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Company’s Obligations in Hiring a Foreign Worker

“A company who tend to hire an Expatriate as an employee, having obligations to know the eligibility position for expatriate, types of contract, and register them to the NPWP & BPJS after they stayed more than 183 days in a year in Indonesia.”

While it is true that, it is important to prioritize and employ the local workforce and individuals, but it is undeniable, especially in developing countries that sometimes the locals are lacking the competencies needed to perform and serve on a certain position in a company. One of the solutions to that is to employ a foreign worker that possess the capability to perform and serve in the needed position, but it is important to note the obligations that are required to be performed by the company who hired the foreign workers, in this article we will get into that.

Positions Available for Foreign Workers

Should a company employs an expatriate, the company should first scrutinize which position is available under the prevailing laws to be filled by foreigners. The Minister of Manpower issued the Minister of Manpower Decision No. 228 of 2019 that regulates the position available for foreign workers. The decision contains 18 categories of the position available for foreign workers including, but not limited to:

a) construction;
b) real estate;
c) education;
d) shipping and storage;
e) information and technology;
f) etc.

Each category is divided by different available positions. For example, in the construction category, one of the available positions is building construction manager. And that applies to the rest of the categories with their respective available position for the foreign workers. Some positions are prohibited to be filled by a foreign worker, and it is regulated by Minister of Manpower Decision No. 40 of 2012, the positions not available for a foreign are in the field of human resources, it has been reiterated several times in various regulations that positions that are related to human resources management are unavailable for foreign workers, and this decision by the Minister of Manpower put those provisions into a greater detail.

Temporary Contract

The status of the foreign workers employed by a company should also be taken into attention, based on Article 42 of Law No. 13 of 2003 on Manpower, it is stipulated that a foreign worker could only be employed for a certain position/job as we have discussed earlier and could only work for a definite amount of time, and this provision is also reiterated by the Minister of Manpower through Minister of Manpower Regulation No. 10 of 2018 which stipulates the same thing, for the foreign workers to only work on a certain position and for a definite amount of time, which implies, a foreign worker can’t be a permanent employee, since their tenure on their respective position is limited to a definite amount of time.


In hiring an expatriate, a company must comply with the regulations and procedures required by law. On Law No. 13 of 2013 Article 45, it is obligatory for a foreign worker-employer to appoint an Indonesian worker associate with the goal to transfer technologies and their expertise to their Indonesian associates, and to train the Indonesian associates until they have the expertise that the said foreign worker possesses the qualification required to occupy the position currently occupied by a foreign worker, also, the employer needs to pay a compensation for using a foreign worker, and transfer such compensation to the bank appointed by the Minister. Moreover, the employer should also facilitate Bahasa Indonesia training and courses to the foreign worker.

It should also be noted that the employers also must guarantee the wellbeing of the foreign workers, therefore, the government through Law No. 24 of 2011 on Social Security Administrator stipulates that for a foreign worker that works for minimum 6 (six) months is obligated to participate in a social security program (BPJS). Moreover, a foreign worker is categorized as a domestic tax subject should the foreign worker in question stayed for more than 183 (one hundred and eighty-three) days in 12 months. If a foreign worker is categorized as a domestic tax subject, the worker in question should have a tax identification number (NPWP) and is subject to pay taxes according to the prevailing regulations. Those are the obligations that need to be fulfilled by the employer so that the foreign worker that came to Indonesia could benefit the nation and the company itself.

Having a question regarding hiring an expatriate to your company? Let’s contact us on the following details:

Hotline          : (+62) 812 1111 8608 / (+62) 021 – 5080 6537
Email             : info@ylpconsulting.com

Our experienced Consultant will happy to help you.

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