Outsourcing in Indonesia just got more defined and more restricted. On 30 April 2026, the Minister of Manpower issued Permenaker No. 7/2026* to implement the provisions of Job Creation Law** and as a follow-up to Constitutional Court Decision No. 168/PUU-XXI/2023.
Under the new framework, outsourcing in the form of the provision of workers (penyediaan jasa pekerja/buruh) by an outsourcing company (perusahaan alih daya) to a user company (perusahaan pemberi pekerjaan) is confined to six categories of supporting services (kegiatan penunjang): cleaning services, food and beverage provision, security services, driver and employee transportation, operational support services, and supporting work in the mining, oil and gas, and electricity sectors. For many businesses, this is not merely a compliance update but a structural shift in how outsourcing arrangements can be designed going forward.
In addition to the category restrictions, the regulation also strengthens requirements for outsourcing agreements (perjanjian alih daya). Each agreement must clearly set out the scope of work, location, workforce size, and duration, and must ensure comprehensive worker protections, including wages, overtime, working hours and rest periods, annual leave, occupational health and safety, social security, religious holiday allowances, and termination rights. Once signed, each agreement must be registered by the outsourcing company with the local manpower office within three working days of execution, and the relevant authority may delay registration where requirements are not met.
A key point to note concerns the allocation of responsibilities between the parties. While the regulation reaffirms that the protection and fulfilment of outsourced workers’ rights remain the responsibility of the outsourcing company, it also imposes an additional obligation on the user company. Pursuant to this framework, the user company must also ensure that the outsourcing company complies with at least the minimum statutory requirements in safeguarding such rights.
Permenaker No. 7/2026 provides a two-year transitional period. Existing outsourcing agreements remain valid until expiry, while the outsourced work categories currently used by outsourcing companies and user companies must be aligned with the new framework within two years from promulgation. Failure to comply carries real consequences: user companies that outsource work outside the six permitted categories face graduated administrative sanctions, namely written warnings followed by restrictions on business activities, while outsourcing companies that fail to meet their statutory obligations are subject to sanctions under the applicable risk-based business licensing rules.
*Regulation of the Minister of Manpower No. 7 of 2026 on Outsourced Work (the “Permenaker No. 7/2026“)
**Law No. 6 of 2023 on the Enactment of Government Regulation in Lieu of Law No. 2 of 2022 on Job Creation as Law (the “Job Creation Law”)