Reallocation of Contributions for Unemployment Benefits Program: Procedures and Implementation

The Minister of Manpower (“MoM”) enacted Regulation No. 7 of 2021 dated March 31, 2021 on Participants Registration Procedures and Implementation of Premium Reallocation for the Unemployment Benefits Program (“MoM Regulation 7/2021“) in order to implement Article 10 (2) and Article 17 (2) Government Regulation No. 37 of 2021 dated February 2, 2021 (“GR 37/2021) on the Implementation of the Unemployment Benefits Program (in Indonesian, Jaminan Kehilangan Pekerjaan or the “JKP Program”).

Employers are required to register their workers with the JKP Program. The workers shall be: i) Indonesian citizens, ii) below 54 (fifty-four) years old when registered, and iii) in employment relationship with the respective employers. In addition, workers who work at large or middle size enterprises must be registered with the following programs: National Health Security (in Indonesian, Jaminan Kesehatan Nasional), Work Accident Security (in Indonesian, Jaminan Keselamatan Kerja or “JKK”), Provident Fund (in Indonesian, Jaminan Hari Tua), National Pension Security (in Indonesian, Jaminan Pensiun) and Life Insurance (in Indonesian, Jaminan Kematian or “JKM”). Workers who work at micro and small enterprises must be registered with the foregoing programs as well, except for the National Pension Security (in Indonesian, Jaminan Pensiun).

MoM Regulation 7/2021 sets out provisions specifically concerning the procedures of the implementation of the premium reallocation for the JKP Program. A summary of the salient provisions of MoM Regulation 7/2021 is set out below.

  • Source of Funds for JKP Program

The premium for the JKP Program shall be paid monthly in the amount of 0.46% (zero point four six percent) of a worker’s monthly salary. The 0.46% (zero point four six percent) amount is based on the following calculation:

  1. 22% (zero point two two percent) from the worker’s monthly salary will be paid by the Central Government; and
  2. The remaining 0.24% (zero point two four percent) from the worker’s monthly salary will be paid by way of the reallocation of the JKK and JKM premia. Pursuant to GR 37/2021, the amount of the JKK premium would be 0.14% (zero point one four percent) from the worker’s monthly salary and the JKM premium would be 0.10 (zero point one zero percent) from the worker’s monthly salary.

The source of the funds for the JKP Program is based on the reallocation of the JKK and JKM premia, with the following conditions:

  1. The JKK contributions are reduced by 0.14% (zero-point fourteen percent) of the monthly wages. Subsequently, the JKK contributions for each risk level group becomes:
    • Very low risk level, 0.10% (zero point ten percent) of the monthly wages;
    • Low risk level, 0.40% (zero point forty percent) of the monthly wages;
    • Medium risk level is 0.75% (zero point seventy-five percent) of monthly wages;
    • High risk level of 1.13% (one point thirteen percent) of the monthly wages;
    • Very high risk level of 1.60% (one point sixty percent) of the monthly wages.
  1. JKM contributions are reduced by 0.10% (zero point ten percent) of the monthly wages. Subsequently, the JKM contributions becomes 0.20% (zero point twenty percent) of the monthly wages.

 

Such reduced contributions (being a total of 0.24% of the monthly wages) are then allocated for the contribution or premium for the JKP Program.  Note that there is no additional payment by an employer or an employee for the JKP Program.

  • Payment of JKK and JKM Recomposed Contributions

Pursuant to Article 10 of MoM Regulation 7/2021, for workers who are included in the Social Security Administrator Program (Badan Penyelenggara Jaminan Sosial or “BPJS”) for the first time, the reallocation of the JKK and JKM contributions will be implemented retroactively as of February 2021. Further, the contributions reallocation shall be implemented by the Manpower BPJS by the 17th of each of the following months. In cases where employers are in arrears in payments of JKK and JKM contributions by February 2021, the workers shall not automatically become participants to the program.

For the reallocation of the contributions executed after February, employers are required to report the participation data of the participants of JKK and JKM Programs to the Manpower BPJS every month no later than the 15th of each of the following months.

  • Calculation of JKK and JKM Reallocated Contributions

The calculation of JKK and JKM reallocated contributions are based on the worker’s latest wage which have been reported to Manpower BPJS and shall not exceed the upper limit of wages, which is Rp5.000.000 (five million Rupiah). In any event the wage exceeds the upper limit, the wage used as a basis for the calculation shall be at the amount of the upper limit of the wage. In any event the wages reported to Manpower BPJS exceeds the upper limit of wages, the differences between the calculation of JKK and JKM reallocated contributions shall become the assets of the work accident social security funds and the death social insurance funds.

  • Legitimacy of Participation

Employers who have included their workers into the JKP Program will be given a JKP Program membership certificate by the Manpower BPJS. The certificate, together with a card of participation, will be issued in electronic form. Pursuant to Article 19 of MoM Regulation 7/2021, the certificates and cards of participation shall be delivered by the Manpower BPJS to employers no later than 3 (three) business days after the contributions are paid while the cards of participation shall be delivered by the employers to their workers no later than 3 (three) business days since the same are received from the Manpower BPJS.

The Manpower BPJS and the Ministry of Manpower (the “Ministry”) shall integrate the JKP Program’s participation data into an employment information system at the Ministry.

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June 3, 2021

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

 

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