Outsourcing Business Licensing

Companies providing outsourcing services (the “Outsourcing Company”) shall comply with the provisions of the Ministry of Manpower Regulation No. 11 of 2019 on Requirements of Partial Work Division to Other Company (the “Regulation”), the newest regulation on outsourcing arrangements. The Regulation requires that the following are produced or amended:

The Outsourcing Agreement (the “Agreement”) needs to clearly state the following additional clauses:

1. Description of the type(s) of works to be performed by the workers/employees of the Outsourcing Company;

2. Outsourcing Company’s statement of willingness to accept the workers/employees’ continuous nature of work;

3. Work relationship between Outsourcing Company and workers/employees must be clearly stated, either under Indefinite Time Working Agreement or Definite Time Working Agreement (PKWTT or PKWT);

4. Obligation to fulfill workers/employees’ rights in accordance to laws and regulations.

The Labor Provider License (Izin Usaha Penyediaan Jasa Pekerja Buruh) must be obtained by the Outsourcing Company:

In order to provide labor services, Outsourcing Company shall obtain Labor Provider License (Izin Usaha Penyediaan Jasa Pekerja Buruh). The license can be obtained by submitting application to Online Single Submission (the “OSS”) with the following requirements:

1. A legal entity and established in accordance to Indonesian laws with labor service provider as its business activity;

2. Having obtained Main Business Number or Nomor Induk Berusaha (NIB).

The Agreement must be registered with the local Manpower Institution (Dinas Tenaga Kerja) by the Outsourcing Company. Failure to do so may result in a written warning followed by suspension of business.

One of Schinder Law Firm’s key practices helps with employment and industrial relations matters. Our senior advisor, Dr. Bambang Supriyanto, is an expert on the subject, and was actively involved in the establishment of various Indonesian Industrial Relations Courts. In addition to Dr. Bambang’s presence, we have a team of lawyers with extensive experience advising and representing clients in various employment matters and disputes.

Please contact us if you have further questions on employing expatriates or any other employment matters administratively or dispute settlement.

About the author:

Geoffrey Auryn Jaurissa
Geoffrey Auryn Jaurissa is a junior associate at Schinder Law Firm. He assists both Indonesian and foreign clients in a variety of corporate works, with primary focus on foreign direct investment. A keen sportsman, Geoffrey likes to spend his spare time practicing Wushu.