On 14 November 2012, the Minister of Manpower and Transmigration
of the ("MOMT") issued MOMT Regulation
No. 19 of 2012 regarding Terms of Partial Assignment of Work to
Third Party Companies ("Regulation No.
19") Regulation No. 19 covers two types of
business activity outsourcing (pemborongan pekerjaan); and
manpower outsourcing (penyediaan tenaga kerja).
Business Activity Outsourcing
Outsourced work which constitutes business activities must meet
the following the criteria:
be conducted separately from the user company's core
business in terms of management and activities;
be conducted under a direct or indirect order from the user
be categorized as business support activities (according to the
flow chart issued by the relevant business sector association);
not have a direct impact on the production process if the
business activity were to stop.
The user company must report the type of work to be outsourced
to the local manpower office where the work will be conducted and a
receipt for the report will be issued. The user may not engage the
outsourcing company without a receipt.
The business activity outsourcing agreement must contain certain
provisions required under Regulation No, 19 and be registered with
the relevant manpower office at least thirty days before the work
Regulation No. 19 requires a business activity outsourcing
company to: a. be legal entity; b. have a company registration
certificate; c. have a business license; and d. have evidence of
filing its mandatory manpower reports (WLTK).
Regulation No. 14 limits manpower outsourcing to support
services which are separate from the main work of the user company
and they may not directly affect the production process of the
user. Support services comprise:
catering for employees;
support services in the mining and oil sectors; and
employee transportation services.
In addition to the above, Regulation No. 19 requires outsourcing
be established as a limited liability company (a Perseroan
Terbatas or PT);
hold a company registration certificate (TDP);
hold a proper business license;
have proper receipts for mandatory employment reports;
hold an operating license;
have a permanent office and address; and
have a taxpayer registration number.
Regulation No. 19 requires the type of work to be outsourced by
the user to be reported to the manpower agency within the
municipality or regency in which the work to be outsourced will be
conducted. Besides reporting its outsourcing activities, the user
company must register the outsourcing agreement with the manpower
agency where the work to be outsourced will be conducted. If the
registration is deemed proper by the relevant authority, a receipt
for registration will be issued within 7 days. Any employer
outsourcing work and therefore having an outsourcing agreement with
a third party provider, must adjust its outsourcing arrangement to
Regulation No. 9.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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