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Indonesia
 


Source and scope of regulations - 2013    

References
  • Act No. 13 of 2003 concerning Manpower [MA]
    Date: 25 Mar 2003; view website » (view in NATLEX »)
  • Act No. 21 of 2000 concerning Trade Unions [TUA]
    Date: 04 Aug 2000; view website » (view in NATLEX »)
  • Act No. 2 of 2004 concerning Industrial Relations Disputes Settlements [IRDSA]
    Date: 14 Jan 2004; view website » (view in NATLEX »)
Scope
Size of enterprises excluded (≤): none
Workers' categories excluded: civil/public servants; domestic workers
Remarks:
  • See Art. 150 MA, Chapter XII Termination of Employment: the provisions concerning termination of employment under this act cover termination of employment that happens in a business undertaking which is a legal entity or not, a business undertaking owned by an individual, by a partnership or by a legal entity, either owned by the private sector or by the State, as well as social undertakings and other undertakings which have administrators/officials and employ people by paying them wages or other forms of remuneration.

    Civil servants are covered by specific regulations.


Types of employment contracts - 2013    

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Maximum probationary (trial) period: 3 month(s)

Remarks:
  • Art. 60 MA.
    However, fixed-term contracts cannot stipulate a probation period (art. 58 (1) MA).

Fixed term contract (FTC):
  • FTC regulated: Yes
  • Valid reasons for FTC use: objective and material reasons
    Remarks:
    • Art. 59 (1) and (2) MA:
      "(1) A work agreement for a specified time can only be made for a certain job, which, because of the type and nature of the job, will finish in a specified time, that is:
      a. Work to be performed and completed at once or work which is temporary by nature;
      b. Work whose completion is estimated time which is not too long and no longer than 3 (three) years;
      c. Seasonal work; or
      d. Work that is related to a new product, a new activity or an additional product that is still in the experimental stage or try-out phase.
      (2) A work agreement for a specified time cannot be made for jobs that are permanent by nature."
  • Maximum number of successive FTCs: 2
    Remarks:
    • Art. 59 (4) MA: one extension possible.
  • Maximum cumulative duration of successive FTCs: 36 month(s)
    Remarks:
    • Art. 52 (4) MA: A fixed term contract can only be concluded for a period of no longer than two years and be
      extended one time that is not longer than one year.

Substantive requirements for dismissals (justified and prohibited grounds) - 2013    

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Obligation to provide reasons to the employee: Yes
Remarks:
  • No express obligation to state the reasons for dismissal. However, according to art. 151 (2) MA: the employer must negotiate directly with the worker (who is not unionized) or, the trade union he belongs to about his intention to carry out the dismissal.


Valid grounds (justified dismissal): worker's conduct; economic reasons; worker's capacity
Remarks:
  • See:
    * Art. 158 MA: grave wrongdoings,
    * Art. 168 MA: absence from work for more than 5 days without justified reason,
    * Art. 161 MA: violation of the provisions specified in the work agreement, the company regulations or the collective agreement,
    * Art. 160 (3) MA: inability to work for reasons related to legal criminal proceeding,
    * Art. 163, 164 and 165 MA: economic reasons (change of status of the enterprise, closing down due to continuous losses, bankruptcy).


Prohibited grounds: marital status; pregnancy; maternity leave; temporary work injury or illness; race; colour; sex; religion; political opinion; trade union membership and activities; disabilities; family members at the same workplace; whistle blowing; lawfully taking leave; fulfilling state duties; ethnic origin
Remarks:
  • Art. 153 MA


Workers enjoying special protection: pregnant women and/or women on maternity leave; confirmed injured workers
Remarks:
  • See: art. 153 c), g), j) and 172 MA.


