Obligations in Hiring Expatriates under Minister of Manpower Regulation Number 16 of 2015
The light bulb joke always makes me laugh. How many lawyers does it take to change a light bulb? There are many answers to that question that describe the stereotypes of lawyers, such as: Three, one person to change it and 2 persons to keep interrupting by standing up and shouting “Objection!”, or, Three, one person to sue the power company for insufficiently supplying power, or negligent failure to prevent the surge that made the bulb burn out in the first place, one person to sue the electrician who wired the house, and one person to sue the bulb manufacturers.
The typical light bulb joke, in the context of the recent regulation of the Indonesian Minister of Manpower, i.e.: The Regulation of the Minister of Manpower of the Republic Indonesia Number 16 dated 29 June 2015 concerning Procedures in Hiring Expatriates (“Minister of Manpower Regulation No.16/2015”) may have an intriguing answer. How many employees does a foreign investment company in Indonesia take to change a light bulb? The answer can be: One employee, if an Indonesian employee does the job; or Eleven employees: one expatriate change the bulb and 10 Indonesian employees to watch him and study the technical know-how on how to change a light bulb.
Obligations under Minister of Manpower Regulation No.16/2015
Minister of Manpower Regulation No. 16/2015 is issued as guidance to the stakeholders in regard to the control of the use of foreign manpower. This regulation replaces the previous one, Minister of Manpower Regulation No.12/2013.
Article 3 par 1 of the Minister of Manpower Regulation No.16/2015 regulates that an employer who employs 1 expatriate is obliged to employ at least 10 Indonesian employees in the company. The exception to this requirement is stated in its Article 3 par 2, that this requirement does not apply in the event that the expatriate is:
- a member of board of directors (BOD) or board of commissioners (BOC) in a limited liability company (Perseroan Terbatas/PT), or, a member of the patrons (Pembina), executives (Pengurus) or supervisors (Pengawas) in a foundation (Yayasan);
- employed for emergency and urgent matters;
- employed for a temporary work; or
- employed for impresario services.
The Minister of Manpower Regulation No.16/2015 also states the requirements for an employer to apply for the license for the exceptions as stated in Article 3 par 2 as mentioned above.
Other important things to be aware of in relation to this new regulation is the restrictions under (a) Article 41 par 1 of Minister of Manpower Regulation No.16/2015 that an employer is not allowed to employ a expatriate for more than one position in the same company and (b) Article 41 par 2 that the employer is not allowed to employ a expatriate who is still under an employment by another employer.
Article 41 par 3 of the regulation, however, excludes those expatriates who are members of either the BOD and the BOC in a Perseroan Terbatas/PT, or, a members of the Patrons (Pembina), Executives (Pengurus) or Supervisors (Pengawas) in a Foundation (Yayasan), from restriction in Article 41 par 2. Such exclusion might be practically understood as permission for, such as, an expatriate to serve as a director of two different Indonesian companies.
In conclusion, careful investment and business planning should take into account this existing restriction in hiring expatriates. We believe investors wish for the best result by placing their best resources in their investment projects. Being careful in studying the Minister of Manpower Regulation No.16/2015 will avoid them from the unwanted things related to employment.
The article was prepared by Michael A. Kaihatu (Senior Associate).
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