• NEW REGULATION ON THE COMPANY RULES & COLLECTIVE LABOUR AGREEMENT

• 2 January 2012 by admin 1 Comments

The Indonesian government has issued Regulation of the Minister of Labour and Transmigration of the Republic of Indonesia No.PER.16/MEN/XI/2011 concerning Procedures for the Making and Ratification of Company Rules and the Making and Registration of Collective Labour Agreements, which came into effect on 17 November 2011 (“Permenaker 16/2011”). The reason why this Permenaker 16/2011 was issued is that the previous regulation is no longer in accordance with the needs and condition in the field.

Permenaker 16/2011 differentiates between Company Rules (Peraturan Perusahaan/PP) and Collective Labour Agreements (Perjanjian Kerja Bersama/PKB) whereby PP means rules made in writing by the employer detailing the company’s work requirements and orders while PKB means an agreement as the result of negotiation between the labour union registered before the employment authorized institution and the employer, several employers, or the employer’s association detailing work requirements and rights and obligations.

Some provisions in Permenaker 16/2011 are: (a) an employer must have a PP or PKB if it employs at least 10 workers; (b) PP or PKB consists of work requirements not provided for in prevailing regulations and details of their implementation; if the PP or PKB covers the same subject matter as the prevailing regulations it should equal or better conditions for employees than those provided in the prevailing regulations; (c) 1 (one) PP or PKB should cover for all employees in a company; if the company has branch(es) than the main PP or PKB should prevail for all branches and a subsidiary PP or PKB can be made for each branch; (d) in a group of companies, separate PP or PKB will be applicable for each company; (e) for the purpose of ratification of PP with the relevant institution the employer must attach the advice and considerations from the employees’ representative and/or labour union in the PP document; in the absence of such advice and considerations after the lapse of the time given under Permenaker 16/2011 for providing the response, evidence in the form of a letter of request for advice and considerations will be sufficient, (f) the negotiations in the making of PKB shall be based on good faith and free will of both of the employer and the labour union and for the purpose of PKB registration, the PKB document to be submitted must be signed by the employer’s representative and the labour union; and (g) the employer must submit a renewal of the PP at the latest 30 working days before the expiration of the PP; in the event that the PP expires and the company is still in the negotiating the making of a PKB then it may apply for a PP extension which extension shall be given at the longest for 1 (one) year.

A PP ratified or a PKB registered must be before the following institutions: (i) a company located in a regency/city area with the head of regency/city employment institution, (ii) a company located in more than 1 (one) regency/city within a province with the head of the provincial employment institution, and (iii) a company located in more than 1 (one) province with the Director General of Industrial Relations and Labour Social Security Development.

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  Labour and Employment

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