What Permenaker 7/2026 Changes for Outsourcing in Indonesia

Outsourcing employees in Indonesia is now restricted to six categories of supporting work. Minister of Manpower Regulation No. 7 of 2026 on Outsourcing Work (Permenaker 7/2026), promulgated on 30 April 2026, limits alih daya to the supply of workers for cleaning services, catering, security, drivers and worker transport, operational support services, and supporting work in mining, oil, gas, and electricity. Roles outside those categories must be filled through direct employment.

The change affects any company in Indonesia that currently staffs functions through a labor-supply vendor, including foreign-invested companies (PT PMA) that outsource customer service, IT support, administration, or warehouse operations.

Existing agreements remain valid until they expire, but job types must be brought into line by 30 April 2028. Companies that outsource a prohibited job type face written warnings followed by restrictions on business activities, including deferral of business licensing.

Key Takeaways

• Permenaker 7/2026 limits outsourcing to six supporting activities. Anything outside those six categories cannot lawfully be staffed through a labor-supply arrangement.
• Outsourcing now means labor supply only. Article 3(1) defines outsourcing as the provision of workers—the supply of workers. The regulation no longer sets out a framework for contracting out a defined scope of work.
• Every outsourcing agreement must be registered with the local Manpower Office within 3 working days of signing. The Manpower Office can suspend registration if the job type or contract contents do not comply.
• The outsourcing company is legally responsible for worker protections, including wages, overtime, leave, occupational health and safety, social security, religious holiday allowance, and termination entitlements. The client company must ensure those obligations are met.
• The adjustment deadline is 30 April 2028. Agreements signed before 30 April 2026 stay valid until expiry, but job types must be adjusted within two years of promulgation.

Permenaker 7/2026 at a Glance

Item	Position	Regulation	Responsible party
Permitted scope of outsourcing	Labor supply only, in six supporting activities	Permenaker 7/2026 Art. 3(1)–(2)	Client company and outsourcing company
Form of provider	Must be a legal entity (badan hukum)	Permenaker 7/2026 Art. 1(3)	Outsourcing company
Contract form	Written alih daya agreement, six minimum contents	Permenaker 7/2026 Art. 4(1)	Both parties
Worker protections	Eight minimum entitlements guaranteed	Permenaker 7/2026 Art. 4(1)–(3)	Outsourcing company (client must verify)
Registration	Within 3 working days of signing, at the kabupaten/kota Manpower Office	Permenaker 7/2026 Art. 5	Outsourcing company
Provider licensing	Business licensing via OSS; operations must commence within 1 year of license issuance	Permenaker 7/2026 Art. 6	Outsourcing company
Sanctions on the client	Written warning, then restriction of business activities	Permenaker 7/2026 Art. 8	Licensing authority, on inspector’s recommendation
Existing agreements	Valid until expiry	Permenaker 7/2026 Art. 10(a)	Both parties
Adjustment deadline	30 April 2028	Permenaker 7/2026 Art. 10(b)	Both parties

What is Outsourcing Under Indonesian Law?

Under Permenaker 7/2026, outsourcing is the transfer of part of a company’s work to another company through a written outsourcing agreement.

• Legal Basis: Permenaker 7/2026 implements Article 64(2) of the Manpower Law, as amended by Law No. 6 of 2023, and follows Constitutional Court Decision No. 168/PUU-XXI/2023.
• Client Company: The company that provides the work and transfers part of it to an outsourcing provider.
• Outsourcing Company: The perusahaan alih daya must be a legal entity and meet the requirements to provide the specified workers or services.
• Business Licensing: Outsourcing companies generally operate under KBLI 78300 and require an NIB through OSS.
• Main Scope: Permenaker 7/2026 focuses on the supply of workers rather than on pemborongan pekerjaan (work contracting).
• Work Contracting Remains Possible: A company may still outsource a defined scope of work to another business operating independently under a commercial arrangement.
• Substance Matters: A managed-service or work-contracting arrangement may still be treated as outsourcing if the workers are effectively supplied to and directed by the client company.

Which Jobs Can Legally Be Outsourced in Indonesia in 2026?

Only six categories of supporting activity may be outsourced in Indonesia, as listed in Article 3(2) of Permenaker 7/2026.

Permitted Activity	Typical Scope
Cleaning services	Office and facility cleaning
Food and beverage provision	Catering and canteen services
Security	Security and site-access services
Drivers and worker transport	Company drivers and employee transport
Operational support services	Not specifically defined in the regulation
Supporting work in mining, petroleum, gas, and electricity	Sector-specific supporting activities

What About Roles Outside These Categories?

