Labor compensation remains effective

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.