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Print articleIndonesia: New Regulation on Company Regulations and Collective Labour Agreements
March, 2012 -
On 17 November 2011, the Minister of Manpower and Transmigration (“MOM”) issued Regulation No. PER.16/MEN/XI/2011 on the Preparation and Legalization of Company Regulations and the Preparation and Registration of Collective Labour Agreements (“PER 16”).
In principle, the provisions on the preparation and legalization of CR are not different from previous regulations. PER 16 does however remove the obligation to submit a written request along with the application for the legalization to the MOM. The other provisions on CR generally remain the same.
Major changes which differentiate PER 16 from the former regulations concern the preparation of CLAs. New provisions on the preparation of CLAs relate to there being only one labour union in the company which does not represent the majority of employees (ie more than 50%). In this case, the labour union may only represent employees in CLA negotiations if it has the support of more than 50% of employees expressed in a vote. A committee consisting of representatives of the employees and the management of the labour union must be formed to administer a vote in compliance with the new procedures provided in PER 16. PER 16 also contains new provisions on the existence of several labour unions and their eligibility to represent the employees in negotiations. Another major change in PER 16 is the mechanism for the settlement of disputes. Previously, if consensus on the CLA could not be achieved through negotiations, the dispute went to mediation. If mediation failed, the mediator would report the failure to the MOM to determine a solution to the dispute. The MOM would then appoint an official to settle the CLA dispute. If this also failed, the dispute could then be decided by the Industrial Relations Court. Now, under PER 16, if mediation fails, the employer or the labour union may submit the dispute directly to the Industrial Relations Court.
PER 16 came into effect on 17 November 2011, but existing CRs and CLAs remain valid until their expiry.
In principle, the provisions on the preparation and legalization of CR are not different from previous regulations. PER 16 does however remove the obligation to submit a written request along with the application for the legalization to the MOM. The other provisions on CR generally remain the same.
Major changes which differentiate PER 16 from the former regulations concern the preparation of CLAs. New provisions on the preparation of CLAs relate to there being only one labour union in the company which does not represent the majority of employees (ie more than 50%). In this case, the labour union may only represent employees in CLA negotiations if it has the support of more than 50% of employees expressed in a vote. A committee consisting of representatives of the employees and the management of the labour union must be formed to administer a vote in compliance with the new procedures provided in PER 16. PER 16 also contains new provisions on the existence of several labour unions and their eligibility to represent the employees in negotiations. Another major change in PER 16 is the mechanism for the settlement of disputes. Previously, if consensus on the CLA could not be achieved through negotiations, the dispute went to mediation. If mediation failed, the mediator would report the failure to the MOM to determine a solution to the dispute. The MOM would then appoint an official to settle the CLA dispute. If this also failed, the dispute could then be decided by the Industrial Relations Court. Now, under PER 16, if mediation fails, the employer or the labour union may submit the dispute directly to the Industrial Relations Court.
PER 16 came into effect on 17 November 2011, but existing CRs and CLAs remain valid until their expiry.
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