Procedural requirements for individual dismissals - 2013    

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Notification to the worker to be dismissed: no specific form required

Remarks:
  • Before terminating the employment relationship, an employer is required to negotiate with the workers' organization concerned, or with the non-unionised worker directly, with a view to reaching agreement.
    Art. 151 (3) and 152 MA require that when negotiation fails between parties, decision on the termination will be taken by the institution for the settlement of industrial relations disputes. Since the entry into force of the Act No 2/2004 [IRDSA], the old institutions for the settlement of industrial relations disputes were dismantled and replaced by new mechanisms. As a result, the administration now only acts as a mediator if the parties fail to reach an agreement on the termination. The Industrial Relations Court will hear the dispute if no agreement was found during the mediation phase

Pay in lieu of notice: No

Notification to the public administration: No

Remarks:
  • Art. 151 (3) and 152 MA require that when negotiation fails between parties, decision on the termination will be taken by the institution for the settlement of industrial relations disputes. Since the entry into force of the Act No 2/2004 [IRDSA], the old institutions for the settlement of industrial relations disputes were dismantled and replaced by new mechanisms. As a result, the administration now only acts as a mediator if the parties fail to reach an agreement on the termination. The Industrial Relations Court will hear the dispute if no agreement was found during the mediation phase.

Notification to workers' representatives: Yes

Remarks:
  • Art. 151(2) requires that termination be negotiated.
    Negotiation will involve the worker's representative only if the employee belongs to a trade union (art. 151 (2) MA). If not, the negotiation will take place between the worker and employer.

Approval by public administration or judicial bodies: Yes

Remarks:
  • Art. 151 (3) and 152 MA require that when negotiation fails between parties, decision on the termination will be taken by the institution for the settlement of industrial relations disputes. Since the entry into force of the Act No 2/2004 [IRDSA], the old institutions for the settlement of industrial relations disputes were dismantled and replaced by new mechanisms. As a result, the administration now only acts as a mediator if the parties fail to reach an agreement on the termination. The Industrial Relations Court will hear the dispute if no agreement was found during the mediation phase.

Approval by workers' representatives: No

Remarks:
  • Art. 151(2) requires that termination be negotiated.
    Negotiation will involve the worker's representative only if the employee belongs to a trade union (art. 151 (2) MA). If not, the negotiation will take place between the worker and employer.

Notes / Remarks
The Indonesian termination system is not based on notice but on prior bipartite negotiations and if they fail, on mediation by the administration and eventually judicial settlement.

Procedural requirements for collective dismissals for economic reasons (redundancy, retrenchment) - 2013    

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Definition of collective dismissal (number of employees concerned):
No definition of collective dismissals.
No specific procedural requirements.

Remarks:
  • See: Art 164 MA allows for termination "because the enterprise has to be closed down due to continual losses for 2 (two) years consecutively or force majeure", (art. 164 (1) MA) and "when the closing down of the enterprise is caused neither by continual losses for 2 (two) years consecutively nor force majeure but because of rationalization" (art. 164 (3) MA).

Prior consultations with trade unions (workers' representatives): Yes

Remarks:
  • Art. 151 (2) MA: general rule not specific to economic dismissals.
    Art. 151(2) MA requires that termination be negociated.
    Negociation will involve the worker's representative only if the employee belongs to a trade union. If not, the negociation will take place between the worker and employer.

Notification to the public administration: No

Notification to workers' representatives: Yes

Remarks:
  • Bi-partite negotiations between the employer and the employee are compulsory in the event the employee belongs to a trade union (art. 150 (2) MA). For non-unionized workers, the bipartite negotiation will take place between the worker and employer.

Approval by public administration or judicial bodies: No

Remarks:
  • Art. 151 (3) and 152 MA require that when negotiation fails between parties, decision on the termination will be taken by the institution for the settlement of industrial relations disputes. Since the entry into force of the Act No 2/2004 [IRDSA], the old institutions for the settlement of industrial relations disputes were dismantled and replaced by new mechanisms. As a result, the administration now only acts as a mediator if the parties fail to reach an agreement on the termination. The Industrial Relations Court now sentences in last resort.

Approval by workers' representatives: No

Priority rules for collective dismissals (social considerations, age, job tenure): No

Employer's obligation to consider alternatives to dismissal (transfers, retraining...): Yes

Remarks:
  • Art. 150 (1) MA stipulates that: "the employer, the worker and/or the trade union, and the government must make all efforts to prevent termination of employment".
    According to the explanatory notes attached to the Manpower Act 2003, under the above mentioned article "the phrase make all effort under this subsection refers to positive activities or actions which may eventually prevent termination of employment from happening , including among others, arrangement of working time, saving measures, restructuring or reorganization of working methods, and efforts to develop the worker/labourer".

