Update on Indonesian Employment Law

Legal Updates
Update on Indonesian Employment Law
23 August 2019

By Indrawan Dwi Yuriutomo

The Indonesian Ministry of Manpower (\"MOM”) has issued MOM Regulation Number 11 of 2019 concerning the Second Amendment to Minister of Manpower and Transmigration Regulation Number 19 of 2012 concerning the Requirements for the Partial Delegation of Work to Other Companies (\"MOM Reg 11/2019”).

MOM Reg 11/2019 introduces several changes and provisions related to delegating work to other companies, as follows:

Online Single Submission (\"OSS”)

In accordance with the purpose to streamline and ease business licensing services, as provided for in the preamble to Government Regulation No. 24 of 2018 concerning Electronically Integrated Business Licensing Services (\"GR 24/2018”), Article 1 point 7(a) and (b) of MOM Reg 11/2019 appoints the agency managing the OSS system to issue business licenses for and on behalf of the MOM, and also to organize government matters in the field of investment. Article 24 of MOM Reg 11/2019 obliges business actors wishing to obtain a business permit to register through the OSS system in accordance with the requirements provided therein. Consequently, OSS is responsible for issuing Labor Supplier Business Permits pursuant to Article 25 of MOM Reg 11/2019.

Registration of Outsourcing Agreements

Article 20 (1) of MOM Reg 11/2019 removes the time period for registering labor supply agreements. However, Labor Supplier Companies must still register labor supply agreements with the institution having authority in the field of employment in the regency/city where the work is being carried out. Furthermore, Article 27(3) of MOM Reg 11/2019 provides a maximum period of three days (from the previous nine days) upon the submission of the Application for Registration for the relevant institution to issue the Registration Receipt of the Employment Agreement.

Licenses Prior to MOM Reg 11/2019

In accordance with Article 34(1) of MOM Reg 11/2019, licenses acquired prior to this regulation will be deemed valid until their expiration. However, business actors who were in the process of obtaining licenses prior to the issuance of this regulation must process the licenses through the OSS system. Article 34(2) provides that all licenses obtained prior to this regulation must be registered with OSS.

Protection of Labor Rights

An additional provision on the protection of labor rights is provided in Article 19 of MOM Reg 11/2019, which obliges Labor Supplier Companies to fulfill the rights of workers as provided by law.

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