Indonesia tightens rules to protect outsourced workers in 2026
JAKARTA, INDONESIA — Indonesia has issued a sweeping new regulation that sharply restricts the types of work that can be outsourced and strengthens legal protections for outsourced workers, marking one of Southeast Asia’s most significant labor reforms in years.
According to a report from Antara News, Manpower Ministerial Regulation No. 7 of 2026 on Outsourced Employment, announced by Minister of Manpower Yassierli, follows a 2023 Constitutional Court decision that mandated tighter limits on outsourcing — and it signals a new compliance reality for multinational firms operating in the region.
The shift carries direct implications for United States and global companies that rely on Indonesia’s labor market for support services across mining, energy, and operational functions.
A narrower definition of permissible outsourced work
The regulation explicitly limits outsourced work to defined categories: cleaning services, food and beverage services, security services, driver provision and worker transportation, operational support services, and supporting work in the mining, oil and gas, and electricity sectors.
Employers must now sign written agreements with outsourcing firms that specify the type of work, duration, location, number of workers, labor protections, and the rights and obligations of both parties.
“This ministerial regulation is a follow-up to Constitutional Court Decision No. 168/PUU-XXI/2023, which mandates restrictions on outsourced work,” Yassierli said.
He added that the policy “aims to provide legal certainty, strengthen the protection of workers’ rights, and at the same time maintain business continuity” — a framing meant to balance worker welfare with employer flexibility.
Mandated worker rights and compliance obligations
Outsourcing companies are now required to fulfill all worker rights under Indonesian law, including wages, overtime pay, regulated working hours and rest periods, annual leave, occupational safety and health protections, social security for health and employment, religious holiday allowances, and severance pay.
The regulation effectively closes the gap that previously allowed outsourced workers to receive lower benefits than directly employed staff.
“Through this regulation, the government reaffirms its commitment to continuously promote harmonious, transformative, and fair industrial relations with the spirit of advancing industry and ensuring worker welfare,” Yassierli said.
The framework places clear compliance obligations on both employers and outsourcing vendors, raising the bar for documentation, accountability, and enforcement across the country’s labor market.
The new rules reflect a broader recalibration unfolding across the global outsourcing industry, where governments in Asia, Europe, and Latin America are tightening labor regulations to address worker protections amid the rise of contract and contingent employment models. For example, the International Labour Organization has flagged non-standard work arrangements as a growing global policy concern.
For U.S. multinationals operating in Indonesia, the regulation signals the end of low-friction outsourcing arrangements — and providers that already deliver compliance-grade service, transparent contracts, and full worker benefits are positioned to win a larger share of contracts as enterprise buyers prioritize legal certainty alongside cost efficiency.
