Constitutional Court deadline forces DPR to fast-track a standalone Labor Law by 31 October 2026

Labor & HRUpdatedUpdated: September 16, 2026

A 2024 Constitutional Court ruling requires Indonesia's labor provisions — currently folded into the 2023 Job Creation Law (UU Cipta Kerja) — to be separated into a standalone Labor Law by 31 October 2026, or the pre-omnibus 2003 Labor Law reverts into force. The bill has grown from an initial 19-chapter, 224-article working draft to a 20-chapter, 264-article text, and on 14 September the government formally submitted its consolidated position (DIM) to DPR, moving the bill into First-Level Deliberation with a dedicated Working Committee (Panja) now in place — while labor unions continue to push back on specific provisions, particularly outsourcing.

Key points

Constitutional Court Decision 168/PUU-XXI/2023, announced 31 October 2024, ruled the labor cluster in Law 6/2023 on Job Creation (UU Cipta Kerja) must be separated into a standalone Labor Law within two years.
The Court reiterated the 31 October 2026 deadline in a June 2026 statement rejecting a further challenge to the Job Creation Law.
If DPR and the government miss the deadline, the pre-omnibus Manpower Law (Law 13/2003) automatically applies in place of the current labor-cluster provisions.
DPR Commission IX (labor affairs) is drafting the bill; as of 13 August 2026 the working draft ran to 19 chapters and 224 articles, prepared by the DPR's Expert Agency.
Draft topics include termination-of-employment prevention, wages, fixed-term employment contracts (PKWT), outsourcing, training and apprenticeships, job placement, non-employment-relationship workers, and foreign worker rules.
DPR leadership targets completing the academic manuscript and bill text by early October 2026, and has committed to expanded consultation with labor unions before the bill is finalized.
A Working Committee (Panja) decision on 4 August 2026 moved the bill into its finalization stage; Commission IX leadership issued a formal letter on 13 August 2026 forming a Drafting Team (Timus) and a Synchronization Team (Timsin), with party groups asked to name their team members by 14 August 2026.
Separately, the Indonesian Employers' Association (Apindo) and the labor union coalition (KBPBI) agreed to form a joint drafting team, targeting their own consolidated proposal by the end of August 2026.
Update: as of 24 August 2026, Apindo and KBPBI reported reaching agreement on roughly 70% of the joint draft's substance, with severance-fund provisions and other investment/industry-related clauses still under negotiation as they work toward a joint submission to DPR.
Update: Apindo and KBPBI's joint drafting team has also conducted comparative studies of labor law in Vietnam, Thailand, the Philippines, and Malaysia, and in a hearing with Commission IX both sides stated that all 12 Constitutional Court rulings relevant to the labor cluster must be incorporated into the new bill.
Update: at the DPR's 3rd plenary session of the 2026–2027 sitting year on 27 August 2026, the bill (now titled the Labor Protection Bill, RUU Pelindungan Ketenagakerjaan) was formally approved as a DPR-initiated proposal (usul inisiatif DPR) after the Legislative Body (Baleg) completed its harmonisation review. This moves the bill into joint discussion between DPR and the government — the next formal legislative stage — rather than remaining a committee-level draft.
Update: on 6 September 2026, Manpower Minister Yassierli reaffirmed the end-of-October 2026 completion target ("hopefully it can be realised"), framing the bill as covering roughly 155 million workers nationwide, with particular attention to the 60% who work in the informal sector and need clearer social-protection guarantees. He repeated that the government remains open to input from both business and labor groups as joint discussion with DPR proceeds.
Update: real friction surfaced on 2 September 2026 when KBPBI (the labor coalition co-drafting with Apindo) met the Minister and called the government/DPR draft "deeply disappointing," with KBPBI president Andi Gani Nena Wea saying "many of our proposals weren't properly accommodated" and singling out an expanded outsourcing system as a specific concern, alongside wages, severance, foreign-worker rules, PKWT (fixed-term contracts) and apprenticeships. Minister Yassierli's response was conciliatory rather than substantive — accepting the input and promising to raise it with DPR — so treat the Apindo–KBPBI 70% agreement noted above as describing the two sides' own joint draft, not the government/DPR draft that unions are objecting to; these are not necessarily the same document.
Upcoming: KSPSI's national leadership has instructed a coordinated "apel siaga" (readiness assembly) for Thursday 10 September 2026, 09:00 WIB, to press DPR and the government to keep the drafting process open and responsive to worker input (letter No. 190/DPP/KSPSI/IX/2026, dated 7 September, signed by acting chair Mahias Ambing and secretary-general Arif Minardi). This is nationwide rather than Jakarta-specific — instructed to take place at regional DPRD buildings, local government offices, or other locations each regional alliance agrees on — so office-safety impact will vary by city; it is not confirmed to include a march on the national DPR building in Jakarta.
