What is Company Regulations in Indonesia?
A Company Regulation (Peraturan Perusahaan) is a written rule issued by the employer that governs employees’ rights, obligations, and workplace discipline within a company.
Under Indonesian laws, a Company Regulations are mandatory for companies employing at least 10 (ten) employees, unless the company already has a Collective Labor Agreement, This requirement also applies to foreign investment companies (PMA).
Key Contents of a Company Regulation
Under Article 111 of UU No. 13/2003, a Company Regulation must at least cover:
a. Rights and obligations of the employer
b. Rights and obligations of employees
c. Working conditions
d. Company rules and discipline
e. Validity period of the regulation
For PMA companies, Company Regulations must comply with Indonesian labor law. While global HR policies may be used as reference, they cannot be directly adopted without adoption to Indonesian legal requirements.
Why Company Regulations Matter for Your Business
From a business perspective, Company Regulations are essential because:
1) Regulatory compliance
Mandatory for companies with ≥10 employees as proof of compliance with Indonesian labor law.
2) Internal legal certainty
Provides a clear basis for disciplinary actions, termination, and enforcement of workplace rules.
3) Global–local alignment (especially PMA)
Ensures global human resources policies are properly aligned with mandatory Indonesian requirements such as wages, working hours, leave, and BPJS. Without proper alignment, companies risk non-compliance and employee disputes.
4) Effective workforce management
Improves clarity of workplace rules, employee discipline, productivity, and overall corporate governance.
Risks and Sanction of the Absence of a Company Regulation
Companies required to have a PP (≥10 employees) under UU No. 13/2003 may result in the following risks:
• Fines
Criminal fines ranging from IDR 5,000,000 to IDR 50,000,000.
• Administrative & operational sanctions
Written warnings, business restrictions, or increased regulatory supervision by the Manpower Office.
• Employment disputes risk
Higher exposure to labor disputes, industrial relations claims, and negative audit findings.
• Compliance & reputational impact (especially PMA)
May affect overall compliance assessment and potentially impact licensing or business expansion processes
We Can Assist You for Your Company Regulations Matter!
Lawyerindo assists companies in preparing and/or reviewing Company Regulations that are legally compliant, practically implementable, and aligned with Indonesian labor law requirements. We have extensive experience in handling this matter and liaising with the relevant government authorities to facilitate and streamline the process.
Please contact us: [email protected] for more information.