• Six Categories Apply: Labor-supply outsourcing should fall within one of the six supporting activities permitted under Permenaker 7/2026.
• Job Titles Are Not Enough: A role should not be classified as outsourced simply because it is labeled a “support” function; the actual work performed matters.
• Operational Support Is Broad: Layanan penunjang operasional is not further defined in the regulation, so companies should assess carefully whether a role falls within this category.
• Registration Is Required: Outsourcing agreements must be registered with the relevant local Manpower Office.
• Existing Arrangements Have a Transition Period: Existing agreements may continue until expiry, while outsourced job categories must be aligned with Permenaker 7/2026 within the applicable two-year transition period.

What Must an Indonesian Outsourcing Agreement Contain?

An outsourcing agreement in Indonesia must be in writing and, under Article 4(1) of Permenaker 7/2026, must contain at least six elements:

• The work is being outsourced to the outsourcing company
• The term of the outsourcing agreement
• The location where the work is performed
• The number of outsourced workers
• The rights and obligations of the outsourcing company and the client company
• The protections and rights of the outsourced workers

The sixth element is itself prescribed. The agreement must cover at least eight worker entitlements: wages; overtime pay; working hours and rest periods; annual leave; occupational health and safety rights; social security; religious holiday allowance (THR); and rights on the ending or termination of the employment relationship.

An outsourcing agreement that omits any of these elements can be refused registration, which in turn means the outsourcing company cannot evidence compliance with Article 6.

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Who Is Responsible for Outsourced Workers’ Rights?

Under Permenaker 7/2026, responsibility is divided between the outsourcing company and the client company:

• Outsourcing Company: Responsible for fulfilling workers’ rights, including wages, overtime, working hours, leave, K3, social security, THR, and termination rights.
• Client Company: Must ensure that the outsourcing company fulfills these rights in accordance with applicable law.
• Employment Contract: Outsourced workers must have a written PKWT or PKWTT with the outsourcing company. For PKWT workers, the protection of rights must continue even if the outsourcing provider changes, as long as the work remains.

How Are Outsourcing Agreements Registered in Indonesia?

Article 5 of Permenaker 7/2026 requires the outsourcing company to register the outsourcing agreement with the relevant local Manpower Office.

• Multiple Locations: For arrangements covering several locations, companies should confirm the filing requirements with the relevant local Manpower Offices.
• Three-Day Deadline: Registration must be submitted within 3 working days after the agreement is signed.
• Location-Based Registration: The application is submitted to the Dinas where the outsourced work is performed.
• Agreement Review: The Dinas may suspend the issuance of the registration record if the job category or the agreement does not meet the requirements of Permenaker 7/2026.

What Happens If a Company Does Not Comply?

Non-compliance with Permenaker 7/2026 can result in administrative sanctions. These are:

• Client Company: Violating the permitted outsourcing categories may result in a written warning, followed by restrictions on business activities.
• Business Restrictions: These may include limits on production or service capacity and/or delays in business licensing at one or more locations for companies with multiple projects.
• Enforcement: Sanctions are imposed by the relevant licensing authority based on a recommendation from a labor inspector.
• Outsourcing Company: Failure to meet Article 6 obligations, including K3 and environmental standards, agreement registration, and commencing operations within one year of licensing, may trigger sanctions under Indonesia’s risk-based business licensing rules.

When Must Companies Comply with Permenaker 7/2026?

Permenaker 7/2026 provides a transition period for existing outsourcing arrangements:

• Existing Agreements: Agreements in place when the regulation took effect remain valid until their agreed expiry date.
• Two-Year Deadline: Existing outsourced job types and fields must be aligned with Permenaker 7/2026 within two years of promulgation. Since it was promulgated on 30 April 2026, the deadline is 30 April 2028.
• Earlier Renewals: If an existing agreement expires before April 2028, a new or renewed arrangement should comply with the new requirements rather than relying on the transitional protection for the expired agreement. This follows from Article 10’s distinction between existing agreements and the two-year adjustment period.

Companies should map outsourced roles against the six permitted categories before renewing vendor arrangements.

InCorp Indonesia (an Ascentium Company) can support outsourcing assessments, employment contract restructuring, and related employment compliance. Talk to our team ->

What Are the Compliant Alternatives to Outsourcing?

Where a role falls outside the six permitted categories, companies in Indonesia have five principal alternatives.

