New Manpower Regulation 150901
CLIENT UPDATE:
Minister of Manpower issue new regulation on the Employment of
Foreign Employees
September 2015
The Minister of Manpower of the Repu li of I do esia MoM has issued ew
regulations on the procedure for employing foreign employees. It drastically
expands the circumstances in which foreign employees require a work permit.
Background
On 29 June 2015, MoM issued Regulation No.
16 of 2015 on the Procedures on the
Employment of Foreign Employees New
Regulation . The New Regulation revokes the
old regulatio
No.
of
Old
Regulation a d impacts foreign employees
who are planning to work in Indonesia and
foreign employees who are currently working
in Indonesia. Besides foreign employees, this
New Regulation also impacts local companies
that employ foreign employees.
In this update, we will describe certain new
requirements for the foreign employees and
their employers under the New Regulation.
Key Provisions
Ratio of Foreign Employees to Local
Employees
The New Regulation now clearly regulates the
ratio of foreign employees to local employees.
For every foreign employees, the employer
must employ 10 (ten) local employees.
However, this 1:10 ratio does not apply for
foreign employees who are:
a. Members of the Board of Directors or
Board of Commissioners of an Indonesian
company including foreign owned
companies established in Indonesia;
b. Members of the patrons, management
and the supervisors of a foundation
(Yayasan);
c. Employed for a job that is urgent and an
emergency in nature;
d. Employed for a temporary job; and
e. Employed for impresario services
(entertainment services e.g. in the field of
arts and sports).
Temporary Plan for Using Foreign
Employees and Temporary Work Permit
The New Regulation expands the requirements
to obtain a Temporary Plan for Using Foreign
Employees (Rencana Penggunaan Tenaga
Kerja Asing
Temporary RPTKA
a d
Temporary Work Permit (Izin Memperkerjakan
Tenaga Kerja Asing Temporary IMTA
include the following activities:
to
a) Providing guidance, counselling, training in
the implementation and development of
innovative industrial technology to
improve product quality and design and
cooperation in offshore marketing of
Indonesian goods and services;
b) Making commercial films with a permit
from the authorized institution;
c) Conducting seminars;
d) Participating in meetings with the central
or representative office in Indonesia;
e) Conducting audits, quality control and
inspections of Indonesian branches;
f) Foreign employees in their trial period;
g) One-off work;
h) Work related to machinery and electric
power installations, aftersales service,
products in test markets.
The New Regulation does not include an
elucidation/clarification and is yet to be
followed with subordinate regulations,
therefore
defi itio s
of
o du ti g
se i ars , participating in meeti gs a d
I do esia ra hes are ot clearly defined.
Based on informal discussions with officials at
the MoM, we concluded that o du ti g
se i ars i ludes organizing events and
speaking at seminars. Attending as a
participant in a seminar is seen as a grey area
and is to be treated cautiously. It is
recommendable for foreigners to wear
participant
nametags
to
prevent
misunderstandings.
Central, representative and branch offices in
Indonesia means the offices of any company
established in Indonesia. The New Regulation
will hinder visits by foreigners from an
overseas office to their Indonesian office. As a
result, visiting employees are strictly speaking
now required to obtain a temporary IMTA for
a broad range of and frequently occurring
activities.
Under the Old Regulation, most of the abovementioned activities (point a-f) did not require
a Temporary RPTKA and Temporary IMTA.
The New Regulation sets the term of expiration
for the Temporary RPTKA at 1 (one) month,
except for point b, g, and h which have a term
of up to 6 (six) months and are not renewable.
Additional New Requirements for Foreign
Employees
All foreign employees are now required to:
a) Show evidence of an insurance policy from
an Indonesian entity;
b) Hold a Taxpayer Registration Number
NPWP ex ept for those undertaking
temporary and entertainment work; and
c) Be enrolled in the National Social Security
Program for employees (Sistem Jaminan
Sosial Nasional SJSN if the assignment
lasts more than 6 months (except for
temporary and entertainment work).
