New Labor Rules on Outsourcing

Following Constitutional Court Decision No. 27/PUU-IX/2011 regarding Law No. 13 of 2003 on Labor, the Directorate General of Industrial Relations Development and Labor Social Security issued Circular Letter No B.31/PHIJSK/I/2012.

“The circular letter provides clearer rules on outsourcing procedures and outsourcing. As a result, outsourcing workers’ rights are guaranteed,” said Muhaimin Iskandar, Minister of Labor and Transmigration in a press release, Friday (20/1). He also stated that his ministry will increase supervision of outsourcing companies in order to guarantee workers rights.

“Supervision over labor development and law enforcement will increase. Outsourcing companies must comply with the Labor Law. They [outsourcing companies] won’t be shut down, but they have to guarantee workers prosperity,” he explained.

Meanwhile, Myra M Hanartani, Director General of Industrial Relations Development and Labor Social Security, asserted that outsourcing companies have to enter into permanent work contracts (perjanjian kerja waktu tidak tertentu – PKWTT) with their employees. However, temporary work contracts (perjanjan kerja waktu tertentu – PKWT) are allowed if they include transfer of undertaking protection of employment.

(Hukumonline / Mahinda Arkyasa)