This is the most impactful new labor regulation in 2026, narrowing the scope for outsourcing practices. Only six categories of auxiliary roles are permitted for outsourcing, while core‑business positions are prohibited from being outsourced:

‑ Cleaning services

‑ Catering / food & beverage supply

‑ Security services

‑ Drivers and staff commuting transportation

‑ Operational support services

‑ Auxiliary work within mining, oil‑gas and power‑generation industries

⚠️ Core Compliance Red Lines:

‑ Outsourced roles must be separate from the company’s core business and shall not directly engage in production or core service delivery.

‑ Principal enterprises bear joint‑and‑several liability: Clients will also face regulatory sanctions if outsourcing vendors default on salary payments, fail to remit BPJS social‑security contributions or delay THR holiday allowance disbursement.

‑ In cases of non‑compliant outsourcing, labor authorities may re‑classify the arrangement as a direct employment relationship under a permanent contract, ordering back‑payment of social‑security contributions, supplementary benefits and administrative penalties.

Following the Constitutional Court’s ruling on the Omnibus Job Creation Law, Indonesia is decoupling labor‑related provisions from the omnibus legislation and drafting a standalone revised labor law. The reform strengthens worker protections, employment stability and wage purchasing power. Companies will face shrinking flexibility for dismissals and workforce management, alongside rising labor costs going forward.

‑ Minimum‑wage hikes: Provincial minimum wages have generally increased by 5%‑7%. Jakarta’s UMP provincial minimum wage rises to IDR 5.73 million per month.

‑ Remuneration‑structure controls: Fixed salary must account for no less than 75% of total compensation; variable allowances are capped at 25%. Salaries cannot be excessively split to lower the calculation base for THR allowances and BPJS contributions.

‑ BPJS Social Security: Employees must be registered within 30 days of onboarding. Employers contribute 4% and employees contribute 1% for healthcare coverage. Foreign‑national employees working in Indonesia for more than six months are mandatorily enrolled.

‑ Currency for salary disbursement: Statutory wages must be paid in Indonesian Rupiah. USD‑denominated payments or off‑book cash salaries are non‑compliant.

This is a mandatory statutory benefit and cannot be substituted by year‑end bonuses:

‑ Employees with 12 months or more of continuous service qualify for one month’s base salary as THR.

‑ Full payment must be completed no later than seven days prior to the major religious holiday. Late payments incur fines and represent one of the most frequent triggers for labor complaints.

Compensation for lawful termination consists of three stacked components:

‑ UP (Basic Severance Indemnity)

‑ UPMK (Long‑Service Reward)

‑ UPH (Entitlement Compensation, including accrued unused annual‑leave conversion, etc.)

Under the latest revisions, the compensation multiplier for restructuring‑driven layoffs has been restored to 1.0. Corporate‑led workforce downsizing carries materially higher labor costs. Lay‑off plans require advance budget assessment.

Employment of foreign nationals in Indonesia follows the sequence: secure quota approval first, then obtain residence permits.

‑ A RPTKA foreign‑worker utilization plan approval must be obtained prior to applying for a KITAS limited‑stay work permit. Standard processing takes 4‑8 weeks.

‑ Head‑count cap for foreign nationals: maximum 10% of the company’s total workforce.

‑ Restricted roles: Foreign nationals are prohibited from holding HR manager and other labor‑relations‑related positions.

‑ Local‑capacity‑building obligation: Each foreign technical specialist must be paired with one Indonesian counterpart to receive structured annual professional training.

‑ Tax residency trigger: Individuals staying in Indonesia for over 183 days within one fiscal year become PPh21 tax residents. Tax authorities share data with immigration authorities. Cross‑border expatriation requires thorough tax planning.

‑ PKWT Fixed‑term contracts: Maximum cumulative term of five years; probation periods are not permitted.

‑ Each renewal requires executing a new written contract and registration within three working days after signing. Non‑compliance will automatically re‑qualify the arrangement as a permanent open‑ended PKWTT contract.

‑ Indonesian‑language contract versions are legally required. Indonesian‑language documents prevail in labor arbitration; Chinese and English texts serve for reference only.

‑ Overtime restrictions: Maximum four hours per day, 18 hours per week, monitored via official digital systems.

‑ Company Regulations (PP): Mandatory for enterprises with 10 or more employees. The 2026 amendments explicitly require anti‑workplace‑bullying clauses to be incorporated.

‑ SUSU salary‑band filing: Companies must submit salary‑range filings for each job grade to the Ministry of Manpower. Failure to complete filing will block RPTKA approvals for foreign‑national staff.

Gonex maintains locally‑registered legal entities in Indonesia, acting as the formal legal employer to execute compliant employment contracts with local staff. Client companies retain authority over task assignment and performance evaluation. Gonex fully administers salary disbursement, BPJS contributions, labor‑dispute handling, termination settlements and compliance evidence management, insulating clients from direct labor litigation risks at source.

No local Indonesian corporate entity is required. Local employees can be fully onboarded in as fast as two weeks. Clients avoid heavy upfront costs for company incorporation, tax registration and office leasing. This model suits market‑entry testing, small‑scale business expansion and short‑term project staffing scenarios.

Additionally, Gonex delivers end‑to‑end work‑visa services for expatriate assignees to Indonesia. Supported by valid employer quotas and complete local qualifications, we handle employment permits, KITAS residence documentation, visa renewals, visa amendments and dependent‑family visas, enabling smooth deployment of expatriate personnel.

Overseas companies targeting Indonesia may scan to connect with dedicated cross‑border HR consultants for customized full‑cycle compliant staffing solutions. A specialist will follow up within 1‑2 working days upon submission. Should you require HR support for other jurisdictions, you may also reach our consultants for global labor‑compliance advisory.