Following Law No. 11 of 2020 on Job Creation (“Omnibus Law”), the Indonesian government has enacted several implementing regulations of Omnibus Law. One of the enacted implementing regulations is Government Regulation No. 34 of 2021 on the Employment of Foreign Workers (“GR/34”). The issuance of GR/34 is a replacement of Presidential Regulation No. 20 of 2018 on Employment of Foreign Workers (“PR 20/2018”).

The GR/34 stipulates that every employer of foreign workers is obliged to prioritize employing Indonesian workers in all types of available positions and if such position cannot be occupied by Indonesian workers, the position can be assigned to foreign workers^[1]. The foreign workers can be hired only by the Employers of foreign workers for a certain job role and for a specific time period (non-permanent) and possess a competence for the occupied position^[2].

According to GR/34, Employer of foreign workers includes government agencies, representatives of foreign countries, international agencies, foreign trade/company/news representative offices, legal entities in the form of limited companies, foundations, registered foreign business entities, social/religious/educational/cultural institutions, events service businesses, and other business entities that are allowed to use foreign workers.

Employers’ Obligation

The GR/34 regulates that the Employer shall appoint an Indonesian employee as a counterpart (known as “Tenaga Kerja Pendamping” in the Indonesian language) and induce transfer of knowledge and skills from the foreign workers in line with the job qualification as required for the position occupied by the foreign workers^[3].

Employers of foreign workers are also required to enroll foreign workers in the national social security program for those who work for more than 6 months or an insurance program for those who work for less than 6 months^[4]. Employers of foreign workers are obliged to report annually to the Minister or relevant authorities for the implementation of the regulations towards utilization of foreign workers for providing education and training for Tenaga Kerja Pendamping and, transfer of knowledge and skills from foreign workers to Tenaga Kerja Pendamping.

Prohibition

In doing away with PR 20/2018, GR/34 prohibits an individual employer from hiring foreign workers. Further, foreign workers are not permitted to have multiple positions in the same company. The Employers of foreign workers are not permitted to hire foreign workers for a position that handles matter of human resources.

Manpower Utilization Plans

Plan for the Use of Foreign Worker (commonly abbreviated as RPTKA^[5]) is required when using foreign workers. The RPTKA application shall be submitted online to the Minister or relevant authorities to be ratified. Ratification of the RPTKA is used as a recommendation to obtain a visa and residence permit for foreign workers. Foreign workers must mandatorily have a stay permit^[6].

How Schinder can help

Our team of lawyers has extensive experience to assist numerous companies with regards to all kinds of permits related to the utilization of foreign workers. We also have been entrusted by our Clients as permanent legal advisors to handle compliance issues related to the use of foreign workers. Shall you need any further information on the GR/34 or need our assistance related to the utilization of foreign workers, please feel free to write to us at info@schinderlawfirm.com.