Labour Supply Contract Agreement Template for Indonesia

A Labour Supply Contract Agreement is a legally binding document that governs the relationship between a licensed labor supply company and a client business in Indonesia. This contract is essential when you need to outsource specific work functions while ensuring full compliance with Indonesia's comprehensive employment regulations and worker protection laws.

When do you need this document?

You need a Labour Supply Contract Agreement when your company requires additional workforce for specific business activities that are legally permitted for outsourcing under Indonesian law. This includes support services like cleaning, security, catering, transportation, and certain administrative functions. The document is particularly crucial for multinational companies establishing operations in Indonesia, seasonal businesses requiring temporary workforce expansion, or companies managing fluctuating labor demands. You must use this agreement when engaging any third-party labor provider, as direct worker deployment without proper contractual framework violates Indonesian employment regulations and exposes your business to significant legal and financial risks.

Key legal considerations

Several critical legal elements must be addressed in your Labour Supply Contract Agreement. The provider must hold valid licenses and registrations required under Minister of Manpower Regulation No. 19 of 2012, including proof of financial capability and proper business permits. Worker protection clauses are mandatory, ensuring deployed workers receive wages, benefits, and social security coverage equivalent to your direct employees. The agreement must clearly define which business activities are being outsourced, as Indonesian law strictly prohibits outsourcing of core business functions. Risk allocation provisions should address liability for workplace accidents, labor disputes, and regulatory violations. Additionally, the contract must include termination procedures, dispute resolution mechanisms, and provisions for worker transfer or redeployment to protect all parties' interests.

Legal requirements in Indonesia

Indonesian law imposes strict requirements on labour supply arrangements that must be incorporated into your contract. Under the Manpower Law and recent Job Creation Law amendments, only specific non-core business activities can be outsourced, and the labor provider must be properly registered with relevant authorities. The agreement must ensure compliance with BPJS (Social Security) enrollment for all deployed workers, including health insurance (BPJS Kesehatan) and employment insurance (BPJS Ketenagakerjaan). Working hour limitations, overtime regulations, and minimum wage compliance must be explicitly addressed. The contract must also incorporate worker rights provisions, including leave entitlements, workplace safety standards, and protection against discriminatory practices. Regular reporting obligations to the Ministry of Manpower may apply, and the agreement should establish clear procedures for regulatory compliance monitoring and audit cooperation.