Labor compensation remains effective

By Ridwan Sijabat

JAKARTA (JP): Despite protests from numerous employers, the ministerial decree regulating higher compensation for dismissed or resigning employees remains effective, say government officials.

Syaufii Samsyudin, director general for industrial relations and labor standards at the Ministry of Manpower and Transmigration, told The Jakarta Post here on Tuesday that companies are obliged to comply with the decree.

Employers found violating it would be processed according to the law, he warned.

"All objections and protests lodged by employers are not an excuse for them to be excluded from abiding by the decree. This new ruling issued in June 20, 2000, remains effective," he said.

He said both the Indonesian Employers Association (Apindo) and numerous employers, especially foreign investors, have complained about the new ruling and urged the government to revise it.

"However, it is impossible for the government to revise the decree because it is based on a tripartite agreement between labor unions, Apindo and the government," he said adding that while a Tripartite Board was discussing these grievances it would not substantially change the decree.

The decree issued by former manpower minister Bomer Pasaribu to replace the 1996 decree on severance payment, regulates that employers are obliged to gain permission from the Committee for Settlement of Labor Disputes (P4) if they wish to dismiss an employee.

Should permission be granted, the company is required to provide a severance payment and a merit or service payment to the dismissed worker.

On severance pay, the decree regulates that a dismissed worker employed for less than a year will receive 100 percent of their gross monthly wage while those employed for less than two-years would receive 200 percent of their gross monthly wage. This scale continues up to employees who have worked less than five years at a company.

Those who have worked more than five years will receive 600 percent of their gross monthly wage.

Syaufii said gross monthly wages are comprised of the basic salary along with housing, health and food allowances.

The previous decree only provided compensation of 500 percent of the gross monthly salary to those who have worked at least four years.

Regarding service or merit payment, the new decree regulates that dismissed employees who have worked between three and six years get another 200 percent of their gross monthly salary while those who have been employed between six and nine years gain 300 percent of their gross monthly salary.

Workers who have been employed between nine to 12 years receive 400 percent while those employed between 12 and 15 years should receive 500 percent of their monthly wage.

The scale continues on up to those who have worked for 24 years or more receiving 1,000 percent of their gross monthly salary.

The previous decree only ruled that dismissed workers who have been at a company for at least five years would receive any such service or merit payment with the highest awarded being 600 percent for those who have worked more than 25 years.

Workers who resign or retire are only entitled to receive service or merit payment.

Another new aspect of the decree is that workers dismissed due to an occupational mistake they made are still entitled to service payment.

The new decree also regulates that employers are obliged to give workers compensation in the form of annual and long service leave and transportation fees from their residence to the workplace.

Suparwanto, Apindo chairman, admitted that numerous employers opposed the decree as it favored workers too much.

"The government should also think of employers' interests amid the prolonged economic crisis," he said.

"Apindo has called on the government to revise it," he said.

But companies are already taking a stand and resisting the decree.

One example is PT Indonesia Synthetic Textile Mills, a foreign investment company in Pasar Baru, Tangerang, has refused to pay compensation in accordance with the decree to Muhammad Yunus who retired on Aug. 31.

The company, in a letter to the worker, maintained that the decree is under discussion and is being revised and thus the company will not pay according to the stipulations of the new decree.

Jacob Nuawea, chairman of the Federation of All Indonesian Workers Union (SPSI), however sent out a strong message saying that a national strike would be organized if the government revises the decree.

"SPSI will stage a national strike if the decree is revised. Investors should not only think of their business but also of their workers' fates because workers are the worst hit during dismissals," he said.

Syaufii insisted that the decree, the substance of which has been agreed on by the tripartite board, was issued to encourage greater industrial harmony between workers and management.

"With the decree, employers are expected to be extra cautious when dismissing their workers.