KADIN INDONESIA
Indonesian Chamber of Commerce and Industry
The government is currently completing work on a Draft Bill on the Amendment (“Draft Amendment”) to Law No. 2 of 2004 on the Settlement of Industrial Relations Disputes (Penyelesaian Perselisihan Hubungan Industrial – “PPHI”), which was previously amended through the issuance of Regulation of the Government in Lieu of Law No. 1 of 2005 (collectively referred to as “Law 2/2004”). In the latest version of the Draft Amendment that Hukumonline has received, which has also been included as a part of the House of Representatives 2020 - 2024 National Legislative Program (Prolegnas) for several years already,[1] state that the issuance of the Draft Amendment will hopefully provide greater legal certainty in terms of the increasingly complex issue of resolving industrial relations disputes.[2]
At its core, the Draft Amendment introduces a number of changes to various provisions that specifically address the organization of PPHI, including principles and purposes, mediation and conciliation procedures, the designation of arbiters, the designation of ad-hoc judges, the imposition of sanctions on mediators, and so forth. However, due to the broad scope of the new framework, the analysis set out within this edition of Indonesian Legal Brief has been confined to the following matters:
Adjusted Scope of Settlement
Under the current framework of Law 2/2004, certain issues may be settled in relation to four stipulated types of Industrial Relations Disputes (Perselisihan Hubungan Industrial – “PHI”), as summarized in the following table:[3]
| Issue/PHI Type | Settlement Type | ||
| Mediation | Conciliation | Arbitration | |
| Conflicts of interest | √ | √ | |
| Rights disputes[4] | √ | ||
| Employment terminations | √ | ||
| Disputes between trade/labor unions within a company (“Disputes Between Unions”) | √ | √ | |
In contrast, under the Draft Amendment, the above-listed four types of issues/PHI can be settled through processes of mediation, conciliation or arbitration if attempts at bipartite settlements fail to produce results.[5] The Draft Amendment also introduces a new electronic PPHI mechanism, detailed provisions on which will be further addressed through the issuance of a forthcoming Regulation of the Minister of Manpower.[6]
New Provisions on Mediation and Conciliation Procedures
A number of changes have been introduced to the applicable mediation and conciliation procedures under the Draft Amendment, as summarized in the following two sub-sections.
A number of significant changes in this area have been introduced under the framework of the Draft Amendment, as summarized in the following table:
| Draft Amendment | Law 2/2004 | |
| PPHI should be settled by relevant mediators, depending on the scope of areas of PHI, as follows:[7] | PPHI to be executed by mediators at Regency/City Offices[8] | |
| Mediators | Type of PHI | |
| Mediators at regency/city level manpower offices (“Regency/City Mediators”) | PHI at the regency/city level and delegations from the Ministry or manpower offices at the provincial level (“Provincial Office”) | |
| Mediators at provincial-level manpower offices (“Provincial Mediators”) |
|
|
| Mediators at the Ministry of Manpower (“Ministry”) level (“Ministerial Mediators”) | PHI that occur within more than one province | |
| If processes of mediation fail to reach a settlement, then five measures should be taken, which include:[9] 1) Mediators must issue written recommendations in the form of settlement minutes (risalah penyelesaian) within ten business days of the first mediation trial; 2) All parties must prepare written responses to mediators that set out approvals or rejections of written recommendations. | Under Law 2/2004, the form of settlement minutes is not specified.[10] | |
If processes of mediation result in a settlement, then a joint agreement should be drawn up, a copy of which (along with the relevant deed of proof of registration) must be submitted to the Regency/City Office, Provincial Office or Minister of Manpower (“Minister”) [collectively referred to “Relevant Authorities”].[11] If the joint agreement is not implemented by one of the parties, then the disadvantaged party may undertake the following actions:[12]
|
Under Law 2/2004, the actions outlined under points (1) and (2) opposite are not currently addressed.[13] | |
| Mediators are required to settle their tasks within 30 business days of receiving the delegation of dispute settlement. If this deadline is exceeded, then the relevant mediators may submit a mediation time extension request to the Relevant Authorities which will be made available within 15 business days of any such approval being granted.[14] | Under Law 2/2004, provisions on time extensions are not currently addressed.[15] | |
Similar to the changes that will apply to mediation procedures, the new Draft Amendment conciliation procedures are summarized in the following table:
| Draft Amendment | Law 2/2004 |
| Conciliation may be performed by conciliators who have registered with a Regency/City Office. Based on a request that is filed by the disputing parties, a conciliator may implement the conciliation process outside the registered conciliator areas with the permission of the Regency/City Office that operates in the location of the registered conciliator.[16] | Under Law 2/2004, provisions on the implementation of conciliation outside the areas of registered conciliators are not currently addressed.[17] |
| Conciliation may be performed by conciliators whose working areas include the working locations of employees/laborers.[18] | Law 2/2004 recognizes the division of dispute settlements, specifically Article 18 (1) states that disputes should relate to: conflicts of interest, employment terminations or Disputes Between Unions.[19] |
| Similar to the mediation procedures, settlement minutes as written recommendations should be drawn up by the relevant conciliators.[20] | Under Law 2/2004, settlement minutes are not currently addressed.[21] |
| Similar to the mediation procedures, if one of the parties fails to comply with a joint agreement, then the disadvantaged party may also report the matter to the Relevant Authorities in order to subsequently be supervised and announced within the pages of a national newspaper.[22] | Under Law 2/2004, reporting and announcements are not currently addressed.[23] |
| Similar to the mediation procedures, a time extension request for conciliators to complete the conciliation process can be filed with the Relevant Authorities if the 30 business day deadline is exceeded.[24] | Under Law 2/2004, provisions on time extensions are not currently addressed.[25] |
Key Takeaways
If the Draft Amendment ultimately comes into force, then it will establish a new regulatory framework for industrial relations actors, including entrepreneurs, workers/laborers and the government. Through the introduction of new PPHI-related principles and purposes under the Draft Amendment, the hope is that PPHI can be implemented more effectively in ways that are beneficial to all parties concerned. However, it is also crucial for relevant disputing parties to ensure that they properly and fully implement any agreed resolution in order to avoid being reported, having the matter publicly announced or having to face enforcement through the courts.
Source: hukumonline.com
National Economy
Regional Economy
