Hi Friend KH!
Are you familiar with the term “outsourcing”?
This term often appears in the world of the work industry.
Let’s talk more about outsourcing, including how work agreements in this system work.
Definition of Outsourcing
Outsourcing is the process by which a company transfers some of its operations to another company.
In the context of Indonesian law, this term refers to Article 1601b of the Civil Code.
Outsourcing involves two parties: the
The contractor agrees to pay a certain amount of money to the vendor to complete a certain job.
Legal Basis for Outsourcing
According to the Labor Law, two types of outsourcing are regulated:
- Job Contractor
- Written Agreement: Delivery of work must be by written agreement.
- Job Requirements: Outsourced work must support the company’s main activities and not hinder the direct production process.
- Worker Protection: Workers should receive the same protections as workers in the employing company.
- Worker/Labor Service Provider
- Type of Work: Workers of the service provider must not be used for the company’s core activities.
- Protection and Rights: Service providers should ensure the protection of workers’ rights and establish written employment agreements.
Outsourcing Work System
In an outsourcing system, the client company utilizes labor from a third party.
However, outsourced workers only perform certain tasks and do not have responsibilities as extensive as permanent employees.
- Treatment without discrimination.
- Overtime pay for working beyond working hours.
- Social security for workers and their families.
- Severance pay upon termination of employment if eligible.
- Legal aid.
Key Differences with Contract Employees:
- Duration of Employment: Contract employees have a maximum tenure of five years, while outsourced workers are based on the needs of the company.
- Employment Agreement: Contract employees deal directly with the company, while outsourcers deal with the outsourcing company.
- Responsibilities: Contract employees have similar responsibilities to permanent employees, while outsourced workers have limited responsibilities.
Benefits of Outsourcing
According to Detik.com, some of the benefits of outsourcing are:
- Cost Efficiency: Save on HR expenditure.
- Business Focus: Allows companies to focus on core business and innovation.
- New Partnerships: Open partnership opportunities with outsourcing companies.
- Product Development: Enhance capabilities in product development and speed to market.
Contents of Outsourced Work Agreement
An outsourced employment agreement must be in writing and include:
- Company name and address.
- Employee name and data.
- Place and type of work.
- Amount and method of wage payment.
- Rights and obligations of both parties.
- Term of the contract.
- Place and date of signing.
- Signature of both parties.
PP No. 35/2021 also stipulates that outsourcing companies must guarantee workers’ rights in the event of a change of outsourcing company, as long as the object of work remains.
The duration of an outsourced work agreement is a maximum of 2 years and can be extended once a year.
KH Contact
If you are interested in using outsourcing services with a clear and legally compliant agreement, contact Contract Law.
We offer lawyer-approved outsourcing agreement creation services at affordable prices and fast turnaround times.
Visit KH Services – Outsource Agreement page for more information.
You can also get a free consultation at Ask KH or send a DM to Instagram @kontrakhukum.
Don’t miss the opportunity to join the KH Business Community or be part of Contract Law’s Affiliate Program to earn extra income.
Register now and improve your business skills and network!
