The Government has issued Minister of Manpower Regulation Number 7 of 2026 concerning Outsourced Work (“MOM Regulation No. 7 of 2026”), which was stipulated and promulgated on 30 April 2026. MOM Regulation No. 7 of 2026 was issued as a follow-up to Constitutional Court Decision Number 168/PUU-XXI/2023 and as a further regulation concerning outsourced work.
MOM Regulation No. 7 of 2026 provides more specific regulations concerning the types and fields of work that may be outsourced, the requirements for Outsourcing Agreements, the recording of Outsourcing Agreements, as well as the obligations of the parties in the implementation of outsourced work. These provisions complement the outsourcing regulatory framework previously regulated, among others, under Government Regulation Number 35 of 2021 (“GR 35/2021”) concerning Fixed-Term Employment Agreements, Outsourcing, Working Hours and Rest Periods, and Termination of Employment (“PP 35/2021”), which remains in force to date.
One of the important changes under MOM Regulation No. 7 of 2026 is the clarification of the types and fields of work that may be outsourced. MOM Regulation No. 7 of 2026 provides that certain outsourced work involving the provision of worker/labor services constitutes supporting activities comprising 6 (six) categories of work.
The following are several important provisions under MOM Regulation No. 7 of 2026:
| Aspect | Previous Regulatory Framework | MOM Regulation No. 7 of 2026 |
| Types and fields of outsourced work | GR 35/2021 regulates the implementation of outsourcing, including the employment relationship between the Outsourcing Company and workers/laborers, but has not stipulated categories of types and fields of outsourced work as detailed under MOM Regulation No. 7 of 2026. | Outsourced work constitutes supporting activities covering: (i) cleaning services; (ii) food and beverage provision; (iii) security; (iv) provision of drivers and worker/laborer transportation; (v) operational support services; and (vi) supporting work in the mining, oil, gas, and electricity sectors. |
| Outsourcing Agreement | GR 35/2021 regulates the employment relationship framework in the implementation of outsourcing, including the employment relationship between the Outsourcing Company and workers/laborers. | The agreement between the Employer Company and the Outsourcing Company must be made in writing and at least contain the outsourced work, term, location, number of workers/laborers, protection and rights of workers/laborers, and the rights and obligations of the parties. |
| Protection and rights of workers/laborers | Protection of workers/laborers in the employment relationship with the Outsourcing Company remains part of the outsourcing regulatory framework. | The Outsourcing Company is responsible for the protection and rights of workers/laborers. In addition, the Employer Company must ensure that the Outsourcing Company fulfills the protection and rights of workers/laborers at least in accordance with statutory provisions. |
| Recording of Outsourcing Agreements | – | The Outsourcing Company must submit an application for recording the Outsourcing Agreement to the relevant Manpower Office at the location where the work is performed no later than 3 (three) working days after the agreement is signed. |
| Obligations of the Outsourcing Company | The Outsourcing Company is required to comply with the licensing requirements and other applicable requirements for the implementation of outsourced work. | The Outsourcing Company must implement occupational safety, health, and environmental standards; record the Outsourcing Agreement with the relevant Manpower Office; and commence business activities no later than 1 (one) year after the business license is issued. |
| Administrative sanctions | – | An Employer Company that violates the provisions regarding the types and fields of outsourced work is subject to administrative sanctions in stages in the form of written warnings and restriction of business activities |
| Transitional provisions | – | Existing Outsourcing Agreements remain valid until the expiry of their term. However, existing types and fields of outsourced work must be adjusted to comply with MOM Regulation No. 7 of 2026 no later than 2 (two) years from the date of promulgation. |
MOM Regulation No. 7 of 2026 also regulates the minimum requirements for Outsourcing Agreements between the Employer Company and the Outsourcing Company. Such agreement must be made in writing and must at least specify the type of work to be outsourced, the term, the location where the work is carried out, the number of outsourced workers/laborers, the protection and rights of workers/laborers, as well as the rights and obligations of the parties. The protection and rights of workers/laborers include, at a minimum, wages, overtime pay, working hours and rest periods, annual leave, occupational safety and health, social security, religious holiday allowance, as well as rights upon the expiration of the employment relationship or termination of employment.
In terms of the protection of workers/laborers, the Outsourcing Company remains the party responsible for fulfilling the protection and rights of workers/laborers. However, the Employer Company is also required to ensure that the Outsourcing Company fulfills the protection and rights of workers/laborers at least in accordance with the provisions of laws and regulations.
MOM Regulation No. 7 of 2026 also regulates the obligation to record Outsourcing Agreements. The Outsourcing Company must submit an application for recording to the relevant Manpower Office at the location where the work is carried out no later than 3 (three) working days from the date the Outsourcing Agreement is signed. The competent Manpower Office may suspend the issuance of the proof of recording if the Outsourcing Agreement does not comply with the provisions regarding the types and fields of work or the minimum requirements for the agreement.
From an enforcement perspective, an Employer Company that violates the provisions concerning the types and fields of outsourced work as stipulated in Article 3 shall be subject to administrative sanctions in stages, in the form of a written warning and restriction of business activities. The restriction of business activities may take the form of limiting the production capacity of goods and/or services for a certain period and/or postponing the granting of business licensing at one or several locations for a Company that has projects in several locations.
However, the entry into force of MOM Regulation No. 7 of 2026 does not automatically terminate existing Outsourcing Agreements. Based on the transitional provisions, existing Outsourcing Agreements shall remain in effect until the expiration of the term of the agreement. On the other hand, existing types and fields of outsourced work must be adjusted to the provisions of MOM Regulation No. 7 of 2026 no later than 2 (two) years from the date of promulgation, i.e., no later than 30 April 2028.
Accordingly, companies that currently use outsourcing services are advised to begin reviewing their existing outsourcing arrangements, including mapping the types and fields of work being outsourced, reviewing the compliance of the Outsourcing Agreements with the new requirements, ensuring the fulfillment of workers’/laborers’ rights, and ensuring that the Outsourcing Company fulfills the applicable registration and licensing obligations.
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