“The provision to register within 30 working days since the signing of the outsourcing agreement is repealed”
Since the issuance of Government Regulation No. 24 of 2018, gradually regulations related to license issuance are integrated to the OSS system, including provisions in regards to diversion of work implementation to another company that provides worker services or labour that is commonly known as outsourcing companies. The outsourcing scheme is generally regulated by Law No. 13 of 2003 Concerning Manpower. On a side note, the Constitutional Court through decision No.27/PUU-IX/2011 dated 17 January 2012 granted some part of judicial review petition related to articles 65 and 66 of Law No. 13/2003.
The government conducted a follow-up action related to the aforementioned Constitutional Court decision by issuing the Ministry of Manpower Regulation (PERMENAKER) No. 19 of 2012 concerning Requirements For Diversion of Work Implementation to Another Company. In the further development of the regulation, this regulation went through 2 (two) amendments, the latest being PERMENAKER No. 11 of 2019 that regulates the integration of outsourcing company licensing process into the OSS system.
Outsourcing Licensing Process Through OSS
Previously in PERMENAKER No. 19 of 2012, it was regulated that outsourcing companies are required to possess a business license and operational license that is obtained from the local manpower authority unit. In the first amendment in 2014, the said authority is transferred to BKPM (Investment Coordinating Body), then, in the second amendment in 2019, the authority is transferred to OSS. The change of the authority has its implications to the related regulations, such as:
1.Outsourcing companies do not need to apply for business license and operational license, the only requirement is to apply for a business license at OSS;
2.The business license derived from OSS is valid in the whole Indonesia area and is in effect as long as the company’s business is still running. Unlike the previous regulation where the license is only valid in one province and only limited to 3 years of eligibility;
3.Companies are required to take care of the Business Identification Number (NIB) in the OSS first before handling the business license, the process no longer uses Company Registration Certificate.
In the case of the outsourcing company still possess a valid business and operational license, such license is still valid with the requirement to register it to OSS.
Amendment to the Regulations of the Outsourcing Agreement and the Outsourcing Work Agreement
Other than integrating Outsourcing licensing to the OSS system, PERMENAKER No. 11 of 2019 also amended several regulations related to other outsourcing implementation scheme. In the previous regulation, the content of an outsourcing agreement should at least consisting of type of work, outsourcing company’s capability to receive from the previous outsourcing company (in case of there is a change of outsourcing company and the work in the employer company is still ongoing), and it needs to be in the form of work agreement for a specified time (PKWT) or work agreement for an unspecified time (PKWTT).
PERMENAKER No. 11 of 2019 also added a regulation that is identical to the provision contained in an outsourcing agreement, the provision stipulated that an outsourcing agreement should guarantee the fulfilment of the worker’s rights under the prevailing regulations. That way, the fulfilment of the worker’s rights are guaranteed, be it through the outsourcing agreement between the employer company and the outsourcing company or outsourcing work agreement between the outsourcing company and the workers.
Regulations related to the registration of outsourcing work agreements are still the same as the previous regulation. It needs to be registered to the local work unit, but the requirement to register the agreement within 30 (thirty) working days since the day the agreement is signed no longer prevails. Instead, the provision related to the registration receipt is amended to be issued within 3 (three) working days compared to the previous regulation which is 7 (seven) working days. Even in the case of the application is rejected, the outsourcing company is allowed to file another application.
Administrative Sanction
Even though the provision to register the outsourcing agreement within 30 (thirty) days is repealed, it does not necessarily mean that the company is allowed to operate without registering the outsourcing agreement. In the previous regulation, the sanction that could be imposed on the outsourcing company should they did not fulfil their obligation to register the outsourcing work agreement is a revocation of their operational license.
Due to the license simplification to business license through OSS, the provisions related to sanctions are also amended into the form of administrative sanctions in two forms which are, written warning and freezing of business license.
Written warning could be imposed twice, with a 3 working days interval. Should the outsourcing company did not respond after the second warning, their business license could be frozen. Other than freeze the business licenses, there is no higher degree of sanction such as revocation of business license.
Author: Benedictus Giovanni / Arif Gaffar
Gaffar & Co. Indonesian Boutique Law Firm that focused on commercial law areas includes employment law.
For further queries and information, contact us:
+62- 21 5080 6536 | info@gaffarcolaw.com | www.gaffarcolaw.com
