The Contentious Minister of Manpower Circular Letter on Religious Holiday Allowance (THR) at the Time of Covid 19

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.

Surat Edaran Menaker tentang Pelaksanaan Pemberian THR Keagamaan tahun 2020

The Indonesian Omnibus Bill, a Never Ending Debate

The government has submitted a Presidential Letter, Work Creation Bill, and Academic Manuscript to the Indonesian Parliament, on 12 February 2020. This Work Creation Bill proposed by the Government is a part of an Omnibus Bill, a form of law that contains various substance of cross sector regulations that amend several laws at once. The Omnibus Bill as claimed by the Government simplifies and amending 74 (seventy four) laws and hundreds, if not thousand, of their derivative regulations.  The Omnibus Bill itself targeted three major area which are the tax, work creation, and micro, small and medium enterprises regulations.

The proponents of the Omnibus Bill assert that this Bill will streamline complex and sometimes conflicting trade related regulations. This bill, as claimed, will boost Indonesia economic growth by providing flexibility that the economic players (foreign investors) crave. A favorable economic growth will eventually improve employment rate, and perhaps eliminate poverty rate. The writer argues that despite the relations between favorable economic growth and employment rate, the economic theory which the proponents argument is based is too simplistic. A country economic principle should not only be based on the simple market supply and demand theory but to also consider sovereignty and dignity, genuine competitiveness and people economic power when creating an economic agenda.

The Omnibus – Work Creation Bill proposed by the government and currently discussed in the House of Representatives continues to be rejected by the Trade Unions and Civil Society. They consider the Employment Creation Bill likely pro-investor and only put focus on economic growth without thinking about people’s welfare and social justice. They also claim that the articles in the Work Creation Bill which consists of 79 laws and 11 clusters supports modern slavery. Specifically articles that amend the existing minimum wage scheme, termination of employment relations (redundancy) and paid leave such as menstruation and paternity leaves are perceived as lifting the protection blanket of already disadvantage labours –please see the attached bill for more details.

The writer is in agreement with the opponents’ claim, but on the methods of redundancy. In principle, employment agreement  legal umbrella is the common contract law dogma which is established between two consenting parties. If employment agreement is equal to a common contract, termination of a work agreement shall be considered as sufficient with the consent of the parties. Moreover, of the severance package, the writer argues that unemployment welfare should be the responsibility of the Government. Firstly, although the connection between severance package and welfare it is not clearly defined in any regulative products, the essence of providing support to people livelihood when they exit the labour market is suspiciously similar with unemployment benefits. Secondly, once a work agreement or contract terminated obligations of the parties are expunged.  In other words, former worker’s welfare is not the responsibility of employer once their contractual relationship finished. Thirdly, in many countries, the concept of welfare that the financial source often comes from income tax is the domain of the Government instead of private sector.

The opponents of the Omnibus Law further argue that the Bill is contrary to the civil law system which Indonesia embraced. The concept of amending several cross sector laws is often used in countries that adopt a common law system such as the United States. The writer argues that although the fundamental thinking of the Bill such as the USA’s common law flexible labour market or trade regulations liberalization principles, there is no direct connection between the Bill with the common law system as not all countries adopting the system in question such as Australia and United Kingdom implement trade liberalization or flexible labour market at the same degree as the USA. The Omnibus Law, in a matter of fact, is merely a type of law reform which is recognized by the civil law system.

Echoing the opponents consideration that the Government to be hasty when drafting the bill so that raises a numerous questions and suspicions from stakeholders such as Trade Unions and Civil Society, the writer suggests the Government to go back to the drawing board instead of pushing the Bill further in the House of representatives. Also, the current global Covid-19 pandemic likely alter the traditional global economy practices and theories. Indonesia or any other sovereign country might not be so reliant to foreign investment and force to focus on building people centered economy due to the pandemic. Consequently, the Bill is no longer fit the original purpose and debates around the Bill in then obsolete.

ruu-tentang-cipta-kerja

2020 Jawa Barat Municipal Minimum Wages

The Governor of Jawa Barat (West Java) issued a Decree (SK) of Governor of West Java concerning 2020 Municipal Minimum Wage. The Decree was issued after trade unions condemned the Governor for only approving the 2020 District/City minimum wage increase with only a circular letter (SE) – for more context please see https://indolabourdatabase.org/2019/11/25/2020-jawa-barat-provincial-and-municipal-minimum-wage/.

The 2020 Minimum Wage Decree was signed on Sunday, December 1, 2019. There are nine points stipulated in the decree. Among others revoking and declaring the Circular Letter Number 561/75/ Yanbangsos dated November 21, 2019 concerning the Implementation of District/Regency Minimum Wages (UMK) in Jawa Barat Province as obsolete.

