The Labour Hire Contract is essential for businesses operating in Indonesia that require flexible staffing solutions while ensuring compliance with local employment laws. This document is specifically designed for situations where a labor hire company provides workers to perform services for a host company, establishing clear rights, obligations, and responsibilities of all parties involved. The contract must comply with Indonesian Manpower Law (Law No. 13/2003), Minister of Manpower Regulation No. 19/2012 on outsourcing, and recent modifications under the Omnibus Law (Law No. 11/2020). It includes provisions for worker protection, social security benefits, workplace safety, and other mandatory requirements under Indonesian law. The document is particularly relevant for businesses seeking to manage workforce flexibility while maintaining legal compliance in Indonesia's complex labor regulatory environment.
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1. Parties: Identifies the three parties to the agreement: the labor hire company (provider), the host company (client), and the worker
2. Background: Explains the context of the agreement, including the labor hire company's licensing status and the host company's requirement for workers
3. Definitions: Defines key terms used throughout the agreement, including specific Indonesian legal terms
4. Term of Agreement: Specifies the duration of the labor hire arrangement, including start date and any renewal provisions
5. Nature of Employment: Describes the three-way relationship and confirms the worker's primary employment relationship is with the labor hire company
6. Position and Duties: Outlines the worker's role, responsibilities, and reporting relationships
7. Work Location and Hours: Specifies where and when work will be performed, including normal hours and overtime arrangements
8. Remuneration and Benefits: Details salary, allowances, and benefits, including mandatory social security (BPJS) contributions
9. Leave Entitlements: Specifies various leave types and entitlements as per Indonesian law
10. Workplace Health and Safety: Outlines responsibilities for ensuring worker safety and compliance with Law No. 1/1970
11. Confidentiality and IP: Addresses confidentiality obligations and intellectual property rights
12. Performance Management: Details performance review processes and management of work quality
13. Termination: Specifies grounds and procedures for termination, including notice periods and severance calculations
14. Dispute Resolution: Outlines process for resolving disputes, including reference to Indonesian labor courts
15. Governing Law: Confirms Indonesian law governs the agreement
1. Mobility Clause: Include when worker may be required to work at different host company locations
2. Training Requirements: Include when specific training or certifications are required for the role
3. Non-Competition: Include when restricting worker from working directly for host company or competitors
4. Shift Work Provisions: Include for positions involving shift work arrangements
5. Commission Structure: Include for sales or performance-based roles with variable compensation
6. International Assignment: Include when worker may be assigned to work outside Indonesia
7. Vehicle/Equipment Provision: Include when worker is provided with specific tools or vehicles
8. Union Recognition: Include when workers are covered by collective agreements
1. Schedule 1 - Position Description: Detailed description of role, responsibilities, and performance expectations
2. Schedule 2 - Remuneration Details: Breakdown of salary components, allowances, and benefits
3. Schedule 3 - Host Company Policies: Key workplace policies of the host company that worker must comply with
4. Schedule 4 - Service Level Agreement: Performance metrics and service standards expected by the host company
5. Schedule 5 - Safety Procedures: Specific workplace safety requirements and procedures
6. Appendix A - Required Certifications: List of mandatory qualifications or certifications for the role
7. Appendix B - Equipment List: Inventory of any equipment or tools provided to worker
8. Appendix C - Calculation of Benefits: Detailed breakdown of how various benefits are calculated
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