Q78. When establishing a local corporation or representative office, is there a mandatory ratio of hiring a local person per foreigner? I wonder how many Koreans can apply for visa issuance?

There is an obligation to hire local people. In the case of a local corporation, there is no obligation to hire locals for directors and auditors listed in the Articles of Incorporation, but in the case of general employees not listed in the Articles of Incorporation, there must be a local employee (TKIP) to replace foreign workers on a 1:1 basis. . In the case of a representative office, the director is equivalent to the director level of the local corporation, but the Indonesian Labor Office treats the branch manager as a general employee and requests a local employee to replace the foreign director on a one-to-one basis. However, depending on the Indonesian labor market situation, the Ministry of Labor requests information on 10 local employees per expatriate when obtaining a residence permit for an expatriate, depending on the nature of the Ministry of Labor employee in charge.

Unreasonable demands are sometimes made based on past regulations that were abolished accordingly. Likewise, in the case of Indonesia, actual laws and internal regulations for business processes are often different, and rules are revised frequently, so you must be careful.

Q79. Is it possible for a local employee to run the business by changing the existing head of the corporation to an employee at the domestic headquarters and then delegating authority in the manner of an appointed representative?

There is no mandatory regulation that the head of a local corporation must work overseas. In legal terms, a power of attorney can be given to a local employee with Indonesian nationality, not a foreigner, to perform the duties of the head of the corporation. However, Indonesia's power of attorney system does not recognize general and comprehensive power of attorney and requires a power of attorney for each specific matter, so when delegating to a local employee, you must give him/her a power of attorney for each case and have him/her sign on your behalf.

If there is a trustworthy local employee who can give a power of attorney, he or she is appointed as a board member and registered in the Articles of Incorporation. Unless there are restrictive provisions in the Articles of Incorporation, the elected local board member is granted the right to represent the company, so the company does not need a power of attorney from the Korean CEO. Local movers can handle the work alone.

Q80. Can I know about the local wage level?

General wage levels in Indonesia vary greatly depending on region and industry. Among a total of 34 provinces, the local autonomous provinces that do not apply a provincial minimum wage but separately apply a city/county minimum wage include West Java Province, Central Java Province, East Java Province, and Jogja District.

The minimum wage for the past three years for each autonomous province in Indonesia is as follows.

<Status of monthly minimum wage by local autonomous state in 2020-2022 (Unit: Rupiah)>

	municipality	2020	2021	2022
1	Aceh	3,165,030	3,165,031	3,166,460
2	North Sumatra	2,499,422	2,499,423	2,522,609
3	West Sumatra	2,484,041	2,484,041	3,512,539
4	Riau	2,888,563	2,888,564	2,938,564
5	Riau islands	3,005,383	3,005,460	3,050,172
6	Jambi	2,630,161	2,630,162	2,698,940

7	South Sumatra	3,043,111	3,043,111	3.144.466
8	Bangka Belitung	3,230,022	3,230,024	3,264,884
9	Bengkulu	2,213,604	2,215,000	2,238,094
10	Lampung	2,431,324	2,432,002	2,440,486
11	Banten	2,460,968	2,460,997	2,501,203
12	Bali	2,493,523	2,494,000	2,516,971
13	DKI Jakarta	4,267,349	4,416,187	4,641,854
14	West Nusa Tenggara	2,183,883	2,183,883	2,207,212
15	East Nusa Tenggara	1,945,902	1,950,000	1,975,000
16	West Kalimantan	2,399,698	2,399,699	2,434,328
17	South Kalimantan	2,877,447	2,877,449	2,906,473
18	Central Kalimantan	2,903,144	2,903,145	2,922,516
19	East Kalimantan	2,981,378	2,981,379	3,014,497
20	Gorontalo	2,586,900	2,788,826	2,800,580
21	North Sulawesi	3,310,723	3,310,723	3,310,723
22	Southeast Sulawesi	2,552,014	2,552,015	2,576,016
23	Central Sulawesi	2,303,710	2,303,711	2,390,739
24	South Sulawesi	3,103,800	3,165,876	3,165,876
25	West Sulawesi	2,571,328	2,678,863	2,678,863
26	Maluku	2,604,960	2,604,961	2,619,312
27	North Maluku	2,721,530	2,721,530	2,862,231
28	Papua	3,516,700	3,516,700	3,561,932
29	West Papua	3,134,600	3,134,600	3,200,000
30	North Kalimantan	3,000,803	3,000,804	3,016,738
31	West Java	1,810,350	1,810,351	1,841,487
32	Central Java	1,742,015	1,798,979	1,812,935
33	Yogyakarta	1,704,608	1,765,000	1,840,487
34	East Java	1,768,777	1,868,777	1,891,567

Most large companies near cities use a monthly wage system, and small and medium-sized businesses or companies located in rural areas apply a weekly wage for simple work. In the case of construction workers, most are paid in the form of weekly wages, and like in Korea, it is extremely difficult to calculate labor costs based on the wage rate, but it is said that there is no problem if calculated slightly higher than the minimum wage.

