Labour law has a unique characteristic compared to another type of state regulations. First, labor law lies between public law and private law spheres. It governs the relationship between two parties, employers and employees, as in contract. At the same times, state interferes by imposing binding rules, sometimes followed by sanction, in the relationships in question. There are several fundamental arguments on the interference of the state in the employment relations. Socio-politic, humanism, until economic arguments are likely suggested. The prominent and the most uncomplicated idea, however, is innately imbalanced power relations between employers and employees.
Employers have better bargaining position compare to employees. This is because compared to employees; they have greater economic power, and a very particular sense also societal supremacy. They often privately regulate the market which subsequently influences norms in the labour market. In other words, although employment relationships conception encompasses the principle of contractual freedom where two free and equal parties bind themselves into a contract; employees, in reality, have minimal say and almost non-existence bargaining power in the construction of the relationships. State interference objective at this point is to balance power relations in the market, so that employer economic goal is achieved while employees’ right to contract and govern employment relationship is protected. This idea must perhaps have a ring of truth at the beginning stage of state labour regulations progression in the 1800s. Nonetheless, as social values change as a result of wide spread industrialization, social concerns shifted into one of the focal points of state labour regulatory regime.
In modern Indonesia, state labour regulations evolution may follow a different footstep compare to other countries. Indonesia went through eras of western colonialism, independence, and the authoritarian political regime which shape its labour regulatory system.
There are very few literature and a document showing the state of employment and paid work before Dutch colonialization. As Indonesia consisted of separate kingdoms, it is likely that feudalistic and vertical social structure control aspect of working as serving a master in return for shelter, food, and even protection. Loyalty and obedience were expected from servants, and master entirely governs the relationships.
After decades of forced cultivation and forced labours to gain maximum profit from economic activity in the colony, the principle of liberalism that was flourished in the imperialist kingdoms found its way to the Dutch Indies in the mid-1800s. Liberal argues that state, or the Dutch East Indies Company as the representative of the state, has interfered too much in the economy and thus violate individual freedom in conducting economic activities and freedom of contract. Liberalism perceived employment as merely contractual relations to do economy activity. As a result, in late 1800s’ Dutch Indies employment contract is included in the private law sphere. The Dutch Indies Civil Codes only set an underlying contract and paid work principle. It did not regulate rights, as similar with other working conditions, they are hypothetically depended on negotiation between employer and employee. The terms of the contract govern the relations of the binding parties. There is no legal and basic rights protection for employees as principles of law recognize employee and employer as equal parties.
Despite this, the Civil Code recognizes the collective power and collective bargaining. Bargaining Agreement, as stipulated by the Civil Code, take precedence over the individual contract. This perhaps influences by the socio-collectivism principle that flourished in Netherlands in end of 1800’s. Right after it was recognized as a statutory right, the number of trade unions in the Dutch Indies continued to grow. It is worth to note, however, that the Civil Code on employment contract did not regulate indigenous people. Thus, at that time most paid work and employment relations are foreign to the indigenous people. Subsequently, they are likely trapped in master and servant or master and slave system.
 See Article 1601 a of Indonesian Civil Code
 See Article 1601 n of Indonesian Civil Code