The contract between the employer and service provider A has ended, service provider B has won the next tender, and the same workers remain at the same posts. A question that almost always arises: do the workers start from scratch at the new provider, with a new contract, new tenure, and negotiable rights?
The answer has long been "no," and since the end of October 2026, the basis has become stronger. Law Number 27 of 2026 concerning Employment Protection was established and promulgated on October 28, 2026 (State Gazette 2026 Number 179). According to the metadata from the JDIH of the Ministry of Manpower, this law completely revokes Law 13/2003 and repeals employment provisions in Law 6/2023.
The Origin of the Principle: Constitutional Court Decision 27/PUU-IX/2011
The Constitutional Court ruled on this case on January 17, 2012. Workers under outsourcing contracts (PKWT) are stated to be protected through the principle of the transfer of protection rights (known as TUPE): as long as the object of their work remains, the new provider continues the employment relationship without lowering the terms, workers are not treated as new employees, and their tenure continues to be counted.
This principle was then formalized. Government Regulation 35/2021 Article 19 paragraph (1) requires that PKWT for outsourced workers stipulates the transfer of protection rights if the outsourcing company changes and the object of work remains the same. Paragraph (2) refers to it as a guarantee of continuity of work. Paragraph (3) closes the loophole: if workers do not receive that guarantee, the outsourcing company is responsible for fulfilling the workers' rights.
What Law 27/2026 Adds
Reports from CNBC Indonesia, CNN Indonesia, and Fortune Indonesia on the new law draft highlight three relevant points for provider changes:
- Tenure at the old provider is cumulatively counted with tenure at the replacing provider, as long as the work remains the same.
- Outsourcing companies are prohibited from cutting or reducing the normative rights that have already been agreed upon.
- PKWT is limited to a maximum of 2 years with two extensions, each for a maximum of 1 year.
The practical impact of the first point: the replacing provider cannot "reset" the contract limit count by signing a new PKWT from month zero.
| Situation | Applicable | Basis |
|---|---|---|
| Provider changes, employer and work remain the same | Rights transferred, at least equal to the old provider | Constitutional Court Decision 27/PUU-IX/2011; Government Regulation 35/2021 Article 19 paragraph (1); Law 27/2026 |
| Counting tenure | Cumulative across providers | Law 27/2026 (as reported) |
| New provider does not guarantee continuity of work | Outsourcing company bears the fulfillment of rights | Government Regulation 35/2021 Article 19 paragraph (3) |
| PKWT ends | Compensation of 1 month's wages per 12 months, proportional | Government Regulation 35/2021 Articles 15 and 16 |
| Outsourced workers used in core production work | Employment relationship transfers to the employer | Law 27/2026 Article 98 (CNN Indonesia) |
Unanswered Questions
The circulating text has not clearly answered whether the compensation for PKWT at the end of the contract is calculated from cumulative tenure or only from the tenure at the relevant provider. Technical details regarding outsourcing are also still awaiting implementing regulations. There is also a difference in coverage: reports on Law 27/2026 mention four types of supporting services (cleaning, worker catering, security, worker transportation), while Ministerial Regulation 7/2026, which was published earlier, mentions six.
What Can Be Checked Now
For employers preparing for a re-tender, these points are worth including in procurement documents: clauses for the transfer of protection rights for continued workers, a list of tenure for each worker from the old provider, and a new PKWT that records previous tenure. For workers, keep a copy of the old PKWT and the last pay slip, as both are the simplest proof of rights that must be continued.
According to the same reports, companies are given one year to adjust, and existing outsourcing agreements remain in effect until they expire. Since the official text is still new, verify the wording of the articles against the official copy before drafting or reviewing contracts.
Sources
- JDIH Ministry of Manpower, Law Number 27 of 2026 concerning Employment Protection (status, date of promulgation, regulations revoked)
- JDIH DJSN, Government Regulation Number 35 of 2021 concerning PKWT, Outsourcing, Working Time and Rest Time, and Termination of Employment (Articles 15, 16, 18, 19)
- Constitutional Court, Decision Number 27/PUU-IX/2011 (official translation by the Constitutional Court)
- CNBC Indonesia, news on the issuance of the Employment Protection Law (November 7, 2026)
- CNN Indonesia, news on the restrictions of outsourcing work in the new employment law (November 10, 2026)
- Fortune Indonesia, news on the enactment of Law Number 27 of 2026