Hoax and Misinterpretation of Omnibus Law in Indonesia

Read this if you:

• want to know what hoax or misinterpretation information that is circulating about the Omnibus Law
• want to know about the clarification given by The House of Representatives of the Republic of Indonesia (DPR RI)

Indonesia – The House of Representatives of the Republic of Indonesia (DPR RI) has passed the omnibus bill on job creation into law despite massive rejection from workers and activists as they fear that the law will bring a negative impact on the environment and labor rights.

Labor unions and civil rights organizations nationwide have pledged to stage large-scale protests and strikes starting Monday to Thursday (5-8 October 2020) as a motion to oversee the plenary session. Knowing the bill has passed, the Association of Indonesian Trade Union (ASPEK) insisted the strike will remain in place as planned. 

At least 32 labor unions have vowed to conduct a nationwide strike on October 6 until October 8 as a protest against the draft of the controversial Omnibus Law on job creation, which is still under deliberation by the House of Representatives (DPR). A video on the call for the strike has been circulating on social media. In the video, a representative of the labor unions said around 10 million laborers in at least 30 provinces will join the movement. 

Responding to the planned strike, the Indonesian Employers Association (Apindo) and the Indonesian Chamber of Commerce and Industry (Kadin) have issued a circular addressed to employers, urging them to educate their workers on sanctions that will be handed down to them if they join the strike, as regulated in the Manpower Law’s Article 137. Separately, the National Federation of Trade Unions (KSPN) has instructed its members to not join the strike. According to the latest development as per this Insight was written, the demonstration will be held in several large cities including Jakarta, Karawang, Serang, Makassar, Medan, and Surabaya.

Some of the points circulated in the workers union and its explanations are as follows (these points are related to the clarifications below): 

1. The wage is set per unit of time. This provision leaves room for hourly wages. When wages are paid per hour, the minimum wage will automatically disappear. 
2. The minimum wage is only based on the UMP (Provincial Minimum Wage), where the UMK (City / Regency Minimum Wage) and UMSK (Regency / City Sectoral Minimum Wage) are removed.
3. Sanctions for employers who pay wages below the minimum updah are removed.
4. There are no penalties for employers who are late in paying wages.
5. Workers who were laid off due to receiving the Third Warning Letter no longer receive severance pay.
6. The workers who resigned are no longer eligible for any compensation.
7. Workers who have been laid off due to a change in status, merger, consolidation, or change in company ownership are no longer eligible for severance pay.
8. Workers who have been laid off because the company has closed because the company has suffered continuous losses for 2 (two) years or due to force majeure, they no longer receive severance pay.
9. Workers who were laid off because the company went bankrupt no longer receive severance pay
10. Workers who die, to their heirs, are no longer given an amount of severance pay
11. Workers who have been laid off due to retirement age are no longer eligible for severance pay
12. Workers who have been laid off due to prolonged illness, experience disabilities due to work accidents when they are laid off, no longer receive severance pay
13. Exempt contract work in all types of work
14. Outsourcing is free to use in all types of work and there is no time limit
15. The obligation of foreign workers to understand Indonesian culture is lost. Thus, foreign workers are not required to speak Indonesian.

The House of Representatives of the Republic of Indonesia corrects some of the points above through the official Instagram account (@dpr_ri). The account states that there are 12 points that are incorrect and the actual facts are explained along with the related articles.

1.  Is it true that severance pay will be eliminated?

Fact: There is still severance pay. Article: Chapter IV: Manpower – Article 89 Regarding amendments to Article 156 Paragraph 1 of Law 13 of 2003: In the event of termination of employment, the entrepreneur is obliged to pay severance pay and/or service pay.

2. Is it true that the UMP, UMK, UMSP were deleted?

Fact: Regional Minimum Wages (UMR) still exist. Article: Chapter IV: Manpower – Article 89 Regarding amendments to Article 156 Paragraph 1 of Law 13 of 2003: In the event of termination of employment, the entrepreneur is obliged to pay severance pay and / or service pay.

