Outsourcing refers to the arrangement in which workers are hired through a third-party provider or an external company. Although the term “outsourcing” is not explicitly found in the Indonesian legal framework. But its meaning is regulated under Article 64 of Law No. 13 of 2003, as amended by Law No. 6 of 2023 on the Ratification of Government Regulation in Lieu of Law No. 2 of 2022 (“Manpower Law”) which mention that “an enterprise may subcontract part of its work to another enterprise under a written agreement of contract of work or a written agreement for the provision of worker/labour”.
Therefore, an outsourcing company is a legal entity authorized to perform certain work and provide workers based on an agreement with the client company.
Liability for the Actions of Outsourced Workers
The legal relationship in an outsourcing scheme is between the worker and the outsourcing company, not between the worker and the client company. This principle is governed under Article 66 of Manpower Law and Article 18 (3) of Government Regulation No. 35 of 2021 on Fixed-Term Employment Agreements, Outsourcing, Working Hours, Rest Periods, and Termination of Employment(“GR No. 35/2021”). These provisions regulate that worker protection, employment conditions, and dispute resolution fall under the responsibility of the outsourcing company.
Accordingly, if an outsourced worker commits a disciplinary violation or negligence, the client company must report the matter to the outsourcing company for appropriate follow-up and handling, as the formal employment relationship exists between the worker and the outsourcing company.
If the contract between the client company and the outsourcing company contains a clause on liability for damages caused by outsourced workers, then the outsourcing company must pay for any losses caused by outsourced workers. If the contract does not include such a clause, then the client company may still file a claim under the Indonesian Civil Code, Article 1365 of the Indonesian Civil Code (tortious act) or Article 1367 of the Civil Code (liability for those under one’s supervision), as long as it can be proven that the outsourcing company was negligent or failed to supervise its workers.
In practice, if a loss arises from the actions of an outsourced worker, the client company may seek accountability directly from the outsourcing company, which has the employment relationship with the worker.
A Case Law Example
The North Jakarta District Court Decision No. 634/Pdt.G/2020/PN.Jkt.Utr (“Case No. 634”) set the example for this matter. On pages 66–67 of the judgment, the panel of judges emphasized that the client company had no employment relationship with the outsourced worker. The employment relationship existed only between the worker and the outsourcing company.
Page 66: “It has been proven that Defendant II Taupiqur Ropik is not an employee of Defendant I, but an employee of PT Berkat Karya Indonesia as the outsourcing company. Therefore, Defendant I PT Charoen Pokphand Jaya Farm has no employment relationship with Defendant II, but rather a contractual relationship with PT Berkat Karya Indonesia as the outsourcing provider.”
Page 67: “Considering the above, the panel of judges consider that since there is no employment agreement between Defendant I PT Charoen Pokphand Jaya Farm and Defendant II Taupiqur Ropik, there is no legal relationship between them. As the result, all acts committed by Defendant II fall under the responsibility of the outsourcing company (PT BKI), not Defendant I.”
This decision confirms that liability for the actions of outsourced workers rests with the outsourcing company, not the client company.
A Conclusion
In an outsourcing scheme, the legal employment relationship exists only between the worker and the outsourcing company, not the client company. Therefore, if an outsourced worker commits a harmful act that causes losses to the client company or third parties, legal responsibility lies with the outsourcing company.
This principle is in line with Article 66 of the Manpower Law in conjunction with Article 18(3) of GR No. 35/2021, and was reinforced by North Jakarta District Court Decision No. 634/Pdt.G/2020/PN.Jkt.Utr, which confirmed that the client company has no direct legal relationship with outsourced workers. Accordingly, liability for the actions of outsourced workers rests with the outsourcing company as their official employer.
Disclaimer: This article provides a general overview of the legal considerations surrounding liability in outsourcing schemes, particularly regarding the responsibility for damages caused by outsourced workers. It is intended for informational purposes only and does not constitute legal advice. Readers should not act or rely solely on the information provided herein without seeking appropriate legal counsel. Laws and interpretations may evolve over time, and outcomes may vary based on specific facts and circumstances. For tailored legal assistance or further clarification regarding the matters discussed in this article, our team would be pleased to assist.
Perdana & Rekan,
October 2025