At the end of 2025, the Indonesian government has introduced several important updates to existing employment regulations. These changes include structural adjustments through Government Regulations (Peraturan Pemerintah / PP), as well as technical updates governed by the Ministry of Manpower Regulations (Peraturan Menteri Ketenagakerjaan / Permenaker).
Beyond routine annual updates such as Minimum Wage (Upah Minimum / UM) adjustments, several changes have a more significant impact—particularly those related to severance pay and benefits for employees affected by termination of employment (PHK).
This article is intended for HR practitioners, finance professionals, and employees who need a clear understanding of what has changed and how these updates affect workforce planning, payroll, and company operations.
Why Is It Important to Understand the Latest Employment Regulations?
Beyond avoiding legal sanctions, a solid understanding of employment regulations plays a critical role in company policy and decision-making. Employers rely on regulatory clarity to plan budgets, recruitment strategies, workforce structures, and employee retirement programs.
These regulatory changes do not only affect legal compliance. They directly influence payroll calculations and overall HR management. Failure to implement them correctly can result in financial losses, administrative issues, and legal exposure for companies.
Key Employment Regulation Updates
Minimum Wage Adjustments for 2026
Unlike in previous years, the 2026 Provincial Minimum Wage (UMP) is no longer regulated through a Ministry of Manpower Regulation. Instead, it is governed under Government Regulation (PP) No. 49 of 2025 on Wages.
The final minimum wage figures are determined through Governor Decrees in each province, with increases ranging between 5% and 7%, depending on regional inflation, cost of living, and economic conditions.
Changes to BPJS Health (BPJS Kesehatan)
Effective July 2025, the Standard Inpatient Class System (KRIS) replaces the previous BPJS Health Class 1, 2, and 3 structure. This transition is regulated under Presidential Regulation (Perpres) No. 59 of 2024 and introduces adjustments to contribution structures.
BPJS Health Contribution Rates (2025)
1. Non-Worker Participants (BP):
- Class 1: IDR 150,000 per person per month
- Class 2: IDR 100,000 per person per month
- Class 3: IDR 35,000 per person per month
2. Contribution Assistance Recipients (PBI):
IDR 42,000 per month (fully paid by the government)
3. Wage-Earning Employees (PPU):
Government Employees (Civil Servants, TNI, Polri, State Officials, and Non-Civil Servants):
- Total contribution: 5% of monthly salary, whereas:
- 4% is paid by the employer (government institution)
- 1% is paid by the employee
Private-Sector Employees:
- Total contribution: 5% of monthly salary, whereas:
- 4% is paid by the employer
- 1% is paid by the employee
4. Additional Dependents of PPU:
For additional dependents (fourth child onward, parents, in-laws): 1% of monthly salary per person, paid by the employee
5. Veterans and Independence Pioneers:
- Contribution set at 5% of 45% of a Civil Servant Grade III/A base salary with 14 years of service
- Fully paid by the government
Updates to BPJS Employment (BPJS Ketenagakerjaan)
Recent policy updates in 2025 place stronger protection on employees affected by termination, particularly in response to economic uncertainty.
- Increase in Job Loss Insurance (JKP) Benefits
Under Article 21 (1) of PP No. 6 of 2025, employees affected by termination are entitled to 60% of their wages for six months.
Previously, under PP No. 37 of 2021, benefits were limited to:
- 45% of wages for the first three months
- 25% for the following three months
The wage used for calculation is the last reported wage to BPJS Ketenagakerjaan, capped at IDR 5,000,000.
- Reduction in JKP Contribution Rate
The monthly JKP contribution rate has been reduced from 0.46% to 0.36% of wages, lowering the financial burden on employers.
- Extended Deadline for JKP Claims
Employees now have up to six months from the date of termination to submit a JKP claim. Previously, the deadline was limited to three months.
- Conditions for Loss of JKP Entitlement
Under the revised Article 40, JKP benefits are forfeited if the employee:
- Fails to submit a claim within six months
- Secures new employment
- Passes away
- JKP Protection in Cases of Bankruptcy or Company Closure
If a company is declared bankrupt or permanently closed, BPJS Ketenagakerjaan will still pay JKP benefits—even if the employer has unpaid contributions for up to six months.
- JKP Coverage Despite Contribution Arrears
If an employer has outstanding JKK contributions funding JKP for up to three months, terminated employees during that period remain eligible for JKP benefits, as stipulated under PP No. 6 of 2025 (amending Article 39).
Technical Regulatory Updates
Several technical adjustments have also been introduced:
- Social Security: Refinement of BPJS Ketenagakerjaan programs (JKK, JKM, JHT, and JKP) to improve accessibility and clarity
(Permenaker No. 1/2025 & No. 3/2025) - Vocational Training: Expanded regulation on vocational training and skills courses to accelerate workforce readiness
(Permenaker No. 6/2025) - Severance Pay: Calculation of severance pay, long-service awards (UPMK), and compensation of rights (UPH) continues to follow provisions under the Job Creation Law (UU Cipta Kerja)
What Should Companies Do Now?
To ensure smooth implementation of these regulatory changes, companies should consider the following actions:
- Internal communication: Inform employees about changes affecting wages and BPJS contributions
- Update wage and contribution structures: Prepare payroll and administrative adjustments in advance
- Use an integrated payroll system: Reduce the risk of miscalculations and compliance errors
Risks of Non-Compliance
Employment regulations are legally binding and must be implemented without exception. Failure to comply may result in:
- Payroll miscalculations: Incorrect BPJS deductions or employer contributions
- Sanctions and fines: Under the Job Creation Law, penalties can reach up to IDR 400 million for failure to comply with minimum wage requirements
- Labor disputes: Legal exposure arising from unpaid employee entitlements
Managing Employment Compliance with an Integrated HR System
Regulatory changes affect more than payroll—they also influence recruitment policies, performance evaluations, career planning, and promotion frameworks.
Without an integrated system, companies may struggle to establish objective salary increases, structured recruitment standards, and long-term workforce planning. These elements are inseparable from effective HR governance.
SunFish HR supports structured workforce management from recruitment and performance evaluation through to talent development. All features are integrated with payroll and tax management as well as salary increment planning to support budgeting, regulatory compliance, and best practices.
Contact DataOn’s professional team to help you assess the most suitable HRIS solution option for your business needs.
Summary
- Minimum Wage: 5–7% increase, determined at provincial level
- BPJS Health: Implementation of standardized inpatient classes (KRIS) and contribution adjustments
- BPJS Employment: Improved JKP benefits, longer claim periods, and reduced JKP contribution rate to 0.36% of wages
FAQ
Q: What are the most significant employment regulation updates for 2025–2026?
A: The most impactful changes relate to JKP benefits and severance protection for terminated employees, aimed at improving worker security. Employers must also account for changes to BPJS Health inpatient class structures.
Q: How does this differ from previous years?
A: Starting in 2026, minimum wage determination is delegated to regional governments, aligned with local economic conditions.
Q: When do the new minimum wage regulations take effect?
A: Minimum wage figures were officially announced at the end of December 2025 and are effective from 1 January 2026.
