In general, the methods used to resolve commercial disputes in Indonesia are litigation, arbitration and alternative dispute resolution (ADR). The resolution of commercial disputes through arbitration or ADR (eg, mediation) is generally governed by the Law Concerning Arbitration and ADR, which recognises the principle of competence under which the district courts have no jurisdiction to try disputes between parties bound by an arbitration agreement.
The minister of manpower recently amended the Minister of Manpower and Transmigration Regulation on the Requirements for Outsourcing, simplifying manpower outsourcing requirements to reflect current needs. The main highlight of the changes is that the required Manpower Office approval can now be obtained online and transferred using the online single submission system. Further, the time limit for registering a manpower outsourcing agreement with the Manpower Office has been removed.
One of the most common ways in which a company can use a person's services is by entering into a partnership agreement and thereby treating them as a partner instead of an employee. However, partnership agreements often give rise to disputes, especially if they are terminated. There have been many cases in which the Manpower Office or the Industrial Relations Court have deemed poorly drafted partnership agreements to be employment agreements.
Previously, under the Manpower Law, employers in Indonesia could include an article in their employment agreements, company regulations or collective labour agreements which allowed them to terminate employees for having a marital or blood relationship with another employee in the same company. However, the Constitutional Court recently sided with eight individual claimants who contended that the wording of the law contravened their constitutional rights.
The number of expatriate employees taking legal action against their employers for terminating their employment contracts, whether for economic reasons or for misconduct, has grown in recent years. Although most jurists maintain that expatriates cannot be permanent employees or receive the same severance entitlements as Indonesian permanent employees, this has not always been the case.
The Ministry of Manpower recently issued Decree 228/2019 on Certain Positions Permissible for Foreign Employees, which came into effect on 27 August 2019 and revoked all prior relevant decrees on this matter. The appendix to Decree 228/2019 provides a list of positions and business fields in which foreign employees can be employed. The list will be evaluated every two years (or as needed).
Indonesian entities must comply with certain requirements and follow a specific procedure when hiring foreign employees. The requirements and procedure used to be provided for in Minister of Manpower (MOM) Regulation 16/2015, as amended by MOM Regulation 35/2015. However, in 2018 the MOM issued a new regulation, which introduced a requirement to obtain a notification from the MOM when hiring foreign employees.
The employment of foreign citizens in Indonesia is subject to various restrictions, including with regard to employment terms. Foreign employees can be employed only on a temporary basis and thus cannot be considered permanent employees. However, they also cannot be considered fixed-term employees under Articles 56 and 59 of the Manpower Law. Despite this framework, mediators and the Industrial Relations Court have expressed inconsistent views on the legal status of foreign employees.