indonesia: company regulation - rht academy · - in 2016, president joko widodo issued presidential...
TRANSCRIPT
SSEK Legal
Consultants
Indonesia: Company Regulation
Rusmaini Lenggogeni
Syahdan Z. Aziz
September 18 , 2018
2 SSEK LEGAL CONSULTANTS
Transforming the Company Regulation
I. Legislation
II. Company Regulation
III. Collective Labor Agreement
IV. Leave System under Indonesian Law
V. Religious Holiday Allowance in Indonesia
VI. Wages in Indonesia
33 SSEK LEGAL CONSULTANTS
LegislationI
The main sources and government agency governing
Company Regulation and the Collective Labor
Agreement:
▪ Law No. 13 of 2003 (March 25, 2003) on Manpower, as
adjusted by Constitutional Court decisions
▪ Law No. 2 of 2004 (January 14, 2004) on Industrial
Relations Dispute Settlement
▪ Law No. 21 of 2009 (August 4, 2000) on Labor Unions
▪ Ministry of Manpower (“MOM”) Regulations
44 SSEK LEGAL CONSULTANTS
Company Regulation II
Company Regulation is a regulation made in writing by a
company/employer that stipulates work conditions, company
procedures and the rights and obligation of the employer and
employees.
55 SSEK LEGAL CONSULTANTS
Company Regulation II
- Company Regulation is required for any company with 10
or more employees.
- Company Regulation must at a minimum cover the
following:
• Rights and obligations of the employer;
• Rights and obligations of employees;
• Terms of employment;
• Company’s code of conduct;
• Validity period of the Company Regulation; and
• Implementing provisions for employment laws and
regulations.
66 SSEK LEGAL CONSULTANTS
Company Regulation II
- It is common for a company regulation to cover the
following provisions:
• Probation period
• Working days and period
• Overtime payment
• Special leaves
• Wages administration
• Benefits and privileges
77 SSEK LEGAL CONSULTANTS
Collective Labor AgreementIII
Collective Labor Agreement (“CLA”) is an agreement
representing the result of negotiations between
workers/labor unions registered at the competent authority
and an entrepreneur, several entrepreneurs or an
entrepreneur organization containing work conditions and
the rights and obligations of both parties.
88 SSEK LEGAL CONSULTANTS
Collective Labor AgreementIII
- A CLA must at the minimum include:
• Name and address of the labor union and the employer;
• Registration number of the labor union issued by the
government;
• Rights and obligations of the labor union and the
employer;
• Validity period of the agreement (maximum of two years);
and
• Signatures of the representatives of the labor union and
the employer.
99 SSEK LEGAL CONSULTANTS
IV Leave System under Indonesian Law
Annual Leave and Public Holidays
- An employee is entitled to at least 12 working days of
annual leave after having worked at the company for 12
months continuously.
- In 2016, President Joko Widodo issued Presidential Decree
No. 24 of 2016 to create a new national holiday, Pancasila
Day, which is marked on June 1 beginning in 2017.
- In 2018, there are in total 17 public holidays and 7 joint
leave days.
1010 SSEK LEGAL CONSULTANTS
Maternity Leave
- Entitled to one-and-a-half months of maternity leave before
giving birth and an additional one-and-a-half months after
giving birth. Therefore, in total, the worker is entitled to three
months of maternity leave.
- During maternity leave, the worker is entitled to full salary
and medical reimbursements.
- Preserving the worker’s job position during maternity leave.
Leave System under Indonesian LawIV
1111 SSEK LEGAL CONSULTANTS
Paternity Leave
- Entitled to two days of paternity leave to accompany his wife
during labor.
- During paternity leave, the worker is entitled to full salary.
Leave System under Indonesian LawIV
1212 SSEK LEGAL CONSULTANTS
Religious Holiday Allowance (Tunjangan Hari Raya or
THR)
MOM Regulation No. 6 of 2016 regarding THR for Employees,
requires all employers to provide THR to employees with at
least one month of service, regardless of whether the worker
is employed on a permanent or temporary basis. Previously,
the obligation to provide THR only applied to workers with
more than three months of service.
V Religious Holiday Allowance in Indonesia
1313 SSEK LEGAL CONSULTANTS
THR must be paid once a year, within a maximum of seven
days of a given religious holiday, as follows:
• Idul Fitri for Muslim employees
• Christmas Day for Christian employees
• Hindu Day of Silence for Hindu employees
• Buddhist Waisak Day for Buddhist employees
• Chinese New Year for Confucian employees
V Religious Holiday Allowance in Indonesia
1414 SSEK LEGAL CONSULTANTS
THR:
- Equal to a minimum of one month’s salary (basic salary plus
any fixed cash monthly allowances) for workers with a
minimum 12 months of service.
- Employees with more than one month but less than 12
months of service will receive THR on a pro-rata basis.
Religious Holiday Allowance in IndonesiaV
1515 SSEK LEGAL CONSULTANTS
THR:
- Employers who do not meet their THR payment obligations
in due time are subject to a fine amounting to 5% of the total
THR amount payable, as well as administrative sanctions in
accordance with the applicable employment laws and
regulations.
Religious Holiday Allowance in IndonesiaV
1616 SSEK LEGAL CONSULTANTS
VI Wages under Indonesian Law
What is “Minimum Wage”?
Lowest allowed monthly wage, consisting of basic salary
including fixed allowance, set by governors based on cost of
living.
What is “Basic Salary”?
Basic remuneration paid to employees in accordance with the
level or type of work which amount is determined by agreement.
What is “Fixed Allowance”?
A fixed (cash) allowance is a fixed amount regularly paid to an
employee and his/her family at the same time as payment of
basic salary.
1717 SSEK LEGAL CONSULTANTS
Wages under Indonesian Law
Example of Fixed Cash Allowances:
Spousal/child support allowance, housing allowance,
transport allowance, etc.
Key: It is a Fixed Cash Allowance if not linked to the
employee’s presence at work, and it is paid regularly
and paid together with the basic salary.
VI
1818 SSEK LEGAL CONSULTANTS
Wages under Indonesian Law
- Application of Minimum Wage rules starts January 1 of each
year.
- Applies to all employees located in the respective jurisdiction
(province or regency/city).
- Sanctions / Fine of non-compliance: Imprisonment of a
minimum of 1 year/maximum 4 years and/or a fine of at least
IDR 100 million/maximum IDR 400 million (i.e. except if
companies that obtain an exemption)
- Minimum Wage rule only applies to employees having a
service period of less than one year; it is expected that the
salaries of employees having >1 year of service already
exceed the Minimum Wage.
VI
1919 SSEK LEGAL CONSULTANTS
Wages under Indonesian Law
A. Provincial Minimum Wage or Upah Minimum Propinsi
(“UMP”): Minimum Wage applicable for all regencies/cities
in a province.
B. Provincial Sectoral Minimum Wage or Upah Minimum
Sektoral Propinsi (“UMSP”): Minimum Wage applicable
to business sectors (i.e., field of business) in a province.
C. Regency/City Minimum Wage or Upah Minimum
Kabupaten/Kota (“UMK”): Minimum Wage applicable to
all areas of a regency/city.
D. Regency/City Sectoral Minimum Wage or Upah
Minimum Sektoral Propinsi (“UMSK”): Minimum Wage
applicable to business sectors (i.e., field of business) in a
regency/city.
VI
Phone 62 21 5212038, 29532000Fax 62 21 5212039
Email [email protected]
www.ssek.com | blog.ssek.com | @SSEK_lawfirm
Mayapada Tower I 14th FloorJl. Jend. Sudirman Kav. 28
Jakarta 12920
SSEK Legal
Consultants