Permenaker 7/2026: Indonesia’s New Outsourcing Rules and What They Actually Require

For two and a half years after the Constitutional Court issued Decision No. 168/PUU-XXI/2023 in October 2023, Indonesian companies using outsourcing arrangements operated in a regulatory gap. The Court had restored the Minister of Manpower’s authority to specify which types of work could legally be outsourced, returning a meaningful constraint that the Job Creation Law had loosened. But the actual ministerial regulation that would define those limits had not yet arrived.

It arrived on 30 April 2026.

Ministerial Regulation of Manpower No. 7 of 2026 on Outsourced Work (Permenaker 7/2026) was issued and took effect on that date, published in the State Gazette of the Republic of Indonesia as No. 281 of 2026 and signed by Minister of Manpower Yassierli. The regulation is eleven articles long. It is precise in some areas and genuinely ambiguous in others. For any company in Indonesia that currently uses outsourcing for any function, understanding both is not optional.

What Permenaker 7/2026 Actually Says

The regulation establishes three things: which types of work can legally be outsourced, what a valid outsourcing agreement must contain, and what happens to companies that get either of those things wrong.

The Six Permitted Job Categories

Article 2 of Permenaker 7/2026 confirms that a Principal Company (Perusahaan Pemberi Pekerjaan) may delegate part of its work to an Outsourcing Company (Perusahaan Alih Daya) through a written agreement. The constraint sits in Article 3: that delegated work must be in the form of labor supply (penyediaan jasa pekerja/buruh) and must constitute supporting activities (kegiatan penunjang), not core operations.

Article 3, paragraph (2) defines the permitted categories as follows:

• Cleaning services (layanan kebersihan)
• Food and beverage provision (penyediaan makanan dan minuman)
• Security (pengamanan)
• Driver provision and worker transportation (penyediaan pengemudi dan angkutan pekerja/buruh)
• Operational support services (layanan penunjang operasional)
• Supporting work in mining, oil, gas, and electricity sectors (pekerjaan penunjang di bidang pertambangan, perminyakan, gas, dan ketenagalistrikan)

The first four categories are relatively unambiguous and align with what practitioners in Indonesian HR compliance have historically understood as the “classical” outsourcing functions. The fifth and sixth are where the interpretive complexity concentrates.

The Category That Needs Careful Reading

Category (e), “operational support services” (layanan penunjang operasional), is the provision that has generated the most scrutiny since the regulation’s release. The text does not define the scope of this category further. No technical guidance has been issued by the Ministry of Manpower to specify what falls within “operational support” and what does not.

Labor observers and union representatives have flagged this as potentially covering a very wide range of functions, including HR administration, logistics, general affairs, technical maintenance, and helper roles, if interpreted broadly. Employers in manufacturing-heavy sectors have raised similar questions. Whether Indonesian courts or the Ministry will ultimately interpret this narrowly or broadly remains to be seen, as no definitive ruling or guidance has been issued as of the date of this article. Companies placing functions under this category should document the business rationale for treating those functions as non-core supporting activities rather than assuming the category’s breadth will accommodate any classification decision.

Category (f), covering supporting work in extractive and energy sectors, is sector-specific and narrowly applicable. Companies in mining, oil and gas, and electricity generation have industry-specific context for what constitutes supporting versus operational work, though the same documentation discipline applies.

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What a Valid Outsourcing Agreement Must Contain

Beyond the permitted job types, Article 4 sets out the minimum content requirements for any Outsourcing Agreement (Perjanjian Alih Daya). The regulation is explicit: the agreement must include at minimum:

• The specific work being outsourced to the Outsourcing Company
• The duration of the Outsourcing Agreement
• The location where the work is carried out
• The number of outsourced workers
• Worker protection and rights, covering at minimum: wages, overtime pay, working hours and rest periods, annual leave, occupational health and safety rights, social security, THR (religious holiday allowance), and rights upon termination or severance
• The rights and obligations of both the Outsourcing Company and the Principal Company

Article 4, paragraph (2) places responsibility for fulfilling worker protection and rights squarely on the Outsourcing Company. However, paragraph (3) makes clear that the Principal Company bears responsibility for ensuring the Outsourcing Company actually meets those obligations. This joint accountability structure matters for procurement and vendor management decisions: signing an outsourcing agreement with a provider that does not meet statutory minimums creates compliance exposure for the Principal Company, not just the vendor.

The TUPE principle, which requires a new outsourcing vendor to carry over workers’ accumulated tenure and rights when the same type of work continues at the same user company, was established under PP No. 35 of 2021 and remains in force. Permenaker 7/2026 does not amend or override it. For companies managing vendor transitions, this obligation continues to apply in parallel with the new agreement content requirements. The full mechanics of TUPE and how it interacts with contract type decisions are detailed in the guide to employee contract types in Indonesia, which addressed the post-MK 168 landscape before this ministerial regulation was issued and remains the foundation for understanding how outsourcing fits within the broader employment contract framework.

