Following the issuance of Law No. 11 of 2020 dated November 2, 2020 on Job Creation (the “Job Creation Law”), the Government issued Government Regulation No. 34 of 2021 dated February 2, 2021 on the Employment of Foreign Workers (“GR 34”) to further regulate obligations and requirements of employing foreign workers in Indonesia.

GR 34 introduces new provisions as well as amends certain stipulations under the Presidential Regulation No. 20 of 2018 dated March 26, 2018 on Employment of Foreign Workers (the “Previous Regulation”). The Previous Regulation is revoked by GR 34.

The major changes under GR 34 compared to the Previous Regulation are as follows:

• Employers’ Criteria

Under GR 34, employers of foreign workers shall be the following:

1. Government agencies, countries’ representatives, international agencies, and international organizations;
2. Trade representative offices, foreign company representative offices, and foreign news agencies that carry out activities in Indonesia;
3. Private foreign companies doing business in Indonesia;
4. Legal entities established under the laws of Indonesia in the form of a limited liability company or a foundation or a foreign legal entity registered in the relevant agency;
5. Social, religious, or cultural agencies;
6. Promotors; and
7. Other business entities so long it is not prohibited under Indonesian laws.

GR 34 further states that legal entities as mentioned in the letter (d) above would exclude limited liability companies in the form of individual limited liability companies.  Please see our Newsflash on individual limited liability companies under the Job Creation Law [here].

• Employers’ Obligation

In addition to appointing an Indonesian employee as a counterpart (in Indonesian, Tenaga Kerja Pendamping) and conducting training sessions for such counterpart, GR 34 requires an employer to return the foreign workers to his/her home country when his/her employment agreement expires.

A counterpart and the training sessions for such counterpart would not be necessary for the following positions:

1. Directors and commissioners;
2. Head of a representative office;
3. Members of a Board of Trustees, a Board of Management, or a Board of Supervisors of a foundation; and
4. Foreign workers employed for temporary works.

Prohibitions

Consistent with the Previous Regulation, GR 34 prohibits an individual employer from hiring foreign workers. Further, foreign workers are not permitted to have a position that handles human resources matter.

GR 34 restricts an employer from hiring a foreign worker for multiple positions at the same company.

Manpower Utilization Plans

As stipulated in the Previous Regulation, employers who will hire foreign workers must apply submit a Manpower Utilization Plan (in Indonesian, Rencana Penggunaan Tenaga Kerja Asing or an “RPTKA”) for approval. In the process of submission, the employer is required to attach documents relating to the proposed foreign workers. According to GR 34, the documents are as follows:

1. education diplomas;
2. competency or work experience certifications;
3. an employment agreement or any other agreement;
4. a letter of counterpart appointment;
5. a statement letter as guarantor for the foreign worker; and
6. checking/savings account of the foreign worker or the employer.

Letters (c) and (f) above were not mentioned under the Previous Regulation.

RPTKAs for government agencies, countries’ representatives, international agencies, and international organizations

The Previous Regulation does not require government agencies, countries’ representatives, international agencies, and international organizations to submit an RPTKA for approval. However, GR 34 now requires the foregoing agencies and organizations to submit an RPTKA for approval.  But GR 34 exempts such agencies organizations from the obligation to have a feasibility study after the RPTKA submission.

The submission must be submitted by attaching:

1. an application letter and reasons to employ foreign workers;
2. a draft employment agreement or any other agreement; and/or
3. an approval letter from the relevant agency.

Types of RPTKA Approvals

GR 34 presents different types of RPTKA approvals, as follows:

1. an RPTKA for temporary jobs
2. This type of RPTKA legalization is valid for 6 (six) months and may not be extended.
3. an RPTKA for jobs more than 6 (six) months
4. This type of RPTKA legalization is valid for 2 (two) years and may be extended.
5. an RPTKA for positions without the obligation to pay compensation funds on the employment of foreign workers (in Indonesian, Dana Kompensasi Penggunaan Tenaga Kerja Asing or “DKPTKA”)
6. This type of RPTKA approval is valid for 2 (two) years and may be extended.
7. This type of RPTKA approval is granted for government agencies, countries’ representatives, international agencies, and international organizations.
8. an RPTKA for a Special Economy Area (in Indonesian, Kawasan Ekonomi Khusus)
9. This type of RPTKA approval is valid for 5 (five) years and may be extended.
10. For directors or commissioners, this type of RPTKA approval may only be given once and will be valid as long as the foreign workers serve as the directors or commissioners.

The abovementioned types of RPTKA approvals are not mandatory for:

1. Directors or commissioners who have certain share ownership in the company (i.e., the employer);
2. Diplomatic or consular officers at foreign countries’ representative offices; or
3. Foreign workers employed by employers for production activities that were stopped due to emergencies, vocational, technology-based start-ups, business visits, and research for a certain period.

RPTKA Approvals Extensions

An extension of an RPTKA approval shall be submitted online at least 30 (thirty) days before it expires. As mentioned above, an extension of an RPTKA legalization may be granted for no more than 2 (two) years. Whereas for an RPTKA for Special Economy Area, the extension may be granted for a maximum of 5 (five) years.

DKPTKA

DKPTKA is not required for:

1. government agencies;
2. countries’ representatives;
3. international organizations;
4. social agencies;
5. religious agencies; and
6. certain positions at education institutions.

• Stay Permits

Every foreign worker who works in Indonesia must have a stay permit.

• Social Security

Pursuant to the Previous Regulation, employers were only required to provide the Employment Social Security for foreign workers who would work for more than 6 (six) months in Indonesia. However, GR 34 mandates that the employer is also obliged to register its foreign workers who work less than 6 (six) months in Indonesia for at least the work accident insurance program.

• Reporting

Pursuant to GR 34, employers who employ foreign workers shall submit an annual report to the Minister of Manpower regarding the implementation of foreign workers’ employment, education and job training for counterparts, and technology and knowledge transfer from the foreign workers to the counterparts.

• Sanction

Unlike the Previous Regulation, GR 34 details a list of administrative sanctions for violations of some provisions in GR 34. The administrative sanctions are as follows:

1. fines;
2. temporary suspension of the RPTKA approval process; and/or
3. revocation of the RPTKA approval.

• Effective Date

GR 34 will be effective as of April 1, 2021. Any relevant licenses for foreign workers’ employment issued prior to the effective date will be valid until such licenses expire. As for submissions that are recently submitted will be processed in accordance with provisions under GR 34.

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March 15, 2021

Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com) or Thomas P. Wijaya (twijaya@aksetlaw.com) for further information.

 

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