Insurance Requirement for Short-Term Foreign Workers in Indonesia

Key Provisions

Under Decree No. 3, the employers must provide TKA employed for less than six months with the insurance program that includes guarantees on work accidents, health, and death. The insurance company where the employers enroll their TKA must be licensed by the Financial Services Authority (Otoritas Jasa Keuangan). The insurance company organizing and managing this program shall also provide participation data in the system connected and integrated with the TKA online system at the Directorate of Foreign Workers Utilization Control of MOM. Decree No. 3 requires the implementation of the insurance program for short-term TKA to be evaluated every six months or anytime as necessary.

The Appendix of Decree No. 3 regulates the premium amount to be paid for the insurance program, which depends on the coverage period: (i) IDR 762,000 for one month; (ii) IDR 1,715,000 for three months and (iii) IDR 2,477,000 for six months. However, it is unclear whether the TKA or employer shall be responsible to pay the insurance premium.

The insurance coverage is limited to a maximum of IDR 200,000,000 for death and permanent disability due to work accident, with an additional maximum of IDR 25,000,000 to return the deceased’s body to the country of origin.

Implementation in Practice

In order to support the implementation of Decree No. 3, the government of the Republic of Indonesia has established Astaka (https://astaka.id/), an online platform that facilitates the insurance program for TKA in Indonesia who work in less than six months. Through Astaka, the employer will be able to process the registration and issuance of insurance policies, claim, refund, activation of policies and any other related matters online.

Furthermore, starting from 1 September 2022, the employers of short-term TKA who have not yet applied for the Foreign Workers Utilization Plan (Rencana Penggunaan Tenaga Kerja Asing or “RPTKA”), will be required to submit an Electronic Policy Certificate from Astaka with every new application to RPTKA. As for the employers with existing RPTKA, Article 39(1)(b) of GR No. 34 provides that if such employers fail to register their TKA in an insurance program, they may be subject to administrative sanction in the form of temporary suspension of RPTKA.

Conclusion

Employers in Indonesia hiring short term TKA must take note of the above requirements and complete the necessary formalities in a timely manner.