With COVID-19 infections not slowing in the country, the Government of Indonesia ("GOI") has continued to issue regulations aimed at fighting the pandemic and the economic downturn it has caused. One of the most recent policies from the GOI is the relaxation of mandatory contributions by employers to manpower social security programs.
On August 31, 2020, the GOI issued Government Regulation Number 49 of 2020 regarding Adjustment of Contributions to the Manpower Social Security Program During COVID-19 ("GR 49"). GR 49 temporarily adjusts, from August 2020 to January 2021, the contribution requirements for the four manpower social security programs administered by the Social Security Administrator for Manpower (Badan Penyelenggara Jaminan Sosial Ketenagakerjaan or "BPJS TK").
The four manpower social security programs affected by the regulation are: (i) Work Accident Security (Jaminan Kecelakaan Kerja or "JKK"); (ii) Death Security (Jaminan Kematian or "JKM"); (iii) Old Age Security (Jaminan Hari Tua or "JHT"); and (iv) Pension Security (Jaminan Pensiun or "JP").
GR 49 introduces the following adjustments:
- Later deadline for the monthly contributions to JKK, JKM, JHT and JP;
- Lower monthly contributions for JKK and JKM; and
- Partial postponement of monthly contributions to JP.
These changes are expected to help business continuity by giving employers and employees some leeway and relief in fulfilling payment obligations to these programs. Following are details of each change:
Later Deadline for Monthly Contributions to JKK, JKM, JHT and JP Programs
Under GR 49, the payment contribution deadline is extended from the 15th to the 30th of the subsequent month. This means that employers, who are responsible for collecting, paying and depositing the payments for these manpower security programs on behalf of employees, can make the payments to BPJS TK as late as the 30th of the subsequent month. The same applies to non-employee participants in the programs. (Non-employee participants are individuals who work independently, not in an employment relationship with an employer.)
Lower Monthly Contributions for JKK and JKM Programs
GR 49 provides relief by lowering the JKK monthly contribution by 99% from the regular rate. The regular JKK monthly contribution for employee participants ranges between 0.24% and 1.74% of their monthly salary, depending on the occupational risk determined for each type of work. Therefore, under GR 49, taking the example of the applicable highest monthly rate, i.e. 1.74%, the monthly JKK contribution is lowered to 0.0174% of the monthly salary. For non-employee participants, the same 99% cut applies to their monthly program contributions, which in normal times range from Rp.10,000 to Rp.207,000 per month, depending on their monthly income.
GR 49 also provides a 99% reduction in the monthly contribution for the JKM program. For employee participants, the JKM monthly payment becomes 0.0030 of their monthly salary as opposed to the 0.30% that applies in regular circumstances. The JKM monthly contribution for non-employee participants is also reduced by 99% from the regular JKM monthly contribution, from Rp.6,800 to Rp.68 per month.
To be eligible for this relief, participants registered in the JKK and JKM programs before August 2020 must have made payments to these programs at the regular rate through July 2020. Participants who registered with the JKK and JKM programs after July 2020 must make monthly contributions at the regular rate for the first two months and the reduced rate will then be applied beginning with the third month of their participation. Note that the adjustment will be made automatically by the BPJS through its system without any application required from the participant.
Specifically for construction workers, if the salary of the workers is recorded and known the 99% reduction in the monthly JKK contribution will be applied to the applicable JKK contribution rate for construction workers, i.e. 1.74% of their monthly salary. And the 99% reduction in the monthly JKM program contribution will be applied to the applicable JKM contribution rate for employee participants, i.e. 0.30% of their monthly salary. If the salary of the construction worker is not recorded and not known, the 99% reduction will be applied to the applicable rate for JKK and JKM monthly contributions as determined by the value of the construction contract, as regulated by Government Regulation No. 44 of 2015 regarding Death Security and Work Accident Security.
Partial Postponement of Monthly Contributions to JP Program
In normal circumstances, employers make monthly contributions to the JP program for each employee at a rate of 3% of each employee's monthly salary. This 3% consists of (i) 1% collected from the employee and (ii) 2% paid by the employer. Under GR 49, employers may postpone 99% of the monthly payment tor JP program, which will then be paid in full or in stages from May 15, 2021 to April 15, 2022. The remaining 1% shall be paid as normal each month.
However, unlike the relief for the monthly contributions to the JKK and JKM programs, this partial postponement of the monthly payments to the JP program is not granted automatically. Medium and large-scale employers/businesses must secure the approval of the BPJS for this postponement. To obtain this approval, employers/businesses must provide evidence that they have experienced a decrease in monthly sales/profits of more than 30% from the period of February 2020, along with a statement from the head of the business. Employers/businesses must also have made monthly contributions to the JP program at the normal rate until the period of July 2020 for employees registered with the JP program prior to August 2020.
Micro and small-scale employers/businesses do not require BPJS approval for the partial postponement of JP payments, they simply have to give notification to the BPJS. However, they must have made monthly contributions to the JP program at the normal rate until the period of July 2020 for employees registered with the JP program before August 2020.
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.