Priority rules for re-employment: No

Notes / Remarks
There are no specific regulations or additional requirements for collective dismissals. Therefore, notification requirements applicable to individual dismissals remain applicable.

Severance pay and redundancy payment - 2013    

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Severance pay:
Remarks:
  • Under art. 156 of the Manpower Law, termination of the employment relationship gives rise to termination payments that include severance pay and /or long service pay.

    The amounts provided here correspond to severance pay: one month's wages for each year of service, up to a maximum of nine months' pay.

    The extent of the termination package depends on the circumstances of termination.
    In the event the termination on the grounds of grave wrongdoings or absence five consecutive workdays without explanation, the worker is not entitled to any severance pay or long service pay. (Art. 160 MA)
    However, if a worker is terminated on the grounds of violation of the terms of employment, he will be nonetheless entitled to severance pay and reward pay. (Art. 158 (1) and 168 (1) MA)
  • tenure ≥ 6 months: 1 month(s)
  • tenure ≥ 9 months: 1 month(s)
  • tenure ≥ 1 year: 1 month(s)
  • tenure ≥ 2 years: 2 month(s)
  • tenure ≥ 4 years: 4 month(s)
  • tenure ≥ 5 years: 5 month(s)
  • tenure ≥ 10 years: 9 month(s)
  • tenure ≥ 20 years: 9 month(s)
Redundancy payment:
Remarks:
  • Same as severance pay.
    The Manpower Act stipulates that workers receive the standard severance, compensation, and long service pay:
    - if the business changes and the workers do not wish to remain employed (Art. 163(1));
    - if the business closes because of losses for two years or force majeure (Art. 164); or
    - if the business goes bankrupt (Art. 165).
  • tenure ≥ 6 months: 1 month(s)
  • tenure ≥ 9 months: 1 month(s)
  • tenure ≥ 1 year: 1 month(s)
  • tenure ≥ 2 years: 2 month(s)
  • tenure ≥ 4 years: 4 month(s)
  • tenure ≥ 5 years: 5 month(s)
  • tenure ≥ 10 years: 9 month(s)
  • tenure ≥ 20 years: 9 month(s)

Notes / Remarks
Under art. 156 of the Manpower Law, termination of the employment relationship gives rise to termination payments.

Severance pay amounts to one month's wages for each year of service, up to a maximum of nine months pay.

In addition, there is a payment for reward of service that consists in adding one month's pay for every three years of employment, starting with two months' pay for 3 years, up to a maximum of 10 months' wages for 24 years of service.

Avenues for redress (penalties, remedies) and litigation procedure for individual complaints - 2013    

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Compensation for unfair dismissal - free determination by court: No

Remarks:
  • No compensation foreseen in the MA.
    A ruling of unfair dismissal entails reinstatement. (see art. 170 MA, also art. 153 (2) on dismissal based on prohibited grounds)

Reinstatement available: Yes

Remarks:
  • Art. 153 (2) MA: any termination based on prohibited grounds shall be declared null and void. The employer must then reemploy the affected worker.

Preliminary mandatory conciliation: Yes

Remarks:
  • Pursuant to Act No. 2 of 2004 concerning Industrial relations settlements, the parties must first attempt to settle their dispute trough bipartite negotiations, and if negotiations fail, trhough conciliation or mediation before the dispute can go to the Industrial Relations Court.

Competent court(s) / tribunal(s): labour court

Remarks:
  • Pursuant to Act No. 2 of 2004 concerning Industrial relations settlements, the Industrial Relation Court is competent if the parties did not reach any agreement through negotiations, conciliation or mediation.

Existing arbitration: Yes

Remarks:
  • Pursuant to Act No. 2 of 2004 concerning Industrial relations settlements, the Industrial Relation Court is competent if the parties did not reach any agreement through negotiations, conciliation or mediation.

Length of procedure: 50 day(s) (statutory)

Remarks:
  • The Industrial Relations Court (IRC) must issue a verdict within 50 days as of the date of the first court session (art. 103 IRDSA).
    An appeal can be lodged before the Supreme Court IRC decision within 7 days, which should issue its decision within 20 days (art.115 IRSDA).

    Note that the prior bipartite negotiations and conciliation/mediation shall be carried out within 30 days each.

Source of additional information - 2013    

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