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Indonesia – Employment Quarterly Review 2014, Quarter 2.

12 August, 2014

 

 

Looking Back:

 

24 October (Implementation Ongoing): 

 

New Regulation Regarding Provisions And Procedures For The Utilization Of Foreign Workers And The Development Of Indonesian Workers In Oil And Natural Gas Business Activities


The Minister of Energy and Mineral Resources (“MEMR“) has issued MEMR Regulation No. 31 of 2013 regarding Provisions and Procedures for the Utilization of Foreign Workers and the Development of Indonesian Workers in Oil and Natural Gas Business Activity, which was enacted on 24 October 2013 (“MEMR Reg 31”).


MEMR Reg 31 requires that contractors, downstream business entities and service companies prioritize the use of Indonesian workers (Tenaga Kerja Indonesia or “TKI“). MEMR Reg 31 provides that in carrying out upstream oil and natural gas business activities, contractors, downstream business entities and service companies can only utilize foreign workers (Tenaga Kerja Asing or “TKA”) in certain circumstances and positions, namely: (i) to support investment in oil and natural gas business activities, for a position on the Board of Directors and/or Commissioners; (ii) to implement the transfer of technology related to the introduction of new technology for oil and natural gas business activities, for professional positions requiring the mastery of technology and certain skills in the oil and natural gas sector; and/or (iii) to fill certain positions that cannot yet be filled by Indonesian workers due to competency or availability factors.


Positions that may not be occupied by foreign workers are as follows: 


a. human resources;
b. legal;
c. Health, Safety and Environment (HSE);
d. supply chain management, which includes procurement and logistics;
e. quality control, including Inspections;
f. structural positions in exploration and exploitation activities below the superintendent level or the equivalent structural position.


Contractors, downstream business entities and service companies are prohibited to:


(i) employ one TKA for more than one position.
(ii) employ a TKA who is employed by another company, except for a TKA who has been appointed to the Board of Directors or Board of Commissioners of other company.


To employ foreign workers, contractors, downstream business entities and service companies must obtain approval from the Director General of Energy and Mineral Resources (“DGEMR”) in the form of a recommendation of Foreign Worker Utilization Plan (Rencana Penggunaan Tenaga Kerja Asing or “RPTKA”) and Foreign Worker Employment Permit (Izin Mempekerjakan Tenaga Kerja Asing or “IMTA”) that is addressed to the Minister of Manpower and Transmigration. 


MEMR Reg 31 also stipulates age limits for foreign workers employed in the oil and natural gas sector, which is a minimum of 30 years old and a maximum of 55 years old. This provision shall not apply to TKA holding the position of President Director, General Manager or Commissioner of a PSC contractor, downstream business entity or service company, as well as TKA in an international employee exchange program.

 

Based on MEMR Reg 31, the DGEMR will evaluate the application for a RPTKA or IMTA recommendation, taking into account the principles of efficiency, effectiveness and benefit. If necessary, the DGEMR may ask the contractor, downstream business entity or service company to clarify certain points. After the evaluation, the DGEMR will issue its decision either approving or rejecting the RPTKA or IMTA recommendation. The RPTKA or IMTA recommendation shall be the basis of the application to the MOMT.


MEMR Reg 31 further provides that contractors, downstream business entities and service companies must appoint at least one Partner TKI for each employed TKA. This provision does not apply for TKA who are members of the Board of Directors and/or Board of Commissioners. 


Contractors, downstream business entities and service companies must conduct transfer of technology and knowledge from TKA to TKI and develop their TKI according to the plan approved by the DGEMR during the granting of the RPTKA recommendation. Contractors, downstream business entities and service companies are required to submit an annual report to the DGEMR regarding the implementation of such transfer of technology and knowledge from TKA to TKI and the development program for the TKI. Contractors, downstream business entities and service companies that fail to with these provisions shall be subject to administrative sanctions in the form of written warnings and/or the revocation of RPTKA and/or IMTA.


The provisions of MEMR 31 also apply to the Representative Offices of foreign companies engaged in oil and natural gas business activities in Indonesia.


Lastly, the utilization of TKA for upstream oil and natural gas business activities without an approved RPTKA or IMTA recommendation from the DGEMR shall result in companies being unable to recover operating costs for such TKA.

