Law 27/2026 on Labor Protection was promulgated on 28 October and is already in force: it replaces the 2003 Manpower Law, caps fixed-term contracts at two years plus two one-year extensions, limits outsourcing to support services and requires a severance reserve fund — outsourcing arrangements must comply by 28 October 2027

Undang-Undang 27/2026 on Labor Protection (Pelindungan Ketenagakerjaan), which the DPR passed on 6 October, was established and promulgated on 28 October 2026 (State Gazette 2026 No. 179, Supplement No. 7222) and came into force on the same day (Article 313). Our earlier entries reported, from a Manpower Ministry official's remark on 6 October, that it would take effect one year after promulgation; the text says otherwise, and we have corrected those entries. The law has 313 articles, revokes Law 13/2003 on Manpower and the labour cluster of the Job Creation Law (Law 6/2023), and keeps the existing implementing regulations of both laws in force so far as they do not conflict with it (Article 310). Implementing regulations are due within one year, that is by 28 October 2027 (Article 312). We confirmed the text on 11 November, after the law had taken effect, so this entry is published after the fact.

Key points

• Source and dates: Undang-Undang Nomor 27 Tahun 2026 tentang Pelindungan Ketenagakerjaan, established and promulgated in Jakarta on 28 October 2026 (President Prabowo Subianto; State Secretary Prasetyo Hadi), State Gazette 2026 No. 179, Supplement No. 7222, in force on promulgation (Article 313). The DPR passed it on 6 October 2026. We read the signed copy on the BPK regulation database (176 pages with the elucidation, a scanned document), and cite article numbers as they read there; we have not read the elucidation line by line.
• What it replaces (Articles 310–312): it revokes Law 13/2003 and the labour-cluster provisions of Law 6/2023 listed in Article 311 (the scan reads Chapter IV, Part One, Article 80 letter a, and Part Two, Article 81, of the Law 6/2023 annex). All implementing regulations of those two laws stay valid so far as they do not conflict with the new law (Article 310), and implementing regulations of the new law must be issued within one year of promulgation (Article 312).
• Fixed-term contracts, PKWT (Articles 82–87, 92–94): a maximum term of two years, extendable twice by up to one year each, so four years at most; the employer must give written notice of an extension at least seven days before expiry. A PKWT must be in writing in Indonesian and Latin script (a bilingual version is allowed and the Indonesian text prevails), with administrative sanctions if not; one that is not written becomes a permanent contract (PKWTT) by law; a PKWT cannot carry a probation period; and it may be used only for work that will be finished within a set time. A permanent contract may carry a probation period of at most three months, paid at no less than 75% of the wage for the position and not below the minimum wage, with social security. An oral permanent contract needs a written appointment letter.
• Outsourcing (Articles 95–99, 306, 308, 309): only support services, listed as cleaning, catering for workers, security and transport for workers. Mining and oil and gas companies may outsource mining and oil support services only through a subsidiary that is a limited-liability company (PT), and state-owned enterprises only to their own PT subsidiaries. If outsourced workers are used for work directly tied to production, the employment relationship passes by law to the company that gave the work, and service years count cumulatively when the provider changes and the work stays. Transition: companies using outsourced workers must comply within one year of promulgation, by 28 October 2027, and outsourcing agreements made before the law remain valid until they end (Article 306); mining, oil and gas and state-owned principals without a subsidiary may keep their current providers for up to one year and must set up or own a subsidiary before then (Articles 308–309).
• Wages (Articles 116, 137–145): governors must set provincial minimum wages and may set district or city ones, which must be higher than the provincial one. A minimum wage is calculated either by a formula using economic growth, inflation and a certain index between 0.5 and 1, or by decent living needs (KHL), taking the higher value agreed by the regional wage council (Article 139); the central government may set a different formula only in disasters or extraordinary economic conditions, for one period (Article 141). Minimum wage applies to workers with under one year of service (Article 140); a company that cannot pay may ask the governor for an exemption with a bipartite agreement and an external audit; micro and small businesses are outside the minimum wage but must pay by agreement at least 50% of it (Article 144). Overtime needs the worker's consent and a written or digital order, up to four hours a day and 18 hours a week, at 1.5 times the hourly wage for the first hour and twice thereafter, with the hourly wage being basic wage plus fixed allowances divided by 173 (Article 116).
• Termination and severance (Articles 228, 232, 233, 253): employers must try prevention steps first, such as cutting overtime and shifts, cutting hours or days, not renewing expired PKWT, rotating temporary layoffs and offering voluntary early retirement. If a termination cannot be avoided, bipartite negotiation must finish within 30 working days; without agreement the dispute goes through the industrial relations dispute procedure and the termination may be carried out only after a ruling that has become final and binding (Article 228). Severance pay runs from at least one month's wage for under a year of service up to nine months for eight years or more, and long-service pay from two months (three years) to ten months (24 years or more), plus payment for unused annual leave and return travel, with factors depending on the reason for the termination (Article 232). Employers must provide a severance reserve fund managed by a government institution, with micro and small businesses exempt, and sanctions that can reach revocation of the business licence; the details are left to a Government Regulation (Article 253).
• Foreign workers (Articles 62–65): an employer needs a foreign-worker plan (RPTKA) approved by the Minister and the Minister's approval to use the worker; individuals may not employ foreign workers; foreign workers may not hold positions with a personnel or human-resources function; they may be used only for set positions and periods that Indonesians cannot yet fill, with priority to Indonesians; the employer must use workers willing to learn Indonesian for technology transfer and appoint Indonesian counterparts; sanctions run up to revocation of the business licence (Article 64).
• Other points we read: company regulations are valid for at most two years and must be renewed, with sanctions if not (Articles 179–180); the BPK abstract lists a ban on employers requiring or holding workers' diplomas or personal documents as security (we saw the equivalent ban for private placement agencies in Article 50); intentionally not paying severance, long-service pay and entitlements carries up to four years' imprisonment or a fine, and not giving inspectors access or data carries up to two years or a fine (Articles 295–296); and a worker's unpaid rights become a debt secured by all of the employer's assets and must be paid first (Article 299).
• Transitional chapter (Articles 300–309): it covers pending industrial disputes (the old law applies), overseas apprenticeship, labour inspectors, outsourcing, mining and state-owned principals and occupational-safety committees. We found no specific rule there for fixed-term contracts that are already running, so how they are treated is open. The law also covers leave, social security, platform and informal workers and training, which we have not summarised here.

Sources

• BPK regulation database — UU Nomor 27 Tahun 2026 tentang Pelindungan Ketenagakerjaan (LN 2026 No. 179, TLN No. 7222; ditetapkan and diundangkan 28 October 2026; primary source listing)
• BPK regulation database — UU Nomor 27 Tahun 2026, signed copy (PDF, 176 pages, scanned)
• Fortune Indonesia — UU Nomor 27 Tahun 2026 Resmi Berlaku: Atur Kontrak, Cuti, hingga PHK (16:08 WIB, 9 November 2026; secondary, cross-checked against the text)