IMTA for Non-Resident Directors and
Commissioners
The New Regulation requires
employees who hold the position of:
foreign
a) Director of an Indonesian company;
b) Commissioner of an Indonesian company;
c) Member of the Patrons, the Management
and the Supervisors of a Foundation
(Yayasan),
to obtain an IMTA.
Such provisions now requires all foreign
directors or commissioners of an Indonesian
company including those living outside and
with no intention to work in Indonesia, to
obtain an IMTA sponsored by the relevant
Indonesian entity.
Conclusions
The implementation of the Regulation has a
significant impact on the employment of
foreign employees. In particular, this applies to
the requirements for visitors from group
companies and for non-resident directors and
commissioners to obtain an IMTA.
There is no transition period for the
effectiveness of the New Regulation and it
therefore takes effect immediately. This may
cause inconvenience for employers in
Indonesia, particularly given the time required
and costs incurred to obtain a Temporary
RPTKA and Temporary IMTA.
For further information, please contact one of
our key contacts below.
KEY CONTACTS
Ivan F. Baely, S.H., LL.M.
baely@iab-net.com
mobile: +62 815 1910 9017
Aston Goad
aston.goad@iab-net.com
mobile: +62 811 881 8801
Almaida Askandar, S.H.
almaida@iab-net.com
mobile: +62 816 111 9711
Tjahyono Firmansyah, S.H., LL.M
tjahyono.firmansyah@iab-net.com
mobile: +62 811 109 365
Erwin Purba, S.H.
erwin.purba@iab-net.com
mobile: +62 811 198 284
Perry Nagle, J.D.
perry.nagle@iab-net.com
mobile: +62 811 910 7323
OUR OFFICE
IAB&F Law Firm
Intiland Tower 9th Floor
Jl. Jenderal Sudirman 32
Jakarta Pusat 10220
Indonesia
T +62 21 5790 5090
F +62 21 5790 5080
mail@iab-net.com
www.iab-net.com
Minister of Manpower issue new regulation on the Employment of
Foreign Employees
September 2015
The Minister of Manpower of the Repu li of I do esia MoM has issued ew
regulations on the procedure for employing foreign employees. It drastically
expands the circumstances in which foreign employees require a work permit.
Background
On 29 June 2015, MoM issued Regulation No.
16 of 2015 on the Procedures on the
Employment of Foreign Employees New
Regulation . The New Regulation revokes the
old regulatio
No.
of
Old
Regulation a d impacts foreign employees
who are planning to work in Indonesia and
foreign employees who are currently working
in Indonesia. Besides foreign employees, this
New Regulation also impacts local companies
that employ foreign employees.
In this update, we will describe certain new
requirements for the foreign employees and
their employers under the New Regulation.
Key Provisions
Ratio of Foreign Employees to Local
Employees
The New Regulation now clearly regulates the
ratio of foreign employees to local employees.
For every foreign employees, the employer
must employ 10 (ten) local employees.
However, this 1:10 ratio does not apply for
foreign employees who are:
a. Members of the Board of Directors or
Board of Commissioners of an Indonesian
company including foreign owned
companies established in Indonesia;
b. Members of the patrons, management
and the supervisors of a foundation
(Yayasan);
c. Employed for a job that is urgent and an
emergency in nature;
d. Employed for a temporary job; and
e. Employed for impresario services
(entertainment services e.g. in the field of
arts and sports).
Temporary Plan for Using Foreign
Employees and Temporary Work Permit
The New Regulation expands the requirements
to obtain a Temporary Plan for Using Foreign
Employees (Rencana Penggunaan Tenaga
Kerja Asing
Temporary RPTKA
a d
Temporary Work Permit (Izin Memperkerjakan
Tenaga Kerja Asing Temporary IMTA
include the following activities:
to
a) Providing guidance, counselling, training in
the implementation and development of
innovative industrial technology to
improve product quality and design and
cooperation in offshore marketing of
Indonesian goods and services;
b) Making commercial films with a permit
from the authorized institution;
c) Conducting seminars;
d) Participating in meetings with the central
or representative office in Indonesia;
e) Conducting audits, quality control and
inspections of Indonesian branches;
f) Foreign employees in their trial period;
g) One-off work;
h) Work related to machinery and electric
power installations, aftersales service,
products in test markets.
