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IMPACT – MEDIUM
What is the change? Under a new labor regulation, companies must have at least 10 Indonesian workers for every foreign worker employed.
What does the change mean? The previously unwritten policy is now subject to official regulation and enforcement.
Background: The regulation, issued by the Ministry of Employment, reinforces efforts to localize employment. However, companies do not have to observe the 10:1 ratio for expatriate employees who are working in temporary jobs, “emergency and urgent” jobs, or temporary positions in the fields of arts or sports. In addition, the rule does not apply to expatriate employees who are members of the board of directors or board of commissioners of an Indonesian company or who are members of the patrons, management or supervisors of a foundation (yayasan).
BAL Analysis: Indonesian companies should be prepared for possible increased scrutiny of their foreign work permits and labor force composition. BAL will closely monitor this new regulation and will provide updates to clients with any additional information or guidelines from authorities.
This alert has been provided by the BAL Global Practice group and our network provider located in Indonesia. For additional information, please contact your BAL attorney.
Copyright © 2016 Berry Appleman & Leiden LLP. All rights reserved. Reprinting or digital redistribution to the public is permitted only with the express written permission of Berry Appleman & Leiden LLP. For inquiries please contact copyright@bal.com.
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