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
Tenaga Kerja Asing Temporary IMTA to include the following activities:
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 above-mentioned 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 foreign employees who hold the position of:
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.
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
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