Employment Sector Regulation Update: Utilization of Foreign Workers

Jun 8, 2021 | News, Articles

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The Government Regulation Number 34 of 2021 concerning Utilization of Foreign Workers (“GR 34/2021”) is one of implementation regulations to Law No. 11 of 2020 (“Job Creation Law”). The GR 34/2021 is expected to encourage the acceleration of national development through the utilization of foreign workers.

The GR 34/2021 is issued on 2, February 2021 and will come into force on 1, April 2021. The enactment of GR 34/2021 revokes the previous Presidential Regulation Number 20 of 2018 concerning Utilization of Foreign Workers (“PR 20/2018”).

Here are some important points that need to be considered by businessmen in utilization of foreign workers after the enactment of GR 34/2021.

General Overview Utilization of Foreign Workers

Employers can only hire foreign workers in employment relationships for a certain position and specific period of time, and the relevant foreign workers must have competence in accordance with the position to be occupied.

Employers are prohibited from hiring a foreign worker to fill dual-positions under one company. Employers are also prohibited from hiring foreign workers for personnel positions.

Furthermore, to employ a foreign worker, employers must obtain a Foreign Manpower Utilization Plan Approval (in Bahasa: Pengesahan Rencana Penggunaan Tenaga Kerja Asing hereinafter referred to as “RPTKA Approval”) which issued by Ministry of Manpower (“MOM”).

Requirement to obtain a RPTKA Approval is excluded if the relevant foreign workers falls into the following categories:

  1. Directors or commissioners with certain shareholding, or shareholders in accordance with the laws in Indonesia;
  2. Diplomatic and consular employees at the foreign countries representative office; or
  3. Foreign workers which are needed by employers in the type of production activity have stopped due to emergencies, vocations, technology-based start-ups, business visits and research for a specific period of time.

RPTKA Approval Procedure

  • The employers must submit an application for RPTKA Approval to MOM via online;
  • The MOM conduct an assessment of the relevant RPTKA Approval application (hereinafter referred to as “RPTKA Assessment”);
  • The employers may submit data of the foreign worker to MOM simultaneously with application for RPTKA Approval or after MOM issued the result of RPTKA Assessment;
  • After the foreign worker’s data is declared complete and correct, the employer must pay the Foreign Worker Utilization Compensation Fund (in Bahasa: Dana Kompensasi Penggunaan Tenaga Kerja Asing hereinafter referred to as “DKP-TKA”); and
  • MOM issued the RPTKA Approval.

The RPTKA Approval shall be used as a recommendation for foreign workers to obtain a visa and residence permit in order for them to work in Indonesia.

Foreign Workers for Technology-Based Start-Ups

Foreign workers who work in technology-based start-ups less than 3 (three) months won’t be needing the RPTKA Approval. But the employers must submit the foreign worker’s data candidate to MOM via online.

In the event of foreign worker will be working for more than 3 (three) months, the employer still requires to obtain a PRTKA Approval issued by MOM.

The Foreign Worker Security for Work Accident

Foreign workers who work more than 6 (six) months must be registered by the employers to the national social security program.

Meanwhile, foreign workers who work less than 6 (six) months, must be registered by the employer to the insurance company that at least provides protection for work accident security.

Annual Report Obligation

Employers are required to make a report on the utilization of foreign workers to MOM every 1 (one) year. The content of the report submitted are as follows:

  1. The utilization of foreign workers;
  2. Education and job training for both Indonesian co-workers and the foreign workers; and
  3. Knowledge and technology transfer from foreign workers to Indonesian co-workers.

Employers are also required to report on foreign worker’s employment agreements that have expired or terminated before the expiration date of employment agreement.

Sanction

Based on the provision of GR 34/2021, the Government may sentence an administrative sanction in the form of a fine to employers who have not obtained a RPTKA Approval issued by MOM. The fine will be charged per person per month with the following detail:

  1. 1 month is subject to a fine of Rp 6.000.000,-;
  2. 2 months is subject to a fine of Rp 12.000.000,-;
  3. 3 months is subject to a fine of Rp 18.000.000,-;
  4. 4 months is subject to a fine of Rp 24.000.000,-;
  5. 5 months is subject to a fine of Rp 30.000.000,-;
  6. 6 months is subject to a fine of Rp 36.000.000,-;

Calculation of the fine above is subject to employers starting from the day foreign workers enter the territory of Indonesia up to 6 months.

Employers must pay the fine sanction within 2 (two) weeks after the official imposition, which will be paid to the State Treasury.

DISCLAIMER:

Any information contained in this Article is provided for informational purposes only and should not be construed as legal advice on any subject matter.  You should not act or refrain from acting on the basis of any content included in this Legal Update without seeking legal or other professional advice.  This document is copyright protected. No part of this document may be disclosed, distributed, reproduced or transmitted in any form or by any means, including photocopying and recording or stored in retrieval system of any nature without the prior written consent of SIP Law Firm.