16 September 2019 (closed)
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In of our previous columns we have described the restrictions to companies that are employing expatriates. In this week’s column we deepen the required actions that must be taken by companies that are employing expatriates. Indonesian Law number 13 of 2003 regarding Manpower (Labor Law) and its implementing regulations set several obligations towards companies which are allowed to hire foreign workers.
Obligation to Assign Indonesian Companion to Expatriate
Based on article 45 Labor Law jo. article 36 of Minister Regulation 16 of 2015 regarding Procedures For The Use Of Foreign Manpower (Minister Regulation), the company which employs expatriates is under the obligations to appoint an Indonesian companion to the expatriate. The goal of this appointment is that the expatriate transfers his knowledge and technology to the Indonesian companion. Ideally the Indonesian companion should be trained by the expatriate to take over its position. Therefore the Indonesian companion should have the appropriate educational background in line with the position of the expatriate.
Both the Labor Law and Minister Regulation regulate an exception to above mentioned obligation. The obligation to assign an Indonesia companion does not apply to directors and commissioners of a company.
Obligation to Pay Compensation For Expatriates
Based on article 47 Labor Law jo. article 40 Minister Regulation the company employing expatriates is required to pay compensation to the Indonesian government for each expatriate it hires. The amount of compensation is set on USD 100 per month and is paid upfront for the term of the work permit. Companies are required to deposit the payment on account the Compensation Fund for the Use of Foreign Workers.
The Labor Law regulates exceptions to the above mentioned obligation. The obligation to pay compensation for expatriates does not apply to social and religious undertakings, government agencies, international agencies, and certain positions in educational institutions.
The Labor Law and its implementing regulations require companies which employ expatriates to obtain several licenses. We have written a separate column about this licensing requirement.
This column is provided by PNB Law Firm Jakarta