The New Regulation does not include an
elucidation/clarification and is yet to be
followed with subordinate regulations,
therefore
defi itio s
of
o du ti g
se i ars , participating in meeti gs a d
I do esia ra hes are ot clearly defined.
Based on informal discussions with officials at
the MoM, we concluded that o du ti g
se i ars i ludes organizing events and
speaking at seminars. Attending as a
participant in a seminar is seen as a grey area
and is to be treated cautiously. It is
recommendable for foreigners to wear
participant
nametags
to
prevent
misunderstandings.
Central, representative and branch offices in
Indonesia means the offices of any company
established in Indonesia. The New Regulation
will hinder visits by foreigners from an
overseas office to their Indonesian office. As a
result, visiting employees are strictly speaking
now required to obtain a temporary IMTA for
a broad range of and frequently occurring
activities.
Under the Old Regulation, most of the abovementioned activities (point a-f) did not require
a Temporary RPTKA and Temporary IMTA.
The New Regulation sets the term of expiration
for the Temporary RPTKA at 1 (one) month,
except for point b, g, and h which have a term
of up to 6 (six) months and are not renewable.
Additional New Requirements for Foreign
Employees
All foreign employees are now required to:
a) Show evidence of an insurance policy from
an Indonesian entity;
b) Hold a Taxpayer Registration Number
NPWP ex ept for those undertaking
temporary and entertainment work; and
c) Be enrolled in the National Social Security
Program for employees (Sistem Jaminan
Sosial Nasional SJSN if the assignment
lasts more than 6 months (except for
temporary and entertainment work).
IMTA for Non-Resident Directors and
Commissioners
The New Regulation requires
employees who hold the position of:
foreign
a) Director of an Indonesian company;
b) Commissioner of an Indonesian company;
c) Member of the Patrons, the Management
and the Supervisors of a Foundation
(Yayasan),
to obtain an IMTA.
Such provisions now requires all foreign
directors or commissioners of an Indonesian
company including those living outside and
with no intention to work in Indonesia, to
obtain an IMTA sponsored by the relevant
Indonesian entity.
Conclusions
The implementation of the Regulation has a
significant impact on the employment of
foreign employees. In particular, this applies to
the requirements for visitors from group
companies and for non-resident directors and
commissioners to obtain an IMTA.
There is no transition period for the
effectiveness of the New Regulation and it
therefore takes effect immediately. This may
cause inconvenience for employers in
Indonesia, particularly given the time required
and costs incurred to obtain a Temporary
RPTKA and Temporary IMTA.
For further information, please contact one of
our key contacts below.
KEY CONTACTS
Ivan F. Baely, S.H., LL.M.
baely@iab-net.com
mobile: +62 815 1910 9017
Aston Goad
aston.goad@iab-net.com
mobile: +62 811 881 8801
Almaida Askandar, S.H.
almaida@iab-net.com
mobile: +62 816 111 9711
Tjahyono Firmansyah, S.H., LL.M
tjahyono.firmansyah@iab-net.com
mobile: +62 811 109 365
Erwin Purba, S.H.
erwin.purba@iab-net.com
mobile: +62 811 198 284
Perry Nagle, J.D.
perry.nagle@iab-net.com
mobile: +62 811 910 7323
OUR OFFICE
IAB&F Law Firm
Intiland Tower 9th Floor
Jl. Jenderal Sudirman 32
Jakarta Pusat 10220
Indonesia
T +62 21 5790 5090
F +62 21 5790 5080
mail@iab-net.com
www.iab-net.com