Govt mandates THR for ride-hailing drivers, strengthens job loss protections

The government is enhancing labor protections by introducing new regulations that guarantee holiday bonuses (THR) for ride-hailing drivers. However, due to the lack of a clear legal classification of these drivers as employees, their entitlement to these benefits remains uncertain. In parallel, President Prabowo Subianto has enacted a regulation ensuring that laid-off workers receive 60 percent of their last salary for six months.

As part of this initiative, the Manpower Ministry will soon issue a circular outlining THR provisions for online motorcycle taxi drivers, online taxi drivers and online couriers. The ministry has mandated that ride-hailing companies provide cash holiday bonuses to their drivers, explicitly prohibiting distribution in the form of staple goods or other incentives. Manpower Minister Yassireli stated that the regulations are under development and may take the form of either a circular letter or a ministerial regulation. The discussion on this issue began last year and has continued into this year, with multiple meetings held between the government and ride-hailing companies. However, key details, particularly regarding the technical aspects of disbursement, are still under negotiation.

These measures aim to provide greater financial security for gig economy workers, such as ride-hailing drivers. However, a major point of contention remains: ride-hailing companies argue that their drivers are independent partners rather than employees.

Several economic experts have raised concerns, pointing out that Indonesia lacks clear regulations on the employment status of online drivers. This debate is particularly relevant given the country's labor composition. As of August 2024, only 60.81 million workers, 42.05 percent of the 144.64 million employed population, were engaged in formal employment, with the majority working in the informal sector.

Without a defined legal framework recognizing online motorcycle taxi drivers as employees, ride-hailing companies are not legally required to provide holiday bonuses. Some experts argue that these drivers meet the criteria for employment under Law No. 13/2003 on manpower, as they provide a service and receive compensation. Their partnership could be classified under fixed-term employment contracts (PKWT). To ensure fair labor practices and social security for ride-hailing drivers, the government and ride-hailing companies must collaborate to establish a clear legal framework defining their employment status.

Beyond the gig economy, the government is implementing broader labor security measures. On Feb. 7, President Prabowo signed Government Regulation No. 6/2025, which guarantees that laid-off workers will receive 60 percent of their monthly salary for six months. This regulation revises Government Regulation No. 37/2021, which governs the Job Loss Insurance (JKP) program, strengthening protections for workers facing job displacement.

Under this new regulation, JKP benefits are calculated based on an employee’s last reported wage submitted by their employer to BPJS Ketenagakerjaan, with a maximum cap of Rp 5 million. For wages exceeding this cap, benefits will be calculated using the maximum threshold. If a company declares bankruptcy or closes while having outstanding contributions of up to six months, BPJS Ketenagakerjaan is still obligated to disburse JKP benefits.

Business groups have reacted to the new regulation. The chairperson of the Indonesian Employers Association (Apindo), Shinta Kamdani, characterized the revision as an effort to optimize job loss insurance rather than imposing additional administrative and financial burdens on businesses.

Manpower Ministry data indicate a significant increase in layoffs in 2024. Approximately 80,000 workers were affected between January and December, compared with roughly 60,000 layoffs in all of 2023. Furthermore, the ministry has identified 60 companies, primarily in the textile and garment industries, that are projected to conduct further layoffs.