A Heritage of Legal Expertise

Attorneys at Law, Legal Consultants, Administrators and Receivers

Avocat à la Cour - Avocats francophones en Indonésie

Manpower Compliance for

Enterprises and Corporate
Employers

Bhirawa J. Arifi, S.H., LL.M

Managing Partner
Badranaya Partnership

Thursday, 30 November 2023

 A Heritage of Legal Expertise
Badranaya Partnership at a Glance Attorneys at Law, Legal Consultants, Administrators and Receivers
Avocat à la Cour - Avocats francophones en Indonésie

Badranaya Partnership is a full service law firm established

on 2nd February 2022 by a team of young and dynamic
professionals with a deep respect for the law and a keen
interest in assisting clients, both foreign and domestic, to
achieve their immediate or long-term goals within the
Indonesian legal environment.

Office Address:
Menara Rajawali, 8th Floor Jl. Dr. Ide Agung Anak Gde Agung, Lot. 5.1
Kawasan Mega Kuningan, Kuningan Timur, Setiabudi, Jakarta
Selatan 12950
Email: info@badranayalaw.com
Phone: +62 21 30499744
Hotline: +62 812 888 210
Website: www.badranayalaw.com
 A Heritage of Legal Expertise
Badranaya Partnership at a Glance Attorneys at Law, Legal Consultants, Administrators and Receivers
Avocat à la Cour - Avocats francophones en Indonésie

A highly dedicated and well-versed team of lawyers and legal

consultants ready to provide you first class service through
excellence and trust.

Since 2022, Badranaya Partnership have assisted more than 200+

projects from multinational companies in commercial transactions
involving manpower complexities, regulatory compliance and
employer liabilities, along with successful credentials in industrial
relations dispute settlements before the Industrial Relations Court.
Our commitment in serving our clients with more than what they
have wished for has earned us praised from our clients, colleagues,
and network, progressively reinforcing our stellar reputation as one
of the leading law firms in labor law and manpower sector.
 A Heritage of Legal Expertise
Attorneys at Law, Legal Consultants, Administrators and Receivers
Avocat à la Cour - Avocats francophones en Indonésie

Manpower Compliance
for Enterprises and Corporate Employers
Why Compliance Matters?

Highly Regulated Sector Serious Consequences – Legal and Commercial

May Affect Growth and Valuation Establish Trust and Stimulate Efficiency
Scope of Manpower Compliance

Key
Status and Managerial Current
List of Manpower
Term of Personnel Payroll and
Employees Compliance
Employees of Benefits
Company

Key data and information of the company/party obtained based on the manpower and labor documentation of the
company
Scope of Manpower Compliance
Participation Certificate of Social Security Management Board of Manpower (Badan Penyelenggara Jaminan Sosial Ketenagakerjaan or “BPJS Ketenagakerjaan”)and any document evidencing the
latest 3 (three) months payment receipt of Jamsostek;

Participation Certificate to the Employee Health Security Program and any document evidencing the latest payment receipt;

Document evidencing the establishment of Labor Union (if any);

Company Regulations or Collective Labor Agreement, including its approval from the Ministry of Manpower;
Evidence of immigration status of all non-Indonesian senior management, together with copies of all work permits, employment passes and other government-issued documents permitting such
personnel to be employed by the Company, including Expatriate Manpower Utilization Plan (RPTKA) and Foreign Employee Utilization Permit (IMTA) or Notification of the Foreign worker of the
Company (if any);
Work Safety License (Izin Keselamatan Kerja);

Documents in respect of compliance on manpower, among others Mandatory Manpower Report (Wajib Lapor Ketenagakerjaan di Perusahaan or WLKP);

Documents on the employee pension fund;

List showing (1) the total number of employees of the Company as of the most recent available date; (2) the number of employees in each major category of employee;

Any contracts or agreements of the Company relating to the employment and compensation of any directors, commissioners or members of senior management, including any option or other plans
relating to rights to acquire the securities of the Company, and any pension, retirement, deferred or incentive compensation, bonus or profit sharing plans;

Any warning letters and/or sanctions from the authorities for any incompliance or violation towards the applicable manpower laws and regulations and/or manpower license held by the Company.

Payment of the Company’s employees showing that the Company has complied with the Regional Minimum Wage regulations.

Policy of management system of work health and safety.

Legal Due Diligence - Manpower
Purpose of manpower due diligence for companies:
• Management/Investor wishes to be informed about the risks and liabilities of the company based on the results of
the legal due diligence in manpower. The substance of due diligence is the complete information on the Target
Company manpower compliance and obligation fulfillment.
• Golder Rule in Manpower Due Diligence:
a. Findings and Legal Issues Identification High Risk Medium Risk Low Risk
b. Risks Assessment and Legal Consequence • Potential Deal Breaker • Medium sanctions if • Low sanctions if
• Serious sanctions if violated violated
c. Risks Mitigation and proposed action violated • Can be resolved • Easy to resolve
Legal Risks Mitigation in Manpower • Liability to the before or after • Can be resolved after
Investor transaction the transaction
• Transfer of risks (e.g Insurance, Seller) • Urgently to be • Formal requirements • Potentially not a Deal
resolved before and easier to resolve Breaker
• Limit the risk transaction • Potentially not a Deal
• High indemnity and Breaker
• Absorb the risk difficulty to resolve
• Reject the risk
Manpower Data and Mandatory Manpower Report
• List showing (1) the total number of employees of the Company as of the
most recent available date; (2) the number of employees in each major
category of employee;
• Documents in respect of compliance on manpower, among others
Mandatory Manpower Report (Wajib Lapor Ketenagakerjaan di
Perusahaan or WLKP).

