The Rise of Freelancers and Gig Workers: Are They Covered by Indonesian Labor Law?
Overview
As Indonesia’s workforce embraces freelancing and gig-based jobs, legal questions arise over their employment status. This article examines whether freelancers and gig workers are protected under Indonesian labor law, focusing on the legal definition of employment, daily freelance work provisions, and the risks of misclassification. It highlights that labels like “freelancer” do not shield companies from liability if the actual working relationship meets the legal criteria for employment. With rising flexibility in the labor market, businesses must ensure compliance to avoid legal and reputational consequences.
Indonesia’s world of work is evolving rapidly. More people, especially younger generations, are opting for alternative work models, choosing to become freelancers, independent contractors, or gig workers on digital platforms. These roles range from ride-hailing drivers and delivery couriers to graphic designers and IT consultants. While such arrangements offer flexibility and independence, they also blur the boundaries of legal protections.
This shift raises critical questions: Are these workers entitled to the same rights as employees? What obligations do companies have when engaging them? And what are the risks if businesses get it wrong?
This article explores how Indonesian labor law defines employment—whether freelancers and gig workers fall within that definition—, and the legal implications of misclassifying workers in today’s increasingly flexible labor market.
Employment Relationships Under Indonesian Law
At the core of employment protections lies the legal definition of the employment relationship. According to the Manpower Law (Law No. 13 of 2003, as amended by Law No. 6 of 2023), a person is considered an employee (pekerja) if they perform work for an employer (pemberi kerja) and receive wages. For a formal employment relationship to exist, three key elements must be present:
- Performance of work;
- Payment of wages; and
- Command or control relationship—meaning the worker operates under the direction of the employer.
Freelancers and gig workers often operate outside this framework. They typically work on a project basis, set their own schedules, and perform tasks without direct supervision. As a result, they often fall beyond the scope of legal protections afforded to formal employees.
However, in practice, form does not always override substance. If a work arrangement reflects the characteristics of employment—such as fixed working hours, managerial oversight, or detailed work instructions—the law may treat it as an employment relationship, regardless of how it is labeled in the contract. This opens the door to regulatory scrutiny and potential claims.
Daily Freelance Workers (Pekerja Harian Lepas)
One notable category recognized under Indonesian law is the daily freelance worker (Pekerja Harian Lepas). Article 10 of Government Regulation No. 35 of 2021 affirms that daily freelance workers are considered to have an employment relationship if:
- the work is irregular or non-continuous in nature; and
- the total working days do not exceed 21 days per month for three consecutive months.
If these conditions are met, the worker must be employed under a Fixed-Term Employment Agreement (perjanjian kerja waktu tertentu, “PKWT”), complete with a written formal contract.
Should the engagement continue for more than 21 days per month across three consecutive months, the law presumes that the relationship is based on an Indefinite-Term Employment Agreement, triggering all rights and obligations associated with permanent employment.
Misclassification: Legal Risks and Consequences
A growing concern is the misclassification of gig workers, treating them as independent contractors when, in reality, the working relationship meets the legal standard of employment. This is particularly common in platform-based services, where workers may:
- be required to follow specific schedules;
- be penalized for inactivity or poor performance;
- be closely monitored through apps or internal systems; and
- operate under company rules that restrict autonomy.
Under those conditions, Article 10 of Government Regulation No. 35 of 2021 requires that the engagement be treated as formal employment. Companies must execute a PKWT. If they fail to do so, the relationship may be deemed permanent by default.
Misclassifying workers as independent contractors can result in denial of key labor protections, including:
- Minimum wage and overtime pay;
- Standard working hours, rest periods, and paid leave;
- Mandatory registration with BPJS for health and employment benefits;
- Severance pay and protections against unlawful termination; and
- Access to dispute resolution and legal remedies.
However, these exclusions are only lawful if the nature of the work truly falls outside the legal definition of employment. Otherwise, businesses risk exposure to back pay claims, social security violations, and reputational damage. In the event of a dispute, courts and labor mediators will look beyond the contractual label. Control, continuity, and dependence will often speak louder than the term “freelancer”.
Conclusion
Freelancers and gig workers represent a modern, flexible labor force, but their rise is challenging conventional employment classifications. Indonesian labor law remains clear: when control and continuity come, legal obligations follow.
To stay compliant and reduce risk, businesses must be intentional about how they engage non-traditional workers. Labels alone offer no protection. It is the nature of the relationship, not the contract title, that determines legal liability.
In today’s shifting workforce, proactive compliance is no longer optional; it’s essential.
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