Indonesia: Parliament issues final approval of Omnibus Law

Indonesia has approved the long-awaited Omnibus Law, which aims to strengthen Indonesia’s economy by increasing competitiveness, creating jobs and making it easier to do business there. The law covers 10 primary areas, from labour reforms to foreign ownership caps to VAT and income tax. Some of the most important changes to the country’s labour laws include: 

• Sectoral minimum wages have been abolished and replaced with minimums set by regional governors 
• Layoffs can occur for reasons including: mergers, acquisitions and consolidations, debt restructuring, prolonged worker absence that exceeds the 12 month limit 
• Overtime will be increased to a maximum of 4 hours per day and 18 hours per week
• Businesses will only be required to give workers one day off a week instead of two 
• Removal of required duration of contracted workers 
• Reduced maximum severance pay for laid off workers