Outsourced Employee Contract Template for Indonesia

When you need to engage workers through an outsourcing arrangement in Indonesia, you require a comprehensive Outsourced Employee Contract that complies with Indonesian employment laws. This three-party agreement creates a legal framework between the outsourcing company (which becomes the legal employer), your company (the client), and the employee who will perform work at your premises.

When do you need this document?

You need an Outsourced Employee Contract when your company wants to engage workers for non-core business activities through a third-party service provider. This arrangement is commonly used for cleaning services, security personnel, catering staff, maintenance workers, and administrative support roles. The contract is essential when you want to focus on your core business while ensuring specialized services are provided by qualified outsourcing companies. You'll also need this document when expanding operations quickly without directly hiring permanent staff, or when you require expertise that your company doesn't possess internally. Indonesian law specifically permits outsourcing for support activities that don't directly relate to your main production process.

Key legal considerations

Several critical legal elements must be addressed in your outsourced employee contract. The agreement must clearly define the triangular relationship and specify that the outsourcing company remains the legal employer responsible for wages, benefits, and compliance with labor laws. You need to ensure the contract includes proper job descriptions, working hours that comply with the 40-hour work week limit, and overtime provisions as required by Indonesian law. The agreement should address social security obligations, including BPJS Ketenagakerjaan (employment social security) and BPJS Kesehatan (healthcare), which the outsourcing company must provide. Termination procedures must follow Indonesian notice requirements, and the contract should specify liability allocation between parties. Additionally, you must ensure the outsourced activities fall within permitted categories under Indonesian regulations and don't involve core business functions.

Legal requirements in Indonesia

Indonesian law imposes strict requirements on outsourcing arrangements under Law No. 13 of 2003 on Manpower and Minister of Manpower Regulation No. 19 of 2012. The outsourcing company must hold proper business licenses and demonstrate financial capability to fulfill employment obligations. Your contract must specify that outsourced work is limited to support activities, cleaning services, catering, security, transportation, or other non-core functions as defined by regulation. The agreement must ensure outsourced employees receive wages and benefits equal to or better than your direct employees performing similar work. Fixed-term contracts are common in outsourcing and must comply with Government Regulation No. 35 of 2021 regarding maximum duration and renewal limitations. The contract must be written in Indonesian language, and both parties must maintain proper employment records. Regular auditing of the outsourcing company's compliance with labor laws and social security contributions is essential to avoid joint liability.