WLKP is a statutory employment document with comprehensive data of

utilization and employment arrangement in KMB, which shall be reported each
year to the Manpower Office through the MOM Platform “Siap Kerja” or
https://wajiblapor.kemnaker.go.id.

Pursuant to Law No. 7/1981, all companies are required to annually submit the
WLKP to the relevant local Manpower Agency which, for the first time, at the
latest 30 days as of the establishment of the company.

The company is obligated to submit a written report (upon the establishment of

a company, business disruption, restart business operation, transfer or
dissolution of a company), to the relevant Manpower Office. If the company has
branches or independent divisions, the obligation to submit written report shall
also apply for such branches or independent divisions. A company failing to
comply with the obligation to submit WLTKs shall be subject to imprisonment
for a maximum period of 3 months or a maximum fine of Rp1,000,000.
BPJS Ketenagakerjaan & BPJS Kesehatan
• Evidence of BPJS Ketenagakerjaan and BPJS Kesehatan Participation and Proof of Payment for the last
3-6 months Certificate of BPJS Ketenagakerjaan and BPJS Kesehatan is a registration of a
company and its employees as participants in the manpower and health social
security programs.

The Law No. 24/2011 (as amended by Perppu Cipta Kerja) stipulates that every
person, either Indonesian or foreigner, who works in Indonesia for more than 6
months is required to become a participant of social security program. Employers are
required to register itself and their employees as participants in BPJS for the
appropriate type of the social security. In the event the employer fails to register the
employees, the employees are entitled to register themselves as participants of the
BPJS at the cost of the employer.

Administrative sanctions may be imposed to employers who fail to fulfill the

requirement to register itself and their employees. The sanctions consist of: (i)
written warnings, (ii) fines, and/or (iii) refusal to accept applications of other licenses,
e.g., business license, building construction permit, and land and building certificate.

Based on Law 24/2011, a company that does not collect BPJS contributions from
employees and/or does not pay the company's share of premium contributions will
be subject to imprisonment for a maximum period of 8 years or a fine of up to IDR
1,000,000,000.
Minimum Wage

• Evidence of minimum wage fulfillment

pursuant to each applicable region

Pursuant to Article 185 of the Manpower Law,

failure to comply with the obligation to comply
with the required minimum wage shall be subject
to (i) imprisonment for a minimum period of 1
year and for a maximum period of 4 years and/or
(ii) a minimum fine of IDR 100,000,000 and a
maximum fine of IDR 400,000,000
Employment Agreements
• Non-Permanent Employment Agreement (PKWT)
• Permanent Employment Agreement (PKWTT)

Manpower Law requires employment agreement for employees to be made in a written employment
agreement or letter of appointment. Failure to comply with said requirements can be sanctioned with
fine of at least Rp5,000,000 and maximum of Rp50,000,000.

Manpower Law with its implementing regulations are silent on the provisions related to the limit of
non-permanent employees that can be hired and engaged in an employment relationship with a
company as the employer. However, based on the Government Regulation No. 35 of 2021 on Definite
Term Contracts, Outsourcing, Hours of Work and Rest Time, and Termination of Employment, the term
of employment of a non-permanent employee employed based on a definite term of employment
agreement can only be entered into or extended for a total period up to 5 years. Therefore, the
Company must comply with this provision so that that each non-permanent employee that has been
employed under a definite term of employment agreement must be either, promoted to permanent
employee status, or be terminated if the non-permanent employment term as reached or exceeded the
5 years employment period since the establishment of non-permanent employment relationship.

The Manpower Law with its relevant implementing regulations, including GR No. 35/2021 are silent on
the penalty or any sanction provision if an employer does not comply with the requirements of the
definite employment agreement under GR No. 35/2021. Pursuant to Article 59 of Labor Law, if an
employer does not satisfy the conditions to implement the definite employment agreement, then the
applicable definite employment agreement will by law become an indefinite employment agreement.
Company Regulation
• Company Regulation Ratified by the Manpower
Office

According to the Manpower Law and MOM

Regulation No. 28/2014, a company that employs
more than 10 (ten) employees is obligated to
prepare a company regulation setting forth the
company’s labor policies in accordance with
Indonesian Labor law which will be effective upon
the approval from the Ministry of Manpower or the
relevant manpower agency.

