Worker’s Wage During the Global Pandemic: Can Employers Pay Workers Less if they Agree?

The Minister of Manpower has asked the provincial Governors to implement wage protection during the Covid-19 pandemic (Covid-19). In addition, local governments are also asked to work on prevention of Covid -19 in the workplace. These are stated in the Circular Letter of the Minister of Manpower No. M/3/HK.04/III/2020 concerning Protection of Workers and Business Continuity in the Context of Prevention and Control of Covid-19 that was issued on 17 March 2020.

In contrast with the recommendation of preventing and controlling Covid-19 infection in the workplace that have yet created backlash from the labour groups and trade unions, wage protection recommendations brings about not only strong consenting arguments in the wage discourse but also another perspective on the future labour law reform. A plethora of Circular Letters from numerous Ministries also exacerbate dissenting opinions about incapability of positive laws in civil laws, underdeveloped and high-politicized countries to keep up with the current situation.

To return to the topic of wage stipulated in the Circular Letter mentioned, the following are the recommendations of the Minister of Manpower: –

  • Workers who are categorized as Covid-19 ODP (people who are monitored but have yet shown any symptoms) based on the doctor’s statement so that they cannot work for a maximum of 14 days or according to Ministry of Health standards, then the wages are paid in full.
  • Workers who are categorized as Covid-19 suspect or suspected and are isolated/quarantined according to the doctor’s statement, then the wages are paid in full during the period of isolation/ quarantine.
  • Workers who do not come to work due to COVID-19 disease as evidenced by a doctor’s statement, the wage is paid according to statutory regulations
  • Companies that restrict (suspend) business activities due to the policies of their respective local governments in preventing and overcoming COVID-19, causing some or all of their workers unable to work, taking into account business continuity, changes in the amount and manner of payment of wages are made in accordance with an agreement between employers and workers.

The writer would like to focus on the last point above. Problematic statement of “…changes in the amount and manners of payment of wages are made in accordance with an agreement between the employers and workers ” likely in violation of the wage regulations. To name a few: Article 90 of the Labour Act No. 13 of 2003 and Article 15 of the Minister of Manpower Regulations No. 7 of 2013 stipulating that employer must not pay workers less than the minimum wage. Article 92 of the Labour Act No. 13 of 2003 also stipulates wage arrangements determined by an agreement between employer and workers or trade unions must not be lower than the wage provisions stipulated in the applicable laws and regulations.

The proponents of the Circular Letter in question claim that wage by agreement is better off compare to worse off no work no pay (Article 93 (1) of Labour Act No. 13 of 2003). Then again, the no work no pay concept in the National Labour Regulations applies when worker did not come to work because of their negligence. With the issuance of the Decree of the Head of the National Disaster Management Agency regarding movement restriction to the suppression and control of Covid-19 infection, negligence element is not met.

What about the negligence element implied in the Labour Act No. 13 of 2003 which annulled the concept of no work yes pay in situation when workers are ready to work but employers could not provide work because of preventable reasons? In the case of the global pandemic status of Covid-19, the employer negligence element is not met either. Thus, at face value it could be argued that the freedom of contract principle is used in determining worker’s wage in this unpreventable situation.

This assertion, however, has one major flaw. Freedom of contract as stipulated in Article 1338 of the Civil Code comes with its legal conditions. One of the conditions stipulate by Article 1320 of the Civil Code is a permissible cause. According to Article 1337 of the Civil Code, a permissible cause is construed as the contents of the agreement are not prohibited by law or do not conflict with decency or public order. If we comeback to Article 92 of the Labour Act No. 13 of 2003 stipulates wage arrangements determined by an agreement between employer and workers or trade unions must not be lower than the wage provisions stipulated in the applicable laws and regulations; any agreement between employers and workers on wage arrangement during the Covid-19 movement restriction which amount likely lower than the wage provisions stipulated in the applicable laws and regulations has no legal value or void.

Also, it does not help the cause that the Minister of Manpower decides to issue a Circular Letter on the subject matters. In the Indonesia Administrative Law, Circular letter 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. 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. Further, Circular Letter substance should not oppose superior laws or regulations. If there is a conflict between a Circular Letters and Law & Regulations, the superior Laws and Regulations take precedence.

Circling back to the labour law reforms discourse. It is worth to consider as fundamentally labour regulations a derivative of contract law and force majeur is a principle of contract law, to have National Labour Regulations adopting 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 their control. Thus, in the event of force majeur such as the Covid-19 global pandemic the convenient principle in question can be used as a relieve argument to delay, withhold or reduce statutory rights and allows employers and workers negotiate and agreed on new terms. This adoption of force majeur principle into the National Labour Regulations should also accompanied by reform of the national welfare system as safety net replacement in uncertain times which negatively impacting both businesses and workers.

SE Menaker No. M_3_HK.04_III_2020

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