Every company owner seeks to employ the optimal number of employees. Doing so will serve as an important step towards the success of the company. Some of the labor laws in Indonesia include information on employees who are to be hired by any company which is based in Indonesia.
The question of how many employees ought to be hired is a question which all company owners in Indonesia must address when starting the company. Such is the case because companies ought to hire a number of employees which will best facilitate the completion of the business objectives of the company. Therefore, it is important to determine the most suitable number of employees to be hired by any company based in Indonesia.
Indonesian Labor Laws and Number of Employees in a Company
The primary piece of legislation that governs labor in Indonesia is Law No. 13 of 2003 of Manpower. This important law is also known as the Labor Law. This law categorizes all employees in Indonesia into three groups: permanent employees, fixed-term employees, and foreign workers. The employees’ length of tenure, job duties, and job type are some of the factors which determine the group into which they are to be placed. The Labor Law, as well as all other labor laws in Indonesia, does not make any mention of how many employees must be hired by companies which are based in Indonesia.
However, the Labor Law does mention the number of employees of an Indonesian company in relation to company regulations. A company regulation is a type of agreement which is to be approved by a local office of the Ministry of Manpower and Transmigration. No company in Indonesia is allowed to have a company regulation unless it has a minimum of 10 employees.
Indonesian labor laws also state how the number of employees in a company affects the company’s requirement to establish a Bipartite Cooperation Body (BCB). A BCB serves as a platform through which the company’s concerns over human resources can be voiced and addressed. Employers and employees alike are members of a BCB. The employees who are members of a BCB are selected by their fellow employees through a vote. According to Indonesia’s current labor laws, every company in Indonesia which has employed 50 employees or more is required to form a BCB.
Hiring of Foreigners in Relation to Hiring of Indonesians
Regardless of the number of employees in an Indonesian company, the current laws in Indonesia specify how many foreigners are allowed to be employed by an Indonesian company. This number is determined in relation to the number of Indonesians who have been employed by the same company. Before an official law was created, most companies based in Indonesia typically hired approximately three times as many Indonesians as they did foreigners. However, a law was eventually passed that defined the official regulations regarding this matter. This law was Regulation No. 16 of 2015 on Procedures for the Utilization of Foreign Employees, also known as Regulation 16/2015. It replaced Regulation No. 12 of 2013 which was also referred to as Regulation 12/2013. Regulation 16/2015 states that for every foreigner who is hired by an Indonesian company, that same company is to hire at least 10 Indonesians. However, foreigners in certain positions are not counted as part of the number for a certain company. Such foreigners include those who are serving as a commissioner or director of an Indonesian company, those who have been employed for the purposes of urgent or emergency work, those who have been employed on a temporary basis, and those who have been employed to carry out entertainment services.
The Indonesian government deems this law important because it believes that this law plays a role in keeping the unemployment rate in Indonesia in check. The government believes that requiring the employment of more Indonesians will cause companies to prioritize the hiring of Indonesian citizens and thus improve the job prospects of the citizens of Indonesia.
Paul Hype Page & Co – OSS service provider and Asean Chartered Accountant.
Paul Hype Page & Co. have 3 physical offices in Singapore, Malaysia and Indonesia
Our Firm Goal is to assist Foreigner and Foreign Companies to set up business in Asean.
How we can help you:
We will call you back, please click below link and make appointment with our Sales consultant:
Step 1- Listen to your Business plan and Relocation needs.
Step 2- Analysis your Tax Planning
Step 3- Recommend the most suited type of Company Incorporation, Open Bank account and Work Visa
Step 4- Arrange for your Spouse and Children Visa
Step 5- Assist as your company to hire staffs and handle all HR matters
Step 6- Every financial year end, we assist you with your yearly OSS Finanical and Tax Complianc
Step 7- Assist you to expand business to Malaysia, Indonesia, Vietnam and Thailand.
Get in Touch with Us Today.
Paul Hype Page