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.