Labor bill to protect workers, hurt businesses

Labor bill to protect workers, hurt businesses

The Jakarta Post, Jakarta

The government and the House of Representatives are deliberating
upon a controversial labor bill that requires employers to pay
compensation to resigning workers and those fired for offenses
such as theft or physical violence against a fellow employee.

The bill which is similar to the once-rejected Ministerial
Decree No. 150/2000, requires employers to gain approval from the
labor court before dismissing workers and to pay severance pay
and/or service payments and accumulated benefits payments to
fired or laid off workers, depending on their length of
employment and the reason for dismissal.

The labor court will be regulated by the bill on settlement of
labor disputes and looks likely to be passed later this month.

Employers who are forced to lay off workers en masse due to
bankruptcy, overstaffing or other circumstances are obliged to
provide severance pay, a length of service payment and
accumulated benefits payment (Table I).

Accumulated benefits may included unused annual leave, housing
and medical allowances and other benefits regulated in their
collective labor agreement (KKB) between employers and their
employees.

Workers who are dismissed during their probation period or
retiring workers who are registered in pension schemes are an
exception.

The ministerial decree issued by former manpower minister
Bomer Pasaribu has sparked protests from foreign investors,
especially those from South Korea and Japan.

The bill also allows employers to dismiss workers found guilty
of committing crimes but they would be obliged to pay a one-month
salary as a severance payment, service payment and monetary
payment for unused annual leave, housing and medical allowances.

Employers are allowed to lay off workers who commit crimes
while their cases are being tried in court. However, during the
trial, workers would have the right to receive up to 50 percent
of their gross monthly salary.

For those who are sued by third parties for crimes and are put
in detention or in court, employers are obliged to pay 50 percent
of their gross monthly salary.

"Those found guilty are subject to dismissal and they have the
right to receive a length of service payment and accumulated
benefits payment while those found not guilty must be allowed to
return to their job," according to the bill.

Workers found guilty of violating workplace regulations are
subject to dismissal after oral and written warnings but they
have the right to receive severance, service and accumulated
benefits payments.

The bill requires employers to pay severance and benefits
payments for resigning workers but the amount is set at Rp 15
million (US1,764) at the most. This matter will further be
regulated in a government regulation.

Employers are also allowed to dismiss workers failing to show
up for five consecutive days without a valid excuse and such a
dismissal needs no approval from the labor court.

In case of disputes, the bill also allows workers to go on
strike as a "last resort" to fight for their interests and to
protest any unfair policy made by employers but the strikes must
be staged peacefully and in accordance with the law.

Labor unions are required to inform of a planned strike to the
management and security authorities at least seven days in
advance. Employers are also allowed to lock out employers in case
of disputes, but such an action must be preceded by informing
labor unions and security authorities at least seven days in
advance.

Employers will also be barred from replacing striking workers.

Disputes between workers and management would be handled by
mediators or the labor court the workers would be allowed to go
on strike but their salary during which would not be paid.

Additionally, employers would also be obliged to give equal
opportunity for all job-seekers and equal treatment for their
workers as well as providing training for workers to improve
their skills and productivity.

The working hours would be set at seven hours per day for a
six-day work week and eight hours a day for five-day work week.
Night shifts would be limited to six hours a night for a six-day
week and seven hours a night for five days or a total of 35 to 36
hours a week.

The bill threatens stiff penalties and costly fines for any
violations to the labor rulings (See Table II).

The Indonesian Employers Association (Apindo) criticized the
stiff penalties imposed on violations of labor rulings which are
included in the category of crimes as unfair.

"This will discourage foreign investors to invest in Indonesia
or encourage investors to move their operations to other
countries," Apindo Secretary General Djimanto told The Jakarta
Post on Saturday.

Muchtar Pakpahan, chairman of the Indonesian Prosperous Labor
Union (SBSI), appreciated the bill, and said it was part of good
law enforcement in the reform era as it aimed to protect workers'
rights which were negated during the New Order era.

"The decreasing investment over the last two years has a lot
to do with problems in the legal system and problems with the
implementation of regional autonomy -- not with the labor bill,"
he said.

Minister of Manpower and Transmigration Jacob Nuwa Wea
concurred and said the bill was needed to improve workers'
competitiveness in entering the free trade era, especially the
ASEAN Free Trade Agreement (AFTA).

"The bill requires employers to improve workers' skills and
productivity by providing necessary trainings," he said.

Asked to comment on the stiff penalties, Nuwa Wea, also
chairman of the Federation of All-Indonesian Workers Union
(FSPSI), said employers would not be punished unless they
violated the law "and the workers need to have confidence in and
be protected by the legal system."

Tambunan, chairman of the House's Commission VII on labor and
social affairs, said the House would pass the bill into law next
month unless there were major objections from the public.