Flexible Work, Rigid Law: Revisiting Working Hour Regulations in the Digital Age

Morales Sundusing

As digital transformation drives the rise of remote and hybrid work, Indonesian labor law remains rooted in a rigid traditional framework. Companies remain bound by strict regulations on working hours, overtime, and employee rights, even when work is performed outside the office. This creates practical challenges in defining working hours, classifying workers, and balancing productivity monitoring with data privacy. To remain compliant and minimize risk, companies must adopt clear policies, ensure accurate worker classification, and carefully align supervisory practices with legal requirements, while maintaining the flexibility of the modern workplace. 

1. Introduction
   With the rapid digital transformation, many businesses are adopting more flexible working arrangements, ranging from remote and hybrid work to project-based engagements. Our previous article, “The Rise of Freelancers and Gig Workers: Are They Covered by Indonesian Labor Law,” explored compliance considerations in engaging freelancers and gig workers. This article shifts focus to remote and hybrid workers, examining how Indonesia’s current labor law framework, still rooted in traditional models, interacts with the realities of the modern workplace. 
2. Current Legal Framework
   Indonesian labor law still reflects a conventional approach to employment, emphasizing fixed working hours and physical presence at the workplace. This has created a regulatory gap between legal provisions and practices evolving in modern work environments.

   Unlike freelancers, remote and hybrid workers remain classified as employees. This means employers are legally obligated to fulfil all employee rights, including wages, benefits, insurance, pensions, and other entitlements. Employees, in turn, remain bound by subordination to their employer, even if their work is performed outside the office.

   In practice, performance in remote or hybrid settings is often measured by results, rather than attendance. This flexibility does not exempt employers from the working-hour standards under the Manpower Law, which mandates a 40-hour workweek, structured as either: 

   • 7 (seven) working hours per day and 1 (one) day rest, for a 6-day workweek; or 
   • 8 (eight) working hours per day and 2 (two) days rest, for a 5-day workweek.

     Non-compliance may expose employers to administrative sanctions.

     Employers are also required to provide overtime compensation to employees when working hours exceed the statutory limits, except for employees falling into one of the exempt categories, such as managers, decision-makers, or those in planning and supervisory roles. In lieu of overtime pay, these employees typically receive a higher base wage to reflect their broader responsibilities.

     Certain industries, including mining, airlines, fisheries, and energy, operate under special roster systems regulated by the relevant ministries. These exceptions reflect operational necessities but are narrowly defined.

     Failure to comply with overtime provisions may result in both administrative and criminal sanctions, including fines and, in some cases, imprisonment. Employers must obtain employee consent for overtime and ensure overtime pay is properly calculated and disbursed.

     By contrast, freelancers remain outside the scope of working-hour rules due to the absence of a subordinative relationship. As noted in our previous article, employers must ensure clear contractual boundaries with freelancers to avoid inadvertently creating an employment relationship subject to working-hour rules.

     
     Read More: Cross-Border Remote Work

3. Challenges 
   Despite the law’s traditional framework, employers must manage flexible arrangements in ways that remain compliant. Several practical issues and responses are as follows: 
   • Working Time Implementation
     Although the law provides for overtime pay and mandatory rest, enforcement in flexible arrangements is difficult. Employers may dispute whether extended availability constitutes “working time,” leading to differing interpretations. A clear internal policy on what qualifies as working time can reduce disputes and provide a defensible compliance framework.
   • Classification and Contractual Clarity
     The blurred lines between employees and freelancers should be treated as a compliance matter, rather than a regulatory challenge. Employers engaging remote or digital workers must ensure the correct classification of workers is documented and supported by written agreements. Where individuals are employees, working-hour rules fully apply. Where they are contractors, contractual boundaries must be established to avoid the risk of reclassification.
   • Data Privacy vs. Productivity Monitoring
     Employers often rely on monitoring software to oversee remote work. However, excessive monitoring may conflict with data protection obligations. Employers should balance productivity monitoring with privacy compliance by implementing transparent monitoring practices, informing employees of monitoring tools, and ensuring alignment with Indonesia’s data protection framework. 
4. Conclusion 

The emergence of remote and hybrid work practices challenges Indonesia’s traditionally rigid working-hour rules. Employers remain obligated to comply with existing regulations, even when employees work outside the office, and must adapt internal policies to bridge the regulatory gap. Missteps can result not only in administrative or criminal sanctions but also in reputational risk in the eyes of employees and regulators. 

To manage these risks, companies should adopt clear internal policies, ensure accurate worker classification, and strike the right balance between productivity monitoring and privacy. Given the evolving nature of both labor law and workplace practices, employers are advised to seek professional legal guidance when designing or updating remote and hybrid work policies to ensure compliance while maintaining flexibility. 

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