P3HKI Proposes Labour Compliance as Prerequisite for Mergers and Acquisitions

The Indonesian Labour Law Educators and Practitioners Association (P3HKI) is pushing for compliance with labour regulations to become a prerequisite for corporate actions, such as mergers and acquisitions, to ensure workers’ rights are upheld. ‘Why don’t we introduce a mechanism where, if there is going to be a corporate action, a merger, an acquisition, there is a requirement that we call a Certificate of Labor Compliance,’ said P3HKI Deputy Chairman Ahmad Ansyori during the BIG Strategic Forum 2026 discussion in Jakarta on Tuesday. According to him, fulfilling labour laws and regulations needs to become an instrument to ensure the protection of workers’ rights remains intact amidst increasing investment activity and corporate restructuring. ‘So, the fulfilment of labour legislation becomes one of the requirements to enter into a merger, acquisition, or any type of corporate action process. If it is not fulfilled, then it cannot be completed,’ he stated. Ahmad assessed that Indonesia needs to develop preventive measures to anticipate various labour issues arising from corporate actions, including the neglect of workers’ rights. He said worker protection needs to be strengthened in line with the government’s efforts to attract investment into the country. ‘We invite foreign investment, we welcome it, we celebrate it, but legal sovereignty must not be placed below investment,’ he said. Beyond the proposed labour compliance certificate, Ahmad also urged the establishment of an escrow account mechanism under government supervision to guarantee the fulfilment of workers’ rights if a company undergoes a change of ownership. He noted that currently, companies are required to calculate and reserve long-term obligations to workers, including severance pay, long-service awards, and compensation for entitlements. However, this mechanism is deemed insufficient to ensure workers’ rights are met if a company changes ownership or ceases operations. ‘What if it doesn’t stop at calculating and reserving, but goes into an escrow account,’ he said. Ahmad explained that funds in such an account could be used to meet the company’s obligations to workers in the event of a dispute or if the company is unable to fulfil its obligations. He expressed hope that these recommendations will be considered in the process of drafting and refining future labour regulations, including in the deliberation of the revision of the Labour Law. According to him, Indonesia needs to ensure that efforts to attract investment go hand in hand with law enforcement and the protection of workers’ rights.