Employer action code: Act
The Ministry of Manpower released Regulation No. 7 of 2026 on Outsourcing at the end of April 2026, establishing a new regulatory framework for outsourcing, effective immediately for new arrangements. The prior framework, based on the omnibus Job Creation Law approved in 2020, reflected a more flexible approach to regulating employment, with fewer restrictions on outsourcing in general.
Key details
The regulation, effective April 30, 2026, allows outsourcing only for the following six categories of work:
- Cleaning services
- Food and beverage services
- Security services
- Driver and worker transportation services
- Operational support services
- Supporting services in the mining, oil and gas, and electricity sectors
The regulation also prescribes elements that all outsourcing agreements must contain, including details on the type of work concerned, duration of arrangements, working conditions such as working time, overtime, annual paid leave, compensation and benefits, occupational health and safety provisions, social security, compensation for termination at the end of service, and the division of responsibilities between the outsourcing service and employing entities.
Furthermore, both entities must ensure that entitlements and protections are observed in practice. All outsourcing arrangements must be registered at the local manpower office, which may decline registration if the arrangement does not meet regulatory requirements. All outsourcing agreements established from April 30, 2026, must meet the new requirements; preexisting arrangements have until April 30, 2028, to comply.
Employer implications
Employers should review and adjust their outsourcing policies accordingly. Note: Further guidance is expected on the new framework, for example, to clarify terms that are not defined in the regulation, such as “operational support services.” The new framework is a partial reversal of the 2020 Job Creation Law, which had significantly relaxed restrictions on outsourcing by removing the previous limitation of outsourcing arrangements to work unconnected to the hiring company's primary activities. The new regulation’s liberalization of outsourcing has been heavily criticized by labor unions as undermining workers’ statutory rights and depressing employees’ pay and benefits.
