The Minister of Manpower just released a new circular letter outlining implementation of the provision of religious holiday allowances in 2020 in the company during the covid pandemic 19. The Circular Letter, a non-legal product of a Government agency or officials on specific internal procedures/instruction resembling an internal memo in the private sector sphere, states that in case a company unable to pay the THR at the time specified in accordance with statutory regulations, the solution to the problem is through dialogue between the company and workers.
Further, the Circular Letter states that in the dialogue in question both parties can agree on the following:
1. Payment of THR in installment;
2. Payment of THR is delayed until a certain period according to (mutual) agreement (between the parties);
3. Time of payment and how to impose late THR payment penalty.
The Circular Letter has received strong push back from the trade unions. Speaking to the media, the Confederation of Indonesian Trade Unions (KSPI) chairperson stated that the Circular Letter has no legal umbrella – Government Regulation No. 78 of 2015 and the Minister of Manpower Regulation No. 6 of 2016 states that companies must pay THR to workers. Moreover, the KSPI chairperson stated that the Circular Letter is implying that all companies unable to pay the THR. Thus, they can pay in installments or to delay payment of the THR.
It is understandable that during the Covid-19 pandemic the country economic outlook is rapidly declining. The Government and other International Agencies claimed that the pandemic is slowing Indonesia economic growth with many companies across all industries struggling to cope with the pandemic. Nevertheless, it is undeniable fact that Indonesia Labour Regulations stipulate the Religious Holiday Allowance as one of worker’s statutory rights.
Also, although labour relationship is derived from contract law principles, the Indonesia labour regulations do not adopt the force majeure doctrine-a convenient “label” used to refer to clauses which relieve a party from performance of its contractual obligations where that performance is impacted by events outside its control, such as natural disasters or war. Thus, the pandemic could not be used as a relieve argument to delay pay or withholding statutory rights that allow employers and employees negotiate and agreed to delay or withhold payment of THR.
It is also worth to note that Circular Letter in Indonesia is conceptualized as merely clarifying or giving instructions on how to carry out certain things that are considered important and urgent that do not yet exist or the rules as primary source of positive law in Indonesia remains unclear. Despite of this, in substance Circular Lettera should not oppose superior laws or regulations. If there is a conflict between the Circular Letters and Law & Regulations, the superior Laws and Regulations take precedence.
Circular Letters are only policy rules from Administrative officials, such as Minister or Governors, instead of legal products. It is only played a role of internal instruction and recommendations. Thus, there is no legal consequence for not complying with Circular Letters.