The question of how many employees ought to be hired is a question which all company owners in Indonesia must address when starting the company. Such is the case because companies ought to hire a number of employees which will best facilitate the completion of the business objectives of the company. Therefore, it is important to determine the most suitable number of employees to be hired by any company based in Indonesia.

Indonesian Labor Laws and Number of Employees in a Company

The primary piece of legislation that governs labor in Indonesia is Law No. 13 of 2003 of Manpower. This important law is also known as the Labor Law. This law categorizes all employees in Indonesia into three groups: permanent employees, fixed-term employees, and foreign workers. The employees’ length of tenure, job duties, and job type are some of the factors which determine the group into which they are to be placed. The Labor Law, as well as all other labor laws in Indonesia, does not make any mention of how many employees must be hired by companies which are based in Indonesia.

However, the Labor Law does mention the number of employees of an Indonesian company in relation to company regulations. A company regulation is a type of agreement which is to be approved by a local office of the Ministry of Manpower and Transmigration. No company in Indonesia is allowed to have a company regulation unless it has a minimum of 10 employees.

Indonesian labor laws also state how the number of employees in a company affects the company’s requirement to establish a Bipartite Cooperation Body (BCB). A BCB serves as a platform through which the company’s concerns over human resources can be voiced and addressed. Employers and employees alike are members of a BCB. The employees who are members of a BCB are selected by their fellow employees through a vote. According to Indonesia’s current labor laws, every company in Indonesia which has employed 50 employees or more is required to form a BCB.

Hiring of Foreigners in Relation to Hiring of Indonesians

Regardless of the number of employees in an Indonesian company, the current laws in Indonesia specify how many foreigners are allowed to be employed by an Indonesian company. This number is determined in relation to the number of Indonesians who have been employed by the same company. Before an official law was created, most companies based in Indonesia typically hired approximately three times as many Indonesians as they did foreigners. However, a law was eventually passed that defined the official regulations regarding this matter. This law was Regulation No. 16 of 2015 on Procedures for the Utilization of Foreign Employees, also known as Regulation 16/2015. It replaced Regulation No. 12 of 2013 which was also referred to as Regulation 12/2013. Regulation 16/2015 states that for every foreigner who is hired by an Indonesian company, that same company is to hire at least 10 Indonesians. However, foreigners in certain positions are not counted as part of the number for a certain company. Such foreigners include those who are serving as a commissioner or director of an Indonesian company, those who have been employed for the purposes of urgent or emergency work, those who have been employed on a temporary basis, and those who have been employed to carry out entertainment services.

The Indonesian government deems this law important because it believes that this law plays a role in keeping the unemployment rate in Indonesia in check. The government believes that requiring the employment of more Indonesians will cause companies to prioritize the hiring of Indonesian citizens and thus improve the job prospects of the citizens of Indonesia.