3. Is it true that labor wages are calculated per hour?

Fact: Nothing has changed with the current system. Wages can be calculated based on time or based on results. Article: Chapter IV: Manpower – Article 89 Regarding amendments to Article 88B of Law 13 of 2003: Wages are determined based on Time unit and/or unit yield.

4. Is it true that all the rights to leave (sick leave, marriage leave, circumcision leave, baptism leave, death leave, maternity leave) are lost and there is no compensation?

Fact: The right to leave remains. Article: Chapter IV Manpower – Article 89 Concerning amendments to Article 79 of Law 13 of 2003.

Paragraph (1) Entrepreneurs are required to provide: Time off and Paid leave.

(Paragraph 3) The leave that must be given to workers / laborers is annual leave, at least 12 (twelve) working days after the worker / laborer has worked for 12 (twelve) months continuously.

(Paragraph 5) In addition to the time off and leave as referred to in the paragraph above, companies can provide extended leave as stipulated in the work agreement, company regulations, or collective working agreement.

5. Is it true that outsourcing is replaced by a lifetime contract?

Fact: Outsourcing to outsourcing companies is still possible. Workers become employees of outsourcing companies. Article: Chapter IV Manpower – Article 89 Concerning amendments to Article 66 Paragraph 1 of Law 13/2003: The working relationship between the outsourcing company and the workers/laborers it employs is based on a work agreement for a specified period of time or a work agreement for an unspecified time.

6. Is it true that there will be no permanent employee status?

Fact: Permanent employee status still exists. Article: Chapter IV Manpower – Article 89 Concerning amendments to Article 56 of Law 13 of 2003: Work agreements are made for a certain time or for an unspecified time.

7. Can companies do layoffs anytime unilaterally?

Fact: Companies cannot unilaterally lay off employees. Article: Chapter IV Manpower – Article 90 Concerning amendments to Article 151 of Law 13 of 2003

(Paragraph 1) Termination of employment is carried out based on an agreement between the entrepreneur and the worker / laborer.

(Paragraph 2) In the event that the agreement as referred to in paragraph (1) is not reached, the settlement of employment termination shall be carried out through the procedure for settling industrial relations disputes in accordance with the provisions of the legislation.

8. Is it true that social security and other welfare are lost?

Fact: Social security still exists. Article: Chapter IV Manpower – Article 89 Concerning amendments to Article 18 of Law 40 of 2004. Types of social security programs include: Health insurance, Accident insurance, Pension plan, Pension guarantee, Life insurance, Job loss guarantee.

9. Is it true that all employees have the status of daily workers?

Fact: Permanent employee status still exists. Article: Chapter IV Manpower – Article 89 Concerning amendments to Article 56 Paragraph 1 of Law 13 of 2003: Work agreements are made for a certain time or for an unspecified time.

10. Is it true that foreign workers are totally free to enter?

Fact: Foreign workers are not free to enter and must meet the requirements and regulations. Article: Chapter IV Manpower – Article 89 Concerning amendments to Article 42 Paragraph 1 of Law 13/2003: Every employer who employs foreign workers must have the approval of the plan for the use of foreign workers from the Central Government.

11. Is it true that workers are prohibited from protesting with the threat of layoffs?

Fact: There are no restrictions. Article: (not explained).

12. Is it true that the holiday is only on the emrah date and there is no additional leave?

Fact: Since long ago the addition of holidays outside the red date was not regulated by law but by government policy. Article: refers to point number 4.

Chairman of the Indonesian Chamber of Commerce / KADIN, Rosan Roeslani, stated that currently there are at least 1000 companies from the United States and Europe that will leave China (Kompas TV Interview, 6 October 2020) so that the bureaucracy efficiency is expected to be able to attract these companies to enter Indonesia instead of going to other countries in ASEAN region. Will the enactment of the law give positive results to Indonesia? We will see the results in the next few months or years.