 

1 January – Specified Dates:

 

New Social Security System In Indonesia (Social Security Organizing Agency-Badan Penyelenggara Jaminan Sosial (“BPJS”)


Under Law No. 24 of 2011 regarding Social Security Organizing Body-Badan Penyelenggara Jaminan Sosial (“BPJS Law”), effective 1 January 2014, the legal entities that manage social security will be divided into two categories as follows: 


A. BPJS For Health


BPJS for Health must organize health security for the entire population of Indonesia. PT Askes, a state-owned health insurance firm, was dissolved on January 1, 2014, and all the assets, liabilities and legal rights and obligations of PT Askes were taken over by BPJS for Health.

 

The schedule for different segments of society to join BPJS for Health is as follows:

 

  • 1 January 2014: those classified as poor, civil servants, Jamsostek healthcare participants;
  • 1 January 2015: employees of state-owned enterprises and private companies;
  • 1 January 2016: employees of micro-enterprises; and
  • 1 January 2019: non-salaried workers (e.g., consultants or other workers who do not receive a monthly salary) and the self-employed.

Foreign nationals who have resided in Indonesia for a minimum of six months are required to participate in BPJS for Health.


B. BPJS For Manpower


On 1 January 2014, PT Jamsostek became BPJS for Manpower, which shall offer the following programs:


a. Work Accident Security;
b. Old Age Security;
c. Pension Security; and
d. Death Security

 

BPJS for Manpower will begin full operation on 1 July 2015. Law No. 3 of 1992 regarding Employment Social Security (Jamsostek) will be revoked once BPJS is fully operational.It is important to note that PT Asabri, a company providing lump sum retirement benefits and pensions as well as death and occupational injury insurance for the armed forces and police, and PT Taspen, a company that manages lump sum retirement benefits and pension programmes for civil servants, will be merged into BPJS for Manpower no later than 2029.
Administrative sanctions for not participating in BPJS for Manpower are as follows:

 

  • For Employers: Loss of eligibility to renew licenses (e.g., business permits, expatriate employment permits and building permits);
  • For Individuals: Barred from obtaining driver’s licenses, land certificate, vehicle ownership certificate, passport or building permit.

 

(Click Here For Further Reference)

 

1 April:

 

List Of Associations That Have Issued And Submitted Flowcharts For Services Subcontracting To Ministry Of Manpower And Transmigration (“MOMT”)


Under MOMT Regulation No. 19 of 2012 on the requirements for outsourcing a supply of labour and subcontracting of services (the “Outsourcing Regulation”), industry associations must register ”flowcharts” with the MOMT indicating core activities in their business sectors that must be handled “in-house” and non-core activities that may be subcontracted to service providers. The following is a list of major associations that have registered their flowchart with the MOMT:

 

1. National Banking Association (PERBANAS)
2. Indonesian Cement Association
3. Food and Beverage Entrepreneur Association (GAPMMI)
4. Indonesian Wheat Flour Producer Association
5. Indonesian National Air Carriers Association (INACA)
6. Indonesian Highway Association (ATI)
7. Indonesian White Cigarette Producer Association (GAPRINDO)
8. Indonesian Wood Producers Association (GPMT)
9. Indonesian Tobacco Community Association (AMTI)
10. Chick Breeding Company Association
11. Indonesian Cosmetics Company Association (PERKOSMI)
12. Car and Motorcycle Equipment Association
13. Train Association
14. Indonesian Mining Association (IMA)
15. Indonesian Coal Mining Association
16. Crop Life Indonesia
17. Indonesian Olefin and Plastic Association (INAplas)
18. PT Kimia Farma
19. PT PLN (Persero)
20. Indonesian Mining Service Association (ASPINDO)
21. Indonesian Life Insurance Association (AAJI)
22. Indonesian Textile Association (API)


There are no sanctions for associations that do not comply with the Outsourcing Regulation and many associations have not yet issued a flowchart. Many associations have also been unwilling to say whether they have issued a work flowchart in accordance with the Outsourcing Regulation.

 

Looking Forward:

 

2014: Minimum Wage Increases

 

Many employers have successfully applied to regional authorities for exemption from theminimum wage increases on financial grounds. Hundreds of these exemption approvals have been recently overturned by the Administrative Court which are now under appeal in the Supreme Court.

 
The recent Presidential Instruction No. 9 of 2013 dated September 27, 2013 and MOMTRegulation No. 7 of 2013 dated October 2, 2013 regarding Minimum Wage provide thatminimum wage decision making by regional governments must take into account “DecentLiving Component”, productivity and economic growth.

 
SSEK

 
For further information, please contact:
 

Richard Emmerson, Soewito Suhardiman Eddymurthy Kardono

richardemmerson@ssek.com

 

Soewito Suhardiman Eddymurthy Kardono Labour & Employment Practice Profile in Indonesia

 

Labour & Employment Law Firms in Indonesia

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