On 29 March 2018, the Indonesian government enacted Presidential Regulation No. 20 of 2018 regarding the Employment of Expatriate Workers (PR 20/2018). PR 20/2018 replaces the previous regulation regarding the employment of expatriate workers, Presidential Regulation No. 72 of 2014 (PR 72/2014). The new regulation, and its significant changes, came into effect on 29 June 2018.
Overview
There are several significant changes introduced under PR 20/2018, including:
- The removal of the need for an Expatriate Employment Permit (also known as Izin Memperkerjakan Tenaga Asing or IMTA). Now, the approval for the Expatriate Workers Utilization Plan (Rencana Penggunaan Tenaga Kerja Asing – RPTKA) constitutes the permit to employ an expatriate.
- Employers are now required to facilitate Indonesian language training to expatriate employees, including those who occupy the position of director or commissioner.
Several of the changes introduced in PR 20/2108 will require an implementing regulations to be issued by the Minister of Manpower (MOM).
There has been no change to other key matters regarding the employment of expatriate employees, such as the requirements to:
- prioritise the employment of Indonesian citizens;
- engage Indonesian "Understudy Workers" with respect to each expatriate employee, to facilitate the transfer of technology and skills;
- implement education and training for Indonesian workers, with respect to the qualifications required to undertake the positions held by expatriate employees; and
- enrol expatriate workers employed for more than six months in relevant social security schemes.
Further, the prohibition on expatriate employees undertaking certain roles (including human resources positions) has been maintained. It is unclear if the relevant regulation setting out permitted positions for expatriates will be updated.
Significant Changes Under Regulation 20/2018
PR 20/2018 includes the following significant changes to PR 72/2014:
| PR 72/2014 |
PR 20/2018 |
1. Employers eligible to employ expatriates
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PR 72/2014 sets out certain entities are eligible to employ expatriate.
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In addition to the entities listed in PR 72/2014, PR 20/2018 specifically adds international organizations, foundations and any other business entities to the extent permitted by prevailing laws.
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2. Multiple employment
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| This issue is not specifically addressed in PR 72/2014. However, under a separate regulation, namely MOM Regulation No. 16 of 2015 regarding Procedures to Employ Expatriates (MOMR 16/2015), an expatriate must not hold multiple positions or employment, save for certain positions as a director or commissioner. |
An employer in certain sectors may employ an expatriate who already has an employment with other employer in the same position. The said expatriate may be employed for the term of his/her employment with his/her initial employer. The positions, sectors, and procedures for this shall be further regulated by the MOM. We envisage MOMR 16/2015 will be amended to accommodate this. |
3. Requirement to obtain IMTA
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The previous regulation required the employer to obtain RPTKA and IMTA as the prerequisite documents before employing an expatriate.
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PR 20/2018 specifies that employer must obtain only RPTKA for employment of expatriate. It is also clearly stated that RPTKA approval constitutes as permit to employ expatriate.
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4. Indonesian language training and education
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Not regulated.
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Employers are required to facilitate training and education of Indonesian language for its expatriate employees, including directors and commissioners.
There are no details available regarding what an employer must do to satisfy this requirement.
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5. Employment termination must be reported
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Not regulated.
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The termination or expiry of an expatriate's employment contract must be reported to the MOM and the relevant Immigration Office.
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The full impact of these changes remains to be seen. However, employers of expatriate workers should be cogniscant of their upcoming implementation. Now is also a good time to undertake a "health check" of your expatriate arrangements in Indonesia.
