formally document the salary scale and actively communicate with employees.

The new regulation also gives companies an Oct. 23 deadline to complete the structure requirements. The Minister of Labor will give penalties to those who fail to commit to the new terms.

The new salary structure regulation can be viewed here.

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