Model	Legal Employer	Permitted for Core Roles?	Key Constraint	Registration
Outsourcing (alih daya)	Outsourcing company	No — six supporting activities only	Job type must fall within Art. 3(2)	Agreement registered within 3 working days
PKWT (fixed-term)	Client company	Yes, for temporary work	Max 5 years total; uang kompensasi payable; no probation	PKWT registered within 3 working days online
Daily contract	Client company	Yes, for irregular work	Under 21 days/month or converts to permanent	As PKWT
Employer of Record	EOR entity	Treatment not expressly addressed by Permenaker 7/2026	Structure must be assessed on substance	Employment contracts registered by the EOR
Managed services / work contracting	Supplier	Depends on the substance of the arrangement	Must transfer a deliverable, not headcount	No express framework in Permenaker 7/2026

What Does It Cost to Hire Employees in Indonesia in 2026?

Employment costs go beyond base salary. Companies should budget for minimum wages, BPJS contributions, THR, and additional costs depending on the employment arrangement.

Minimum Wage

Indonesia’s 2026 minimum wages are determined under the framework introduced by Government Regulation No. 49 of 2025.

• Jakarta UMP: IDR 5,729,876 per month, up 6.17% from 2025.
• Less Than One Year of Service: Minimum wage generally applies to workers with less than one year of service.
• Local and Sectoral Rates: UMK, UMSP, or UMSK may apply depending on the employee’s location and sector, so companies should use the relevant local rate rather than relying only on the provincial UMP. For example, West Java’s UMP is IDR 2,317,601, but all 27 regencies/cities have their own 2026 UMK.

BPJS Contributions

Employers must enroll eligible employees in the applicable BPJS programs, including workers under PKWT and PKWTT arrangements.

Program	Total	Employer	Employee	Notes
BPJS Kesehatan	5%	4%	1%	Wage ceiling applies
JHT	5.7%	3.7%	2%	No wage ceiling
JP	3%	2%	1%	Annual wage ceiling applies
JKK	0.24%–1.74%	Full	—	Based on risk classification
JKM	0.3%	Full	—	Employer-funded

BPJS Ketenagakerjaan confirms JHT at 3.7% employer/2% employee, JP at 2%/1%, JKK at 0.24%–1.74%, and JKM at 0.3%.

For salaries below the relevant contribution ceilings, employer-side BPJS costs are generally around 10.24%–11.74% of salary, depending mainly on the JKK risk category. JKP does not create a separate additional employer contribution under the current funding structure.

Other Employment Costs to Budget For

• PKWT Compensation: Compensation is payable when a fixed-term contract ends and also if it is terminated early, based on the employee’s completed service period.
• THR: Eligible PKWT, PKWTT, and daily workers are entitled to religious holiday allowance; employees with less than 12 months of service receive it proportionally.
• Daily-Worker Conversion: If a daily worker works 21 days or more per month for three or more consecutive months, the daily arrangement ceases to apply, and the employment relationship becomes PKWTT by law.

What Could Still Change in 2026?

Three areas remain important to watch:

• New Manpower Law: The Constitutional Court required the employment provisions of the Job Creation Law to be separated into a standalone Manpower Law within two years of its 31 October 2024 decision, setting the deadline for 31 October 2026. The RUU Ketenagakerjaan is currently being developed by Commission IX of the DPR.
• Operational Support Services: Permenaker 7/2026 includes layanan penunjang operasional as a permitted outsourcing category but does not further define its scope. Local Manpower Offices may assess compliance when outsourcing agreements are registered.
• Employer of Record (EOR): Permenaker 7/2026 does not expressly address EOR arrangements, so companies should assess the actual employment and service structure against existing manpower rules.

For now, the 30 April 2028 adjustment deadline under Permenaker 7/2026 remains applicable unless the regulatory framework changes. Companies should therefore continue preparing existing outsourcing arrangements for compliance rather than waiting for the new Manpower Law.

Review Your Outsourcing Setup Before the Next Renewal

Permenaker 7/2026 introduces tighter requirements for outsourced work, making it important to assess existing arrangements before contracts renew or compliance issues arise.

InCorp Indonesia (an Ascentium Company) can support your company with:

• Outsourcing Compliance Review: Assess outsourced roles and vendor arrangements against Permenaker 7/2026.
• Employment Contract Support: Draft or restructure PKWT and PKWTT agreements where needed.
• PKWT Registration: Support registration and ongoing compliance with employment requirements.
• Payroll & BPJS Administration: Manage payroll, statutory contributions, THR, and related obligations.
• Employer of Record (EOR): Supports companies hiring employees in Indonesia before establishing their own local entity.

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