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View all search resultsLabor bill must protect workers, not just employment relationships
To protect millions in an era of subcontracting and gig platforms, Indonesia’s new labor bill must ensure that basic rights follow the worker, not just the corporate contract.
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Two 'ojek' (online motorcycle transportation) drivers wait in traffic on June 24, 2026 with passengers wearing the helmets of Gojek and Grab in the Kampung Melayu Besar area of South Jakarta. (JP/Iqro RInaldi)
T
he Labor Protection Bill arrives at a moment when the very nature of work is undergoing fundamental transformation. The draft legislation revisits perennial battlegrounds, outsourcing, fixed-term contracts, minimum wages and severance pay, while attempting to address vulnerable, informal and gig-economy workers who have long operated outside the purview of conventional labor statutes.
This makes the draft far more than a routine statutory overhaul. It offers a critical window for Indonesia to rethink how it defines worker protections within an economy that is increasingly atomized, subcontracted and digitized.
For decades, domestic labor regulation has rested on a binary employment model: an enterprise hires an individual, that individual becomes a formal employee, and an enforceable matrix of statutory rights and duties ensues. This framework remains indispensable. It establishes the baseline legal mechanics governing wage floors, working hours, social insurance, occupational safety, dispute settlement and termination standards.
Yet the modern workplace rarely conforms to such direct bilateral terms. A laborer may work daily on a mine site, industrial estate, plantation, manufacturing plant, or infrastructure project, wearing a site badge, adhering to the principal firm’s safety protocols, and driving its core operations, yet formally answer to a third-party labor contractor. That contractor may delegate tasks to a subcontractor, recruitment may be handled by an agency, and payroll may be dispersed by a temporary staffing entity.
In the platform economy, ride-hailing drivers and logistics couriers rely almost exclusively on algorithmic systems for dispatch and compensation, yet the law categorizes them as independent "partners" rather than employees. Millions more work across informal arrangements without formal contracts, completely exposed to market shocks.
Consequently, lawmakers must evaluate the draft bill through two complementary lenses. The first is the traditional employment-relationship model. Its premise is clear: pinpoint the formal employer and enforce statutory compliance. This mechanism must be vigorously preserved. Corporates must not be permitted to shirk their legal liabilities through corporate restructuring, sham contracts, or shell staffing vehicles.
However, the traditional model alone is no longer sufficient. Enterprise operations now function as diffuse commercial webs. A principal client commissions a primary contractor; that contractor engages subcontractors; those subcontractors rely on manpower brokers. As a result, recruitment, contractual custody, compensation, direct supervision, and site management are often distributed across distinct corporate entities that are operationally unified but legally ring-fenced.
