COVID-19 Pandemic: Remuneration Subsidy Program for Indonesian Workers

In the wake of the coronavirus pandemic, the Indonesian government has provided numerous stimulus package including a special credit scheme for micro-, small- and medium- enterprises, a preemployment training program, and various tax incentives. Recently, the government introduced a remuneration subsidy program to support employers to keep their employees and prevent further job terminations while businesses concede their feasibility and explore required adjustments to adapt to the unfolding pandemic.

Legal Frameworks: Our below executive summary refers to the Minister of Manpower (“MoM”) Regulation No. 14 of 2020 on the Guidelines for Granting of Government’s Support in the Form of Wage/Remuneration Subsidy for Workers in Handling the Impact of Corona Virus Disease 2019 (COVID-19). (“MoM Regulation 14/2020”)

Main Keys on the Remuneration Subsidy Program for Indonesian Workers Affected by COVID-19: We have managed to provide you the following main keys regarding the remuneration subsidy program applicable to Indonesian workers affected by COVID-19.

Remuneration Subsidy: Indonesian Government will grant a total of IDR2.4Million remuneration subsidy for every qualified Indonesian worker or IDR600,000 for four months. (Art. 4 (1) of MoM Regulation 14/2020). However, we note that such subsidy will be disbursed in two installments of Rp 1.2 million every two months starting in September 2020.[1]

Criteria of Workers Entitled to Remuneration Subsidy: We note that the criteria of workers that are qualified to receive the remuneration subsidy are as follows:

  1. Indonesian citizen;
  2. Active member of the Manpower Social Security Organizing Body/Badan Penyelenggara Jaminan Sosial Ketenagakerjaan (“BPJSTK”);
  3. Recipient of remuneration or wages;
  4. The BPJSTK membership must be valid until June 2020;
  5. Pays BPJSTK premium with the remuneration of less than IDR5,000,000 (five million Rupiah) based on the report submitted by the employer; and
  6. Own an active bank account (Art. 3 (2) of MoM Regulation 14/2020).

Note: Please be advised that any unqualified workers who received the remuneration subsidy must return the received amount to the state treasury (Art. 8 (2) of MoM Regulation 14/2020.

Procedures of Granting: The following are procedures to be undertaken prior to the granting of remuneration subsidy:

  1. BPJSTK will perform independent verification and validation of its members and will provide a list of recipient candidates to the MoM;
  2. The MoM through Budget User Authorizer/Kuasa Pengguna Anggaran (“KPA”) will determine the qualified workers that are entitled for the remuneration subsidy and require The State Treasury Service Office to make payments such remuneration subsidy;
  3. The State Treasury will distribute the remuneration subsidy through the appointed government bank to the recipients’ bank account (Art. 5 – 7 of MoM Regulation 14/2020).

[1] Rahman, Dzulfiqar Fatur. “Government Expands Wage Subsidy to Include 3 Million Furloughed, Reduced Pay Workers.” The Jakarta Post, August 11, 2020. https://www.thejakartapost.com/news/2020/08/11/government-expands-wage-subsidy-to-include-3-million-furloughed-reduced-pay-workers.html., last accessed on 2 October 2020.

The article above was prepared by Marshall S. Situmorang (Partner) and Aniendita Rahmawati (Associate). 

Disclaimer: The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. Specific legal advice should be sought by interested parties to address their particular circumstances. For more information, please contact us at mail@nusantaralegal.com.