Registration: The Three-Day Window That Many Companies Will Miss

Article 5 introduces a procedural requirement that sits outside the main employment law compliance calendar most companies currently track. After an Outsourcing Agreement is signed, the Outsourcing Company must register that agreement with the local Manpower Office (Dinas Ketenagakerjaan kabupaten/kota) at the location where the work is performed, within three working days of the agreement being signed.

This is not an administrative formality. The Manpower Office has authority to withhold the registration certificate (bukti pencatatan) if the agreement does not meet the job type requirements under Article 3 or the content requirements under Article 4. Only after the agreement passes review is the certificate issued. The head of the local Manpower Office must then report registered agreements to the Minister of Manpower quarterly, with copies to the provincial Manpower Office.

For Principal Companies, the practical implication is that the three-day window runs against the Outsourcing Company, not them directly. However, an outsourcing agreement that fails registration because it does not meet the job type or content requirements creates an immediate problem for the Principal Company’s operations. Confirming that an outsourcing provider has completed registration before work commences is now part of vendor due diligence, not an afterthought.

Sanctions: Who Gets What and How It Escalates

Article 8 applies to Principal Companies that violate the job type restrictions in Article 3. The sanction structure is administrative and graduated:

• First: Written warning
• Second: Business activity restriction, which takes either of two forms: limitation of production capacity for goods or services within a specified period, or delay in the issuance of business permits at one or more locations for companies with multi-location projects

The sanctions are administered by the licensing authority on the recommendation of the Labor Inspection Unit (Pengawas Ketenagakerjaan). This means enforcement runs through labor inspectors, not through automatic OSS system triggers. The timeline between a violation being identified and a restriction actually being imposed depends on inspection capacity and local implementation, but the legal basis for restriction is now explicit.

Article 9 applies to Outsourcing Companies that violate their operational obligations under Article 6. Those obligations are: applying occupational health, safety, and environmental standards; registering Outsourcing Agreements with the local Manpower Office; and commencing business operations within one year of the business license being issued. Sanctions follow the risk-based business licensing framework (PP No. 28 of 2025) rather than the specific escalation structure in Article 8.

The payroll compliance obligations that flow through any outsourcing arrangement, including PPh 21 calculation for outsourced workers, BPJS enrollment, and THR payment responsibilities under Permenaker 6/2016, sit alongside Permenaker 7/2026 rather than being modified by it. For a detailed breakdown of how those obligations interact with employer cost planning, the guide to payroll outsourcing in Indonesia covers the full monthly compliance calendar that any outsourcing arrangement generates.

The Transition Window: Two Years to Align, Not Two Years to Wait

Article 10 sets out the transitional position for arrangements already in place when the regulation came into force on 30 April 2026:

• Existing Outsourcing Agreements remain valid until their current term expires.
• Both Outsourcing Companies and Principal Companies must bring their job types into alignment with the new permitted categories no later than two years from the date of promulgation, meaning by 30 April 2028.

The two-year window is a compliance deadline, not a grace period that defers the obligation to act. Companies that are currently using outsourcing for functions that fall outside the six permitted categories face a structural decision: transition those workers to a different employment arrangement before April 2028, restructure the work scope to fit within a permitted category, or face the sanctions in Article 8 once that deadline passes.

For companies running HR administration, finance support, IT helpdesk, or other back-office functions under an outsourcing arrangement, the immediate practical step is an audit of current outsourcing contracts against the Pasal 3 framework. That audit needs to assess, for each outsourced function, whether it genuinely constitutes a supporting activity rather than a core operational function, and whether it falls within one of the six defined categories or whether it relies on the open-ended “operational support services” language of category (e) in a way that may not survive scrutiny.

That audit is also the right time to review whether existing Outsourcing Agreement documents meet the Article 4 minimum content requirements, since the three-day registration obligation will apply to any new agreements signed after 30 April 2026, and Manpower Offices have authority to reject non-compliant agreements at the point of registration.

The Broader Compliance Picture

Permenaker 7/2026 resolves the regulatory gap that existed after the Constitutional Court ruling by establishing clear permitted categories and a formal agreement framework. It also introduces a registration procedure and a sanctions structure that did not exist in their current form under previous outsourcing regulations.

What it does not resolve is the uncertainty around the scope of “operational support services.” That category will be defined in practice through enforcement decisions and, potentially, further guidance from the Ministry. Companies that need to place functions under that category should proceed with documented rationale rather than treating the category as a catchall for any function that is not explicitly listed elsewhere.

XPND’s HR administration and compliance team assists companies with outsourcing arrangement audits, agreement review against Permenaker 7/2026 requirements, and workforce structure assessments that map current arrangements against the new job type framework. For companies reassessing whether their current outsourcing model remains viable under the new rules, the starting point is understanding the full picture of their current arrangements before the two-year adjustment window begins to close.

Reach out to XPND’s HR compliance team to audit your current outsourcing arrangements against the Permenaker 7/2026 framework before the April 2028 transition deadline creates a timeline problem.