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Employment Law: Utilization Of Foreign Workers In Indonesia Pursuant To Government Regulation No. 34 Of 2021 – Employee Rights/ Labour Relations



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Upon the issuance of Law Number 11 of 2020 on Job Creation
(“Job Creation Law“), there have been
major changes in various regulations in Indonesia, especially in
the Manpower sector. Although Job Creation Law has been declared
unconstitutional” under Constitutional Court
Decision No. 91/PUU-XVIII/2020 dated 25 November 2021
(“Constitutional Court Decision 91“), it
shall be deemed legal for the next 2 (two) years to avoid legal
uncertainty. And in the interest of the public, the previous law
(Manpower Law) shall be re-enacted if the legislators fail to
complete the scheduled improvements and/or revisions as instructed
by the Constitutional Court, based on Constitutional Court Decision
91.

Notwithstanding the enactment of Constitutional Court Decision
91, Job Creation Law has amended a noteworthy number of provisions
under Law No. 13 of 2003 on Manpower (“Manpower
Law
“), which has never been amended since its
application on 25 March 2003. Up to the publication of this
article, these amendments have been followed by issuance of various
implementing regulations including Government Regulation Number 34
of 2021 on the Utilization of Foreign Workers (“GR
34/2021
“), effective as of 1 April 2021. GR/34 2021
regulates the framework for foreign manpower (Tenaga Kerja
Asing
or “TKA“) in the process of
job placements by the employers. Despite the Constitutional Court
judgement, the matters regulated by GR 34/2021 and Job Creation Law
are still effective.

In this article, we provide the summary of key provisions of GR
34/2021 covering: (i) general overview; (ii) restrictions and
requirements of TKA employers; (iii) the Foreign Workers
Utilization Plan (Rencana Penggunaan Tenaga Kerja Asing or
RPTKA“); (iv) the Compensation Fee on
TKA Utilization (Dana Kompensasi Penggunaan Tenaga Kerja
Asing
or “DKPTKA“); and (v)
Sanctions.

General Overview

Based on GR 34/2021, TKA employers that are permitted to employ
TKA in Indonesia are limited to:

  1. government agencies, representatives of foreign countries and
    international organizations;

  2. representative offices of foreign trade business, foreign
    company representative offices, and foreign news offices conducting
    activities in Indonesia;

  3. foreign limited liability companies with business activities in
    Indonesia;

  4. legal entities in the form of limited liability companies or
    foundations duly established under Indonesian laws, or foreign
    business entities registered in the authorized agencies;

  5. social, religious, educational, and cultural institutions;
    and

  6. legal entities authorized to utilize TKA.

(“TKA Employers“)

(Article 3 paragraph (1) of GR 34/2021)

Furthermore, Article 4 paragraph (1) GR 34/2021 further
classifies TKA as workers who are employed within certain periods
for “certain positions” that are not in the list
of prohibited positions under the Manpower Law, which include those
in charge of personnel-related positions (i.e., HR
managers, HR supervisors, or other related positions). TKA
Employers are only able to employ TKAs under the definite period
employment contracts (Perjanjian Kerja Waktu Tertentu or
PKWT“).

Restrictions and Requirements of TKA Employer

It is important to note that GR 34/2021 establishes several
restrictions on the process of TKA employment.

TKA Employers must comply with the following restrictions:

  1. No individuals shall be legally recorded as TKA employers;

  2. a TKA cannot be employed for double positions within the same
    company or by the same employer;

  3. a TKA cannot be employed in any position that handles personnel
    matters (or any position responsible for employment/
    industrial-relation matters).

(Articles 9-11 of GR 34/2021)

Furthermore, a TKA Employer must fulfil the following
requirements:

  1. obtain RPTKA for each employed TKA, which should be approved by
    the Minister of Manpower (“MoM“);

  2. appoint an Indonesian citizen worker as the TKA’s work
    companion (“Accompanying Indonesian
    Worker
    “) for the purpose of transfer of technology
    and expertise from the TKA to the work companion;

  3. implement on-the-job education and training for the
    Accompanying Indonesian Worker so he/she can later qualify for the
    position of the TKA;

  4. repatriate the TKAs to their countries-of-origin after the
    expiry of their contracts;

  5. facilitate Indonesian language training and education for the
    TKAs;

  6. register their TKAs for the Manpower Insurance and Social
    Benefits (Badan Penyelenggara Jaminan Sosial or
    BPJS“) after the TKAs have been
    employed for more than 6 (six) months, or other
    insurance programs if the TKAs have been employed for less than 6
    (six) months.

(Articles 6, 7 (1) and (2) and Article 8 of GR
34/2021
)

(together, the “TKA Employer
Obligations
“)

However, please be informed that provisions b, c, d, and e above
(i.e., Articles 7 (1) and (2) of GR 34/2021) are
exempted for a TKA who is:

  1. a director or commissioner;

  2. a head of Representative Office;

  3. a founder (pembina/pendiri), administrator
    (pengurus), or trustee (pengawas) of a
    Foundation

  4. employed for a temporary work.

Given the abovementioned employer obligations, a TKA Employer is
required to submit a yearly report to MoM on the implementation
of:

  1. foreign worker utilization;

  2. education and work training for the Accompanying Indonesian
    Workers; and

  3. transfer of technology and expertise from the TKAs to the
    Accompanying Indonesian Workers.

(Article 32 (1) of GR34/2021)

Foreign Workers Utilization Plan

Under Article 6 of GR 34/2021, a TKA Employer must obtain RPTKA,
which is further approved by MoM.

We note that under GR 34/2021, RPTKAs are classified into:

  1. RPTKA for temporary works;

  2. RPTKA for workers who would be employed for more than 6 (six)
    months;

  3. RPTKA for workers who have no payment obligation to DKPTKA;
    and

  4. RPTKA for workers of Special Economic Zones (Kawasan
    Ekonomi Khusus
    or “KEK“).

(Article 16 of GR 34/2021)

However, the following positions are not required to obtain
RPTKA approval:

  1. directors or commissioners with certain share ownership;

  2. shareholders;

  3. diplomatic and consular staffs of representative offices of
    foreign countries; or

  4. foreign workers of certain types of production activities in
    emergency situations; those in vocational jobs or technology-based
    start-up companies (for a maximum duration of three months), those
    in business visits, and those working in research for definite
    periods.

(Article 19 of GR 34/2021)

Compensation Fee for TKA Utilization

A TKA Employer is required to submit DKPTKA payments to MoM to
obtain the RPTKA approval. However, the obligation does not apply
to any TKA employer categorized as: (i) a government institution;
(ii) a foreign country representative; (iii) an international
organization; (iv) a social or religious institution; or (v) an
organization that holds certain positions in educational
institutions. (Article 19 (1) of GR 34/2021)

Sanctions

Please note that under GR 34/2021, violations are subject to
administrative sanctions (kindly refer to Article 36 of
GR34/2021 for further context
). Such administrative sanctions
include fines, temporary termination of RPTKA application, and/or
revocation of RPTKA.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.



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