Update: the 10 September action (organized under the broader KBPBI coalition, of which KSPSI is a member) went ahead peacefully in around 30 regions; see our dedicated safety article for the full outcome, including the 25 worker representatives received by DPRD DKI's Speaker in Jakarta.
Update: as of 2 September, Minister Yassierli said he has received the latest draft from DPR, and the next procedural step is for President Prabowo Subianto to send a formal letter (Surat Presiden) to DPR naming the government's counterpart(s) for the joint discussion phase — a standard step in Indonesian lawmaking that has not yet been reported as completed. Separately, and in tension with KBPBI's "deeply disappointing" reaction above, other reporting on an August working meeting between DPR Commission IX, Apindo and labor representatives cited roughly 80% of labor's proposals as already accommodated in the draft — we could not pin down the exact date of that meeting or fully reconcile it with KBPBI's later reaction, so treat the two data points as coming from different moments or different scopes of "the draft" rather than a contradiction to resolve on our own.
Update: on 14 September, Manpower Minister Yassierli formally submitted the government's DIM (Daftar Inventarisasi Masalah — its consolidated list of positions on the bill, incorporating input from unions and employers) to Commission IX Chair Felly Estelita Runtuwene at the Parliament complex in Senayan. This moves the bill into "Pembicaraan Tingkat I" (First-Level Deliberation) — the formal joint government–DPR discussion stage — and Commission IX unanimously formed a Working Committee (Panja) the same day, chaired by Deputy Commission IX Chair Putih Sari, to carry the detailed discussion forward. The bill itself has grown since the 13 August working draft: it is now described as 20 chapters and 264 articles (up from 19 chapters/224 articles), and remains targeted for completion in October 2026 under the National Legislation Program (Prolegnas) 2025–2029. Putih Sari frames the Panja's task as finding "a democratic compromise" between worker-protection demands and business need for flexibility and investment certainty.
What is actually in the draft — and how firm it is. The DPR's draft has been circulated publicly and its provisions are being reported in detail, so this is no longer only a process story. Treat everything below as a draft under active negotiation in Tingkat I, not settled law: the text has already moved from 19 chapters/224 articles in early July to 20 chapters/264 articles in September, and the Manpower Minister said on 14 September that outsourcing in particular is "still long — there's still a process to get input from stakeholders."
Draft provision — PKWT (fixed-term contracts), the change most likely to touch a typical employer: a maximum initial term of two years, extendable twice by up to one year each, against the current five-year ceiling. End-of-contract compensation remains payable, scaled to length of service. A PKWT may not carry a probation period — if one is written in, it is void and the time still counts toward the employee's service.
Draft provision — Jaminan Pesangon (a severance guarantee): a new social-security programme on top of JKN, JKK, JKM, JHT, JP and JKP, which employers would be required to enrol workers in and contribute to. Where the programme's benefit falls short of the statutory severance entitlement, the employer covers the difference — so it is an additional contribution rather than a cap on existing liability.
Draft provision — digital platform workers get their own chapter: social security, occupational safety and health, and protection against unilateral termination of the partnership or algorithm changes that harm the worker. Informal-sector workers are separately brought into social security for work-accident (JKK) and death (JKM) cover.
Draft provision — wages and hours: minimum wages, sectoral minimum wages and wage scales set by a formula tied to economic conditions, with standard working time of 40 hours a week and overtime beyond it.
Where to read it: the DPR's draft was prepared with input from unions, employer associations and academics and has been circulated publicly, and the chapter structure and key provisions are widely reported. We could not locate an official downloadable text on dpr.go.id, so for the authoritative wording — and for the government's DIM, which is not published in full — the practical routes are DPR Commission IX and the ministry directly.

What this means for your Indonesian entity

If your Indonesian entity relies on the current outsourcing, fixed-term contract (PKWT), or termination rules under the Job Creation Law, those rules are being rewritten under real time pressure — outsourcing has already been tightened separately under Permenaker 7/2026 (effective 30 April 2026). Treat October 2026 as a checkpoint: if the bill passes, your HR policies, employment contract templates, and outsourcing vendor agreements may need updating to the new law's terms; if DPR misses the deadline, the 2003 Labor Law reverts, which is stricter on outsourcing and fixed-term contracts than the current omnibus provisions. Either outcome changes your compliance baseline, so this is worth tracking monthly rather than assuming today's rules hold through year-end.

Sources

This page summarises publicly available information for orientation. It is not tax, legal, or accounting advice, and regulations change. Verify against the linked primary sources and contact us before acting on anything here.

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