Company Regulation

Definition

Set of rules and regulations made in writing by an entrepreneur that specifies work requirements and the enterprise’s discipline and rule of conduct (Article 1 number 20 Act number 13 year 2003 concerning Manpower)

Legal Basis

  1. Act Number 13 Year 2003 Concerning Manpower (“Act 13/2003”)
  2. The Decision of the Manpower and Transmigration of the Republic of Indonesia Number: KEP.48/MEN/IV/2004 Concerning Procedure for the Making and Legalization of the Company Regulations and Procedure for the Making and Registration of the Collective Labor Agreement (“DMTRI 2004”)

The Company Regulations Mechanism

  1. Procedure for the making of company regulations according to Act 13/2003 and DMTRI 2004
    1. Companies regulations shall be formulated by taking into account the recommendations and considerations from the worker/labourer’s representatives of the enterprise, the worker/labourer’s representatives as mentioned before shall be the trade/labour union’s officials.
    2. The worker’s representative as mentioned on point (a) may not give recommendations and considerations on the company regulations submitted by the employer.
    3. If there were already the workers representative on the company, then the workers representative shall be elected by workers based on democracy and shall represent every division of the company.
    4. If that workers union has been established but it’s members do not represent the majority number of workers in the company, the employer, other than observing the recommendations and considerations of the manager of workers union, must also consider the recommendations and considerations of the workers’ representative not becoming member of the workers’ union.
    5. Company regulations shall not against the prevailing laws and regulations.
    6. Company regulations shall at least contain:
      • The rights and obligations of the entrepreneur;
      • The rights and obligations of the worker/labourer;
      • Working conditions;
      • Enterprise discipline and rule of conduct; and
      • The period of the validity of the company regulations.
  1. Ratification on company regulations according to Act 13/2003 and DMTRI 2004
    1. The employer must submit a request for the ratification of company regulations to the officer, the officer in this article refers to head of the institution for labor affairs in the Province for companies domiciled only in the Province for companies domiciled only in more than 1 (one) Regental/Municipal area in a Province.
    2. The request for ratification as mentioned in point (a) earlier, must be completed with :
      • written request containing:
        • Company’s name and address;
        • Name of Director of the company;
        • Company’s areas of operation;
        • Status of the company;
        • Business;
        • Total number of workers classified based on sex;
        • Status of employment relation;
        • Highest and lowest salary;
        • Name and address of workers union (if any);
        • Register number of workers union (if any);
        • Validity of company regulations; and
        • Umpteenth ratification of company regulations.
    1. Draft of company regulations in 3 (three) copies signed by the employer; and
    2. Evidence of request for recommendations and considerations from workers’s representative (in the case that there are no workers union)
  1. After the officer that responsible for labor affairs inspected the completeness of the documents and the materials of the company regulations submitted which must not be lower than the laws in force, they must ratify company regulations by issuing a decree within no more than 30 (thirty) working days from date of receipt of the request for ratification.
  2. If the request is not completed with the documents and/or there are materials in the company regulations which are in violation with the laws in force as mentioned in point (c) earlier, the officer must return the request in writing to the employer within a period not later than 7 (seven) working days since receipt of the returned company regulations.
  3. The company must submit company regulations that have been completed and/or revised to the institution responsible for labor affairs within no more than 14 (fourteen) working days since date of receipt of the returned company regulations.
  1. If the employer does not comply with the provision of point (d), it may be declared not submitting request for the ratification of company regulations so that it may be deemed as not having any company regulations.
  2. The company regulations shall come into force after being ratified by the officer.

Penalty of violation

According to article 161 Act 13/2003, the provision about penalty of violation is:

  1. In case the worker/labourer violates the provisions that are specified under work agreement, the company regulations, or the collective labour agreement, the entrepreneur may terminate the employment after the entreprenuer precedes it with the issuance of the first, second, and third warning letters consecutively.
  2. Each warning letter issued as mentioned point (a) earlier, shall expire after 6 (six) months unless otherwise stated in the work agreement or the company regulations or the collective labour agreement.

Workers/labourers whose employment is terminated for reasons as mentioned point (a) earlier, shall be entitled to severance pay amounting to 1 (one) time of the amount of severance pay stipulated under subsection (2) of Article 156, reward pay for period of employment amounting to 1 (one) time of amount stipulated under subsection (3) of Article 156, and compensation pay for entitlements according to the provision under subsection (4) of Article 156.

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