28 Jan 2013

The Minister of Manpower and Transmigration (“Minister”) has revoked two previous Minister decrees, respectively No. KEP.101/MEN/VI/2004 regarding Guidelines Permits for the Outsourcing of Workers/Labor Services and No. KEP.220/MEN/X/2004 regarding Requirements for the Outsourcing of Part of Work to Another Company, and replaced them with Regulation No. 19 of 2012 regarding Requirements for Outsourcing (“Regulation 19/2012”).


The new Regulation 19/2012 divides outsourcing activities into: (i) piece of work contracting, which is the activity of contracting part of a job performance to another company (the service provided company) (pemborongan pekerjaan) and (ii) labor outsourcing, which is the activity of supplying workers/labor services by a labor provider company for the performance of part of work (penyediaan jasa pekerja/buruh). For both types of outsourcing, there are restrictions as to the type of work that may be outsourced.


For peace of work contracting, activities that may be outsourced are activities that

o    are conducted separately from the user company’s main activities, whether the activities are management and work performance activities; or

o    are conducted by direct or indirect order of the user (work provider); or

o    are supporting activities of the user; or

o    if not performed, do not cause a problem or a halt in the user’s production process.

Companies intending to outsource any of the above activities are obliged to report their intention to the respective local manpower office and obtained a receipt for their report. In addition, the contract for the assignment of the piece of work must be submitted to the same manpower office at the latest 30 (thirty) days prior to the performance of the work.


For labor outsourcing, the work activities that may be outsourced are work activities which are the supporting activities of the user or work activities which do not have any direct relation with the production process of the user. Regulation 19/2012 explicitly stipulates that these activities are: (a) cleaning service; (b) catering service; (c) security service; (d) mining and oil supporting activities; and (e) workers transportation service. Companies intending to labor outsource any of the foregoing activities are required to register the labor outsourcing agreement with the regional manpower office at the latest 30 (thirty) days as of the signing date.

date. All labor provider companies are obliged to have a written employment agreement with the employees, and to register the agreement with the respective local manpower office.


Non compliance with the provisions of the regulation will result in the change of the employment status of the employees to employment with the labor user in the case of (i) piece of work contracting; or revocation of the permit of the labor provider company in the case of (ii) labor outsourcing.


Regulation 19/2012 has been in effect since 19 November 2012. (by: Danny Tanuwijaya)