Admin / Saturday, 30 May 2020, 00:28

With the issuance of Presidential Decree Number 11 of 2020 concerning Determination of Public Health Emergencies of Corona Virus Disease 2019 (COVID-19) ("Decree Number 11/2020"), Indonesia is declared in the public health emergency and extraordinary situation. This state affects the business activities in Indonesia, specifically in manpower.

Minister of Manpower issued a Circular Letter Number M/3/HK.04/III/2020 of 2020 (“Circular Letter”) addressed to all governors in Indonesia to take action for protecting the worker/laborer and the business continuity in response to COVID-19 pandemic in the work environment. Based on such Circular Letter, the companies that restrict the business activities due to government policies in their respective regions for the prevention and countermeasure of COVID-19 so as to cause some or all of their worker/laborer not to come to work, are advised to make agreements with their worker/laborer regarding the change of wage amount and its payment method.

Wage protection for worker/laborer related to COVID-19 Pandemic based on the Circular Letter shall be implemented as follows:

  1. Worker/Laborer categorized as person under supervision (“ODP”) related to COVID-19 according to doctor’s statement so that he/she unable to work for a maximum of 14 (fourteen) days or according to Ministry of Health standards, their wages shall be fully paid;
  2. Worker/Laborer categorized as COVID-19 suspect and under quarantine/isolation based on doctor’s statement, their wages shall be fully paid during quarantine/isolation period;
  3. Worker/Laborer unable to work due to COVID-19 illness and proven by doctor’s statement, their wages shall be paid in accordance with the regulations;
  4. Company that implement restrictions on business activities due to government policy in their area to prevent and countermeasure COVID-19, resulting part or all of its workers unable to work, by considering business continuity,  may change the amount and payment method of wages with an agreement between the employer and worker/laborer.

Law Number 13 of 2003 concerning Manpower (“Law Number 13/2003”) explicitly regulates the time limit or period for worker/laborer who suffers from prolonged illness which is 12 (twelve) months before the Employer can terminate the employment with such worker/laborer (“PHK”). However, the Circular Letter did not determine the time limit if the worker/laborer suffers COVID-19, therefore in this case, employment termination due to prolonged illness cannot be done and the Employer shall pay the wages for worker/laborer affected by COVID-19 in accordance with the prevailing laws and regulations.

Following the public health emergencies based on Decree Number 11/2020, the Ministry of Health has issued Regulation Number 9 of 2020 concerning Guidelines for Large-Scale Social Restrictions to Accelerate Countermeasure for Corona Virus Disease 2019 (COVID-19) (“PMK Number 9/2020”). PMK Number 9/2020 regulates the guidelines for large-scale social restrictions (“PSBB”) in the appointed areas. Such PMK Number 9/2020 mentioned that PSBB involves closing for school and working place and also restriction of activities in public places in the longest incubation period and can be extended if there is any evidence of spreading, with the exception for certain sectors and activities.

Companies located in PSBB area shall comply with the guidelines regulated in PMK Number 9/2020 by conducting closing of working place, and for companies excluded can follow the guidelines based on the regulation in their areas.

However, in practice, not all companies can do this. Many companies and business activities still have to continue to operate during PSBB in the midst of a COVID-19 pandemic where the closure of the workplace and company will actually cause losses to the business, and might impact the consumers and workers. The direct impact experienced by some companies such as reduced revenues and profits as well as temporarily or permanently close their business activities.

The companies that continue to run their business activities during PSBB, in order to maintain business continuity and reduce labor costs, can take the following actions:

  1. decrease the salary and facilities of the upper level worker, such as manager and director;
  2. reduce the shift of the workers;
  3. limit/cut the overtime;
  4. reduce the working time;
  5. reduce the working day;
  6. temporarily dismiss the workers in turn;
  7. not extending the period of the expired work agreements;
  8. provide pensions for those who already qualify.

Furthermore, companies can also apply work from home (“WFH”) system or create separate schedules for worker/laborer (“Split Operation”) in order