Minimum Wage Provision on Micro and Small Business

Micro and Small businesses has always been a part of the Indonesian economy. Every city and region will find Micro and Small businesses that complement the trading ecosystem in the middle of large communities in our country. One of the biggest obstacle to the development of Micro and Small enterprises is labor. As the business began to grow, additional hands became necessary. On the other hand, some employees who do not have much work experience are willing to work for substandard wages. That way, the needs of Micro and Small Enterprises have been accommodated by their agreements with these workers. However, what about the applicable wage provisions?

As we have known, entrepreneurs who do not provide the minimum wage can be subject to imprisonment for a maximum of 4 (four) years or a maximum fine of Rp400,000,000.00 (four hundred million Rupiah). After all, wage provisions are always made in order to pay attention to the worker’s welfare. However, it seems that the enactment of Law Number 11 of 2020 concerning Job Creation brings good news to Micro and Small entrepreneurs. In accordance to the provisions in Article 90B, the minimum wage provisions shall no longer apply to Micro and Small Enterprises.

Based on article 90B, currentlyMicro and Small Businesses shall no longer need to worry about criminal sanctions for “wage violations” that are often committed by Micro and Small entrepreneurs. The agreement between employers and workers can now become a fundamental agreement as long as it meets the average standard of public consumption.

Suria Nataadmadja & Associates Law Firm

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