Failure to comply with the obligation to have the company regulation ratified by the relevant
manpower agency may result in a fine of minimum IDR 5,000,000 and maximum of IDR 50,000,000.
Labor Union

• Labor Union articles of association and ratification

• Collective Labor Agreement

Based on the Manpower Law and Law No. 21 of 2000 on Labor Union, every employee has the right to form
and become a member of a labor union. Labor unions must consist of at least 10 members. A company can
have more than one union. Labor unions must be notified and registered with the relevant Manpower Office.
Foreign Manpower and Expatriate
• Foreign Manpower Utilization Plan (Rencana Penggunaan
Tenaga Kerja Asing)
• VITAS, KITAS, KITAP

Under the Government Regulation No. 34 of 2021 on Procedures for Expatriate

Employment, an employer employing foreign employee, must obtain approval of an
Expatriate Utilization Plan (Rencana Penggunaan Tenaga Kerja Asing or “RPTKA”).

Further, the respective expatriate must also obtain a Limited-Stay Permit (Izin
Tinggal Sementara or “ITAS”) as their stay permit based on their approved RPTKA.

Violations may lead to administrative sanctions under GR 34/2021 in the form of

penalties, temporary suspension of the RPTKA ratification, and/or the revocation of
the RPTKA ratification.

Pursuant to Article 122 of Law No. 6/2011 (as amended by Perppu Cipta Kerja), an
expatriate must work in accordance with their work permit. Failing to comply with
Law No. 6/2011, the expatriate may be subject to maximum 5 (five) years
imprisonment and a fine of maximum IDR500,000,000 (five hundred million
Rupiah). Further, any violation of the immigration regulations may result in
deportation of the expatriate from Indonesia.
 Management System of Work Health and Safety
• Document evidencing the Occupational Health and SMK3 Certificate
• Document evidencing establishment of P2K3 (Panitia Pembina Keselamatan dan Kesehatan Kerja)

Pursuant to GR No. 50/2012, a company (i) employing more than 100 employees; or
(ii) having a high level of potential danger, must implement Occupational Health and
Safety Management System. Implementation of such system shall further be audited
by an independent auditor as appointed by the Minister of Manpower, upon the
HCID’s request. In addition to that, MOMR No. 26/2014 further stipulates that
companies which have been audited and achieved a satisfying level of audit shall
receive an SMK3 Certificate.

Further under MOM Regulation No. 04/1987, a work-place employing more than 100
(one hundred) employees creates an obligation for the employer to establish a P2K3,
which shall be determined by the MOM or an authorized official, based on the
proposal of the employer.

Failure to comply with requirements under MOM Regulation No. 04/1987 is subject to
a criminal sanction at the maximum of 3 (three) months or a fine at the maximum of
Rp100,000.
Warning Letters and Industrial Relations Dispute

• Applicable warnings from the Manpower Office

• Dispute documentation from parties,
Manpower Office, and/or Industrial Relations
Court
“Management is doing things right; leadership is doing the right things”.
– Peter Drucker
Thank You
The Speaker Bhirawa Jayasidayatra Arifi, S.H., LL.M.
Managing Partner
Bhirawa, a founding partner of the firm, is one of the most respected and versatile lawyers in Indonesia today. After years in legal practice, he is
a market-leading lawyer for corporate / mergers & acquisitions (M&A), foreign direct investment (FDI), capital markets, and banking & finance.
He also offers extensive experience and expertise in mining and oil and gas, land and real estate, restructuring and insolvency, shipping,
automotive, aviation and technology, media & telecommunications (TMT). Bhirawa is the Head of Badranaya’s Corporate and Commercial
Practice, as well as other non-litigation practice areas.

Bhirawa graduated from the Faculty of Law, Gadjah Mada University and he subsequently earned an LL.M in French and European Law from
Université Paris 1 Panthéon-Sorbonne, Paris - France. He commenced his legal career in France, where he worked for a leading UK-based global
law firm in its Paris office and, prior to that, for a French boutique law firm in Paris. Prior to establishing Badranaya Partnership, Bhirawa was an
attorney from Ali Budiardjo, Nugroho, Reksodiputro, the largest and oldest corporate law firm in Indonesia.

Having graduated in law from a French university, Bhirawa is recommended as an attorney by the French Embassy in Jakarta. He is a member of
the French-Indonesia Alumni Association (IAPI)’s National Board and the France Alumni organization at the French Embassy in Jakarta. Bhirawa
is also an active member of the Indonesian French Chamber of Commerce and Industry (IFCCI) and other strategic business associations in
Indonesia.

PROFESSIONAL MEMBERSHIP:
PERADI (Indonesian Advocates Association)
AAI (Indonesian Lawyers Association)
HKHPM (Association of Capital Market Legal Consultants)

CITIZENSHIP:
Indonesian

LANGUAGES:
Indonesian
French
English

EMAIL:
bhirawa@badranayalaw.com
Contact us
Jakarta Office:
Menara Rajawali, 8th FLoor, Jl. Mega
Kuningan Barat Lot 5.1, East Kuningan,
Setiabudi, South Jakarta City, 12950 DKI
Jakarta, Indonesia

Surabaya Office:
To be announced

Website : https://badranayalaw.com/
Phone : +62 21 30499744
Fax : +62 21 30499744
info@badranayalaw.com