Please refer to the website below where you can find out the Indonesian wage level for each major Indonesian company.

https://www.qerja.com

The minimum wage is set based on economic and human resource conditions such as purchasing power, employment rate, and median wage. The minimum wage is adjusted annually, and the minimum wage is set between the upper and lower minimum wage limits for the relevant region. The upper limit of the minimum wage is the average monthly consumption per person x the average number of household members % employed per household, and the lower limit of the minimum wage is 50% of the upper limit.

The low wage is promulgated by the governor's decision no later than November 21 of the current year and takes effect on January 1 of the following year. If the average economic growth rate of a specific city/county over the past three years is higher than the state's average economic growth rate, or if the economic growth rate of the city/county is higher than the state economic growth rate by subtracting the inflation rate over the past three years, the economic growth rate is positive every year. The governor may promulgate a city/county minimum wage after promulgating the state minimum wage.

The minimum wage for micro- and small-scale businesses is determined by agreement between employers and workers, but must be at least 50% of the average consumption of state residents and at least 25% above the state poverty line. Micro- and small-scale businesses that are exempt from minimum wage regulations must be businesses that utilize traditional resources and must not be high-tech or capital-intensive businesses.

Employers are prohibited from paying workers less than the minimum wage, and are obligated to pay the minimum wage to workers who have worked for less than one year, and are obligated to pay workers who have worked for more than one year in accordance with wage regulations.

Q81. I would like to know about Indonesia’s standard working hours and vacation system.

The standard working hours and vacation systems under the Labor Standards Act are as follows.

1. Standard working hours: 40 hours per week

*The decision to work 5 or 6 days a week is at the discretion of the employer (company).

• 5-day work week
  
  • Monday to Friday (5 days) x 8 hours of work per day = 40 hours
• 6-day work week

• Monday to Friday (5 days) x 7 hours of work per day = 35 hours of work
• Saturday x 5 hours of work per day = 5 hours of work

*Total 35 hours + 5 hours = 40 hours

• Working hours for hazardous and hazardous work: up to 6 hours per day, up to 35 hours per week
• Break time: At least 30 minutes after 4 hours of continuous work

1. vacation
   
   • Annual leave: 12 working days of leave per year after 12 months of service

2.2 Condolence leave: Child circumcision (2 working days), child baptism (2 working days), child birth (2 working days)

1. Religious activity time: Prayer time is allowed for workers during working hours.

1. Female workers: Obligation to provide breastfeeding opportunities

Q82. What types of workers are there in Indonesia?

In Indonesia, all employment contracts are either fixed-term employment contracts (PKWT) or indefinite employment contracts (Perjanjian Kerja Waktu Tidak Tertentu/PKWTT). Korean businessmen usually refer to fixed-term employment contracts as contract workers, and indefinite employment contracts are classified as regular workers.

1. Refusal to grant fixed-term employment contracts

Fixed-term employment contracts cannot be concluded for fixed-term work (Article 4, Paragraph 2 of the Government Ordinance) *Because fixed-term employment contracts for general production or office employees without a time limit are not legal, they are automatically entered into indefinite employment contracts. changes to .

1. Allowing fixed-term employment contracts

A fixed-term employment contract can only be concluded for a certain number of days to be completed within a certain time, depending on the type and nature of the work or activity. Have a fixed-term employment contract

The tasks you can do are as follows:

• Something that isn't expected to take too long
• seasonal days
• Work related to new products, new activities, or additional products that are still being tested or investigated

• Work that is not fixed in type, nature, or activity

1. Permitted period for entering into a fixed-term employment contract: Up to 5 years
   
   • If the fixed-term employment contract is terminated but the work is not completed, the fixed-term employment contract can be extended, but it is limited to a maximum of 5 years, including the initial contract period and the extension contract. (“Example” First 3 years + 2 extension years = maximum 5 years. year)
   • If the contracted work is completed before the expiration date of the fixed-term employment contract, the employment relationship in the fixed-term employment contract is automatically terminated on the day the work is completed.
   • For jobs where the type or amount of work is not fixed, a limited-term employment contract (*daily worker fixed-term employment contract) can be concluded based on attendance. However, if any of the following applies, the already concluded fixed-term employment contract is automatically changed to an indefinite employment contract.
     
     • If there are more than 21 working days in a month
     • If you continue to work for more than 3 months
   • A fixed-term employment contract for daily workers must be concluded in writing.
   • In the case of concluding a fixed-term employment contract for daily workers through a collective labor contract, the fixed-term employment contract contains the employer's name and address, the worker's name and address, work details and wage amount, and the worker's social security insurance coverage.
     
     • A probationary period cannot be provided in a fixed-term employment contract. If there is a probationary period, it is invalid at source and calculated as a period of service.

1. A fixed-term employment contract must contain at least the following:
   
   • User's name, address and industry
   • Worker's name, gender, age and address
   • Employee's position or job, work location, wage amount, and wage payment method
   • User rights and obligations
   • Workers' Rights and Obligations
   • Effective date and period of fixed-term employment contract
   • Date and place of conclusion of fixed-term employment contract, signatures of employer/company and worker

1. Obligation to register a fixed-term employment contract

A fixed-term employment contract must be registered online with the competent labor bureau within 3 working days from the date of conclusion. If online is not available, it must be registered with the competent labor bureau within 7 working days from the date of conclusion.

1. Obligation to pay severance pay to workers with fixed-term employment contracts

Severance pay must be paid to employees who have worked for at least one month under a fixed-term employment contract as follows.

• Continuous 12-month employment: 1 month salary (*basic salary + fixed allowance) = severance pay
• Employees who have worked for more than 1 month but less than 12 months: Total number of months worked x 1 month salary / 12 months = Severance pay
• Employees who have worked for more than 12 months: Total number of months worked x 1 month salary / 12 months = Severance pay
• Upon termination of a fixed-term employment contract concluded between a small business or small business and an employee, severance pay is paid in the amount agreed upon between the parties (*It is not illegal even if it is not paid according to the above formula).
• If an employee or employer terminates a fixed-term employment contract before the expiration of the fixed-term employment contract, severance pay must be paid according to the above formula based on the period already worked.

Example: A 1-year employment contract is signed, but salary and severance pay are payable upon dismissal after 6 months of employment.

*Salary: Salary for the remaining 6 months of a fixed-term employment contract

*Severance pay: 1 month salary (basic salary + fixed allowance)

1. Severance pay for foreign workers

Foreign workers with fixed-term employment contracts are not required to pay severance pay.

1. Language of concluding a fixed-term employment contract
   
   • Fixed-term employment contracts must be concluded in writing using Indonesian and Latin characters.
   • If a fixed-term employment contract is signed in both Indonesian and a foreign language and there is a difference in interpretation between the two, the Indonesian employment contract takes precedence over the foreign language employment contract.

Q83. Please explain outsourcing.

Outsourcing is preferred by employers because it facilitates labor management, reduces the burden of labor costs, and increases productivity. However, workers benefit from minimum wage, attendance allowance, position allowance, industrial accident insurance, meals and transportation, annual leave, menstrual leave, maternity leave, religious bonuses, etc. Almost all fields, including severance pay, union membership, employment contracts, company regulations, collective labor contracts, long-term work opportunities, etc.

I am reluctant to outsource because it is at a disadvantage. Types of outsourcing include work subcontracting (Perjanjian Pemborongan Pekerjaan/PPP) and labor supply contracting (Penyediaan Jasa Pekerja/Buruh/PJPB).

1. 작업도급 계약(Job Contracting Agreement)

In management or practice, work that is separate from the company's main production activities, work carried out under direct or indirect instructions from the contracting company, or a process for which a contract is given is an auxiliary process that is not a main production process, even if the production process is determined by a legitimate association in the industry. This is permitted for operations that do not cause delays in the main production process.

1. Manpower supply contract permitted processes/areas

Work that is not directly related to the company's auxiliary functions or production process can be entrusted to a manpower supply company by concluding a manpower supply contract with the company. Auxiliary functions that allow for manpower supply contracts include cleaning services, catering, security, mining and petroleum services, and transportation of workers to and from work.

1. Manpower supply contract (Perjanjian Penyediaan Jasa Pekerja/Buruh) Subcontracting is prohibited under the manpower supply contract.

Q84. I would like to know about the procedures for hiring foreigners, such as Koreans, at local corporations.

The Indonesian government regulates the employment of foreigners by the Labor Standards Act (Labor Act No. 13 of 2003) and Government Ordinance No. 34 of 2021 on Foreign Employment, and matters related to the stay of foreigners are regulated by the Immigration Control Act. I'm doing it. Therefore, when a local corporation hires a foreigner, it must obtain an employment permit and residence permit. An employment permit must be obtained from the Ministry of Labor and a residence permit must be obtained from the Immigration Office. The permits and procedures for foreign employees are as follows.

• Recommendation letter from the competent ministry (*temporary due to coronavirus)
• Foreign Employment Plan Approval (RPTKA): Ministry of Labor
• Application for Employment Permit (Permohonan Notifikasi): Ministry of Labor
• Personnel Training Fund (DKPTKA) payment: National bank
• Employment Permit (Notifikasi): Ministry of Labor
• Temporary residence permit visa cable: Immigration Office

• Temporary Residence Permit (ITAS): Immigration Service
• Police Report (STM): Local Police Agency
• Certificate of residence (SKTT): Resident Registration Office

Q85. I wonder if a local corporation can hire foreign employees, such as Koreans, as full-time employees.

The Indonesian Labor Standards Act is very different from the Korean labor law, so an accurate understanding of the Indonesian Labor Standards Act is essential. Local corporations are subject to Indonesian labor law, and there are only two types of workers recognized by Indonesian labor law: workers with indefinite employment contracts (PKWTT) and workers with fixed-term employment contracts (PKWT). Every worker's legal status falls into one of these two categories. Additionally, the provisions of Indonesian labor law apply to Indonesian workers and do not apply to foreign workers.

Moreover, it is clearly stated in Article 4 of the Government Decree on the Use of Foreign Labor 2021 (PP No. 34 Tahun 2021 tentang Penggunaan Tenaga Kerja Asing). Employers (Pemberi Kerja) may only exceptionally hire foreign workers for certain positions, for certain periods of time, and only in the case of foreign workers with the appropriate skills for the given position. (TKA hanya dapat dipekerjakan oleh Pemberi Kerja untuk jabatan tertentu dan waktu tertentu, serta memiliki kompetensi sesuai jabatan yang diduduki.) Considering the labor and immigration law regulations applicable locally, it should be interpreted that it is impossible to hire foreign employees as regular employees. It appears

Q86. I would like to know what the employer is legally responsible for other than wages.

1. When an employer or company hires an employee, the employee has an obligation to provide labor to the company, while the employer or company has an obligation to pay wages and withhold and pay earned income tax (PPH 21) to the employee. In addition, for the safety of employees and their immediate families, employees must enroll in Social Security Insurance (BPJS) and pay a certain amount of insurance premiums. The scope of Indonesia's social security system is Industrial Accident Insurance (Jaminan Kecelakaan Kerja) b. Death Insurance (Jaminan Kematian) c. Old-age pension (Jaminan Hari Tua) d. This is health insurance (Jaminan Pemeliharaan Kesehatan), and the purpose of this social security insurance is to protect workers and their families from problems such as business accidents, death, old age, and health.

Companies that hire workers are required to enroll their employees in social security insurance. The insurance premium calculation standard is

- Industrial accident insurance 0.24% ~ 1.74% of monthly salary (paid by the company)

• Death insurance: 3% of monthly salary (company burden)

- 5.7% of monthly retirement insurance salary (3.7% for companies, 2% for individuals)

• Health insurance 5% of monthly salary (4% for companies, 1% for individuals)

Payment must be made on this basis.

1. Obligation to pay religious bonuses

Employees who have worked continuously for more than one month are required to pay religious bonus (THR) every year on religious holidays. As for the bonus amount, employees who have worked for more than one year must pay a religious bonus equivalent to at least 1 (one) month's salary, and employees who have worked for less than one year are required to pay a religious bonus equal to one month's salary / 12 months x the number of months worked.

Q87. I founded a company in Indonesia and was appointed as the CEO according to the articles of incorporation, but business is not running smoothly, so I am looking for a job. In this case, what should the existing company do? (Existing company wants to register as CEO, new company wants to issue work visa)

We recommend that you proceed differently depending on the situation.

1. If you submit your resignation as representative to the existing company, resolve your resignation at the general shareholders' meeting, obtain an EPO (exit permit) from the immigration office, and leave the country, your relationship with the existing company will end. Before leaving the country, you can apply for an employment permit and a temporary residence visa for a new company as an employee, send them to the Indonesian embassy abroad, receive a visa there, enter Indonesia, and start working for the new company.

1. If you want to leave the old company after working for both the old company and the new company for a while, the Temporary Residence Permit (ITAS) can be obtained only through sponsorship from the existing company, but the Employment Permit (RPTKA + NOTIFIKASI) can be obtained under the name of the old company and the new company. Each must receive one. If you want to completely leave your existing company, you must obtain permission to change the sponsor of your limited-term residence permit (from the existing company to a new company) from the Immigration Office. Only board members are allowed to work at two companies simultaneously.