Indonesia's Minister of Manpower Regulation No. 7 of 2026 on Outsourced Work (Permenaker 7/2026), signed and in force from 30 April 2026, narrows the country's domestic outsourcing regime to six categories of supporting work, requires outsourcing companies to be legal entities operating under a written and registered agreement, and gives existing arrangements two years to comply.
It does not prohibit an overseas company from having work done in Indonesia. Outsourcing from an overseas entity to Indonesian workers or vendors is legal and widely practiced, provided the arrangement follows local tax, commercial, and labor regulations. This article explains what the regulation says, who it binds, and what an overseas buyer should do about it.
What the regulation is, and where it came from
The regulation implements Constitutional Court Decision 168/PUU-XXI/2023 of 31 October 2024. In that decision the Court reviewed the employment provisions of Law No. 6 of 2023 on Job Creation and, among other rulings, required the Minister of Manpower to specify which types of work may be outsourced under Article 64 of the Manpower Law. Until then the post-2021 framework under Government Regulation No. 35 of 2021 had left the scope of outsourceable work open.
Permenaker 7/2026 is the Minister's answer. It was published in the State Gazette on 30 April 2026 and is in force from that date. The full text is on the Ministry's legal database, JDIH Kemnaker.
The six categories of work an outsourcing company may take on
Under the regulation, an Indonesian user company (pemberi pekerjaan) may hand work to an Indonesian outsourcing company (perusahaan alih daya) only in these categories of supporting activity:
Cleaning services
Food and beverage provision for workers
Security services
Provision of drivers and worker transportation
Operational support services
Supporting work in the mining, oil and gas, and electricity sectors
The first four are the categories Indonesian law has treated as outsourceable for two decades. The fifth, operational support services, is the one that will be tested in practice, and labour unions have already said publicly that they regard the phrase as a potential loophole. Expect Ministry guidance or inspection practice to define it further.
The duties the regulation imposes
Requirement | What it says | Who carries it |
|---|---|---|
Legal form | The outsourcing company must be a legal entity (badan hukum); informal labour suppliers are excluded | Outsourcing company |
Written agreement | Must state the type of work, its duration, the location, the number of workers, the workers' protections and rights (wages, overtime, working hours and rest, annual leave, occupational safety and health, social security, THR, and rights on termination), and the rights and obligations of both parties | Both parties |
Registration | The agreement must be registered with the local Manpower Office within three working days of signing | Outsourcing company |
Worker protection | The outsourcing company must meet every statutory entitlement; the user company is expected to monitor compliance | Outsourcing company, with the user company overseeing |
Transition | Arrangements in place on 30 April 2026 have up to two years, to 30 April 2028, to comply; existing agreements run to their end date | Both parties |
Sanctions | Administrative: written warnings, then restrictions on business activity such as limits on production capacity or postponement of business licensing | Outsourcing company and user company |
The regulation is about the relationship between two Indonesian companies and the workers supplied between them. That is the point an overseas reader most needs.
Who the regulation binds, and who it does not
Permenaker 7/2026 regulates alih daya: an Indonesian principal contracting an Indonesian outsourcing company to perform work with the outsourcing company's employees. It binds the user company and the outsourcing company in that relationship.
It does not address, and does not prohibit, an overseas company having work done in Indonesia. Outsourcing from an overseas entity to Indonesian workers or vendors is legal and widely practiced, provided the arrangement follows local tax, commercial, and labor regulations. Two structures cover almost every case:
Direct employment through an employer of record. Your team members hold Indonesian employment contracts, permanent (PKWTT) or fixed-term (PKWT) under PP 35/2021, with the employer of record as their legal employer. They work only for you and under your direction. The employer of record carries BPJS registration, THR, PPh 21 withholding, payroll and the Manpower Law protections.
The employer of record holds the employment contract and carries the statutory duties, and the work is directed by you. How a particular arrangement is characterised depends on its facts and should be confirmed with Indonesian counsel. It is the structure MixWork provides, and the one that fits finance, engineering, marketing, support and operations roles.
Contracting an Indonesian service provider. You buy a defined process or outcome from a licensed Indonesian company that employs its own staff. Where that provider is itself supplying labour to an Indonesian principal, the six categories and the agreement and registration duties above apply to it, and you should ask to see the registered agreement and the provider's licences.
The distinction that matters is who employs the people and who directs the work. If the people are employed on Indonesian contracts by a party that carries the statutory duties, and you direct their work, you have an employment structure. If a vendor's staff perform a process for you under the vendor's management, you have a service contract. What the regulation targets is the space between: labour supplied into an Indonesian principal's operations without the protections of either.
What an overseas buyer should do now
Map every arrangement you have in Indonesia to one of the two structures above. Anything that is really full-time, directed, exclusive work by an individual belongs in employment, whatever the contract calls it. That was already the position under Indonesian labour law; the new regulation raises the cost of getting it wrong.
If you use an Indonesian vendor, ask for its registered outsourcing agreement and its licences, and put a review date before 30 April 2028 in the contract. Vendors restructuring under the transition may reprice or exit.
If you employ through an employer of record, confirm the contract type and that the statutory duties are being met: BPJS registration within 30 days, THR seven days before the holiday, PPh 21 deposited by the 15th and filed by the 20th of the following month, and the minimum wage of the city where the person works.
Do not engage contractors for ongoing, directed work. Misclassification liability for BPJS, THR, tax and severance runs back to the start of the relationship.
Have your structure reviewed by Indonesian counsel. How an arrangement is characterised depends on its facts, and the fifth category above is still being interpreted.
What has not changed
The statutory obligations of an Indonesian employer are the same as they were on 29 April 2026. BPJS employer contributions run from 10.24% to 11.74% of wage; THR is one month's wage for staff with twelve months' service; PPh 21 is withheld on the effective-rate method; contracts must be in Bahasa Indonesia under Law 24/2009; and the 2026 Jakarta minimum wage is IDR 5,729,876 a month.
The dated log of every change, including the new Manpower Law the Constitutional Court required by 31 October 2026, is kept on the Indonesia employment law tracker. For the full picture of costs, models and how to choose a partner, see outsourcing to Indonesia in 2026, and for the employment layer, the Indonesia employer-of-record guide.
Where MixWork fits
MixWork employs Indonesian professionals on permanent, compliant Indonesian contracts and places them with overseas clients who direct their work. Recruitment, employment, workspaces in our own Jakarta office, managed IT and Total Care 360 HR care come as one partnership at a published price, from USD 249 per employee per month. Twelve-month retention across placements runs above 90%. We do not place contractors, and we do not supply labour into Indonesian principals' operations. If you want a structure reviewed against the new regulation, book a call.
Primary sources
Minister of Manpower Regulation No. 7 of 2026 on Outsourced Work, JDIH Kemnaker
Constitutional Court Decision 168/PUU-XXI/2023, 31 October 2024
Law No. 13 of 2003 on Manpower, Article 64 to 66 as amended
Government Regulation No. 35 of 2021 on fixed-term contracts, outsourcing, working time and termination
Cabinet Secretariat statement on the outsourcing restriction, 2026
This article describes Indonesian regulation in general terms as at 12 September 2026 and reflects MixWork's position as confirmed with counsel. It is not legal advice. Have any arrangement reviewed by qualified Indonesian legal counsel before you rely on it.
