Upon the issuance of Law Number 11 of 2020 on Job Creation ("Job Creation Law"), there have been major changes in various regulations in Indonesia, especially in the Manpower sector. Although Job Creation Law has been declared "unconstitutional" under Constitutional Court Decision No. 91/PUU-XVIII/2020 dated 25 November 2021 ("Constitutional Court Decision 91"), it shall be deemed legal for the next 2 (two) years to avoid legal uncertainty. And in the interest of the public, the previous law (Manpower Law) shall be re-enacted if the legislators fail to complete the scheduled improvements and/or revisions as instructed by the Constitutional Court, based on Constitutional Court Decision 91.
Notwithstanding the enactment of Constitutional Court Decision 91, Job Creation Law has amended a noteworthy number of provisions under Law No. 13 of 2003 on Manpower ("Manpower Law"), which has never been amended since its application on 25 March 2003. Up to the publication of this article, these amendments have been followed by issuance of various implementing regulations including Government Regulation Number 34 of 2021 on the Utilization of Foreign Workers ("GR 34/2021"), effective as of 1 April 2021. GR/34 2021 regulates the framework for foreign manpower (Tenaga Kerja Asing or "TKA") in the process of job placements by the employers. Despite the Constitutional Court judgement, the matters regulated by GR 34/2021 and Job Creation Law are still effective.
In this article, we provide the summary of key provisions of GR 34/2021 covering: (i) general overview; (ii) restrictions and requirements of TKA employers; (iii) the Foreign Workers Utilization Plan (Rencana Penggunaan Tenaga Kerja Asing or "RPTKA"); (iv) the Compensation Fee on TKA Utilization (Dana Kompensasi Penggunaan Tenaga Kerja Asing or "DKPTKA"); and (v) Sanctions.
Based on GR 34/2021, TKA employers that are permitted to employ TKA in Indonesia are limited to:
- government agencies, representatives of foreign countries and international organizations;
- representative offices of foreign trade business, foreign company representative offices, and foreign news offices conducting activities in Indonesia;
- foreign limited liability companies with business activities in Indonesia;
- legal entities in the form of limited liability companies or foundations duly established under Indonesian laws, or foreign business entities registered in the authorized agencies;
- social, religious, educational, and cultural institutions; and
- legal entities authorized to utilize TKA.
(Article 3 paragraph (1) of GR 34/2021)
Furthermore, Article 4 paragraph (1) GR 34/2021 further classifies TKA as workers who are employed within certain periods for "certain positions" that are not in the list of prohibited positions under the Manpower Law, which include those in charge of personnel-related positions (i.e., HR managers, HR supervisors, or other related positions). TKA Employers are only able to employ TKAs under the definite period employment contracts (Perjanjian Kerja Waktu Tertentu or "PKWT").
Restrictions and Requirements of TKA Employer
It is important to note that GR 34/2021 establishes several restrictions on the process of TKA employment.
TKA Employers must comply with the following restrictions:
- No individuals shall be legally recorded as TKA employers;
- a TKA cannot be employed for double positions within the same company or by the same employer;
- a TKA cannot be employed in any position that handles personnel matters (or any position responsible for employment/ industrial-relation matters).
(Articles 9-11 of GR 34/2021)
Furthermore, a TKA Employer must fulfil the following requirements:
- obtain RPTKA for each employed TKA, which should be approved by the Minister of Manpower ("MoM");
- appoint an Indonesian citizen worker as the TKA's work companion ("Accompanying Indonesian Worker") for the purpose of transfer of technology and expertise from the TKA to the work companion;
- implement on-the-job education and training for the Accompanying Indonesian Worker so he/she can later qualify for the position of the TKA;
- repatriate the TKAs to their countries-of-origin after the expiry of their contracts;
- facilitate Indonesian language training and education for the TKAs;
- register their TKAs for the Manpower Insurance and Social Benefits (Badan Penyelenggara Jaminan Sosial or "BPJS") after the TKAs have been employed for more than 6 (six) months, or other insurance programs if the TKAs have been employed for less than 6 (six) months.
(Articles 6, 7 (1) and (2) and Article 8 of GR 34/2021)
(together, the "TKA Employer Obligations")
However, please be informed that provisions b, c, d, and e above (i.e., Articles 7 (1) and (2) of GR 34/2021) are exempted for a TKA who is:
- a director or commissioner;
- a head of Representative Office;
- a founder (pembina/pendiri), administrator (pengurus), or trustee (pengawas) of a Foundation
- employed for a temporary work.
Given the abovementioned employer obligations, a TKA Employer is required to submit a yearly report to MoM on the implementation of:
- foreign worker utilization;
- education and work training for the Accompanying Indonesian Workers; and
- transfer of technology and expertise from the TKAs to the Accompanying Indonesian Workers.
(Article 32 (1) of GR34/2021)
Foreign Workers Utilization Plan
Under Article 6 of GR 34/2021, a TKA Employer must obtain RPTKA, which is further approved by MoM.
We note that under GR 34/2021, RPTKAs are classified into:
- RPTKA for temporary works;
- RPTKA for workers who would be employed for more than 6 (six) months;
- RPTKA for workers who have no payment obligation to DKPTKA; and
- RPTKA for workers of Special Economic Zones (Kawasan Ekonomi Khusus or "KEK").
(Article 16 of GR 34/2021)
However, the following positions are not required to obtain RPTKA approval:
- directors or commissioners with certain share ownership;
- diplomatic and consular staffs of representative offices of foreign countries; or
- foreign workers of certain types of production activities in emergency situations; those in vocational jobs or technology-based start-up companies (for a maximum duration of three months), those in business visits, and those working in research for definite periods.
(Article 19 of GR 34/2021)
Compensation Fee for TKA Utilization
A TKA Employer is required to submit DKPTKA payments to MoM to obtain the RPTKA approval. However, the obligation does not apply to any TKA employer categorized as: (i) a government institution; (ii) a foreign country representative; (iii) an international organization; (iv) a social or religious institution; or (v) an organization that holds certain positions in educational institutions. (Article 19 (1) of GR 34/2021)
Please note that under GR 34/2021, violations are subject to administrative sanctions (kindly refer to Article 36 of GR34/2021 for further context). Such administrative sanctions include fines, temporary termination of RPTKA application, and/or revocation of RPTKA.
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.