The following details the monthly minimum wage in 27 districts / cities in Jawa Barat:

1. Karawang Regency: IDR 4,594,324 (US$ 317)
2. Bekasi City: IDR 4,589,708 (US$ 317)
3. Bekasi Regency: IDR 4,498,961 (US$ 310)
4. City of Depok: IDR 4,202,105 (US$ 290)
5. Bogor City: IDR 4,169,806 (US$ 288)
6. Bogor Regency: IDR 4,083,670 (US$ 282)
7. Purwakarta Regency: IDR 4,039,067 (US$ 279)
8. City of Bandung: IDR 3,623,778 (US$ 250)
9. West Bandung Regency: IDR 3,145,427 (US$ 217)
10. Sumedang Regency: IDR 3,139,275 (US$ 217)
11. Bandung Regency: IDR 3,139,275 (US$ 217)
12. Cimahi City: IDR 3,139,274 (US$ 217)
13. Sukabumi Regency: IDR 3,028,531 (US$ 209)
14. Subang Regency: IDR 2,965,468 (US$ 205)
15. Regency of Cianjur Regency: IDR 2,534,798 (US$ 175)
16. City of Sukabumi: IDR 2,530,182 (US$ 174)
17. Indramayu Regency: IDR 2,297,931 (US$ 158)
18. City of Tasikmalaya: IDR 2,264,093 (US$ 156)
19. Tasikmalaya Regency: IDR 2,251,787 (US$ 155)
20. City of Cirebon: IDR 2,219,487 (US$ 153)
21. Cirebon Regency: IDR 2,196,416 (US$ 151)
22. Garut Regency: IDR 1,961,085 (US$ 135)
23. Majalengka Regency: IDR 1,944,166 (US$ 134)
24. Kuningan Regency: IDR 1,882,642 (US$ 130)
25. Ciamis Regency: IDR 1,880,654 (US$ 130)
26. Pangandaran Regency: IDR 1,860,591 (US$ 128)
27. Banjar City: IDR 1,831,884 (US$ 126)

SK Gubernur Jabar UMK 2020

2020 Jawa Tengah Municipal Minimum Wages

The Governor of Jawa Tengah (Central Java) has set municipal minimum wages by signing Governor Decree Number 560/58 in 2019 concerning regency/city minimum wage in Central Java Province. This Decree has been through the existing mechanism and refers to the applicable laws and regulations which are the minimum wage formula of Article 44 paragraph 2 of Government Regulation No. 78 of 2015 and Minister of Manpower Circular Letter No. BM 305 of 2019.

The following details the minimum wage in 35 districts / cities in Central Java:

  • Semarang City:  IDR 2,715,000 (US$ 187)
  • Pekalongan City: IDR 2,072,000 (US$ 143)
  • Salatiga City: IDR 2,034,915 (US$ 140)
  • Surakarta City: IDR 1,956,200 (US$ 135)
  • Tegal City: IDR 1,925,000 (US$ 133)
  • Batang Regency: IDR 2,061,700 (US$ 142)
  • Magelang Regency: IDR 2,042,200 (US$ 141)
  • Jepara Regency: IDR 2,040,000 (US$ 141)
  • Demak Regency: IDR 2,432,000 (US$ 168)
  • Kendal Regency: IDR 2,261,775 (US$ 156)
  • Semarang Regency: IDR 2,229,880 (US$ 154)
  • Kudus Regency: IDR 2,218,451 (US$ 153)
  • Cilacap Regency: IDR 2,158,327 (US$ 149)
  • Pekalongan Regency: IDR 2,018,161 (US$ 139)
  • Karanganyar Regency: IDR 1,989,000 (US$ 137)
  • Klaten Regency: IDR 1,947,821 (US$ 134)
  • Boyolali Regency: IDR 1,942,500 (US$ 134)
  • Purbalingga Regency: IDR 1,940,800 (US$ 134)
  • Sukoharjo Regency: IDR 1,938,000 (US$ 134)
  • Banyumas Regency: IDR 1,900,000 (US$ 131)
  • Tegal Regency: IDR 1,896,000 (US$ 131)
  • Pati Regency: IDR 1,891,000 (US$ 130)
  • Pemalang Regency: IDR 1,865,000 (US$ 129)
  • Wonosobo Regency: IDR 1,859,000 (US$ 128)
  • Magelang City: IDR 1,853,000 (US$ 128)
  • Purworejo Regency: IDR 1,845,000 (US$ 127)
  • Kebumen Regency: IDR 1,835,000 (US$ 126)
  • Blora Regency: IDR 1,834,000 (US$ 126)
  • Grobogan Regency IDR 1,830,000 (US$ 126)
  • Temanggung Regency: IDR 1,825,200 (US$ 126)
  • Sragen Regency: IDR 1,815,914 (US$ 125)
  • Brebes Regency: IDR 1,807,614 (US$ 125)
  • Rembang Regency: IDR 1,802,000 (US$ 124)
  • Wonogiri Regency: IDR 1,797,000 (US$ 124)
  • Banjarnegara Regency: IDR 1,748,000 (US$ 120)

SK Gub Jateng 560-8 th 2019 UMK Jateng

2020 DI Yogyakarta Municipal Minimum Wages

The Government of the Daerah Istimewa Yogyakarta (Special Region of Yogyakarta) Province has set an increase in the Regency / City Minimum Wage (UMK) of the Yogyakarta Special Region in 2020 through the Governor’s Decree No. DIY. 257 / Kep / 2019.

The following is the amount of municipal minimum wage in the Daerah Istimewa Yogyakarta:

  1. The City of Yogyakarta: IDR 2,004,000/month (US$ 134)
  2. Sleman Regency: IDR 1,846,000/month (US$ 127)
  3. Bantul Regency: IDR 1,790,500/month (US$ 123)
  4. Kulon Progo Regency: IDR 1,750,500/month (US$ 121)
  5. Gunungkidul Regency: IDR 1,705,000/month (US$ 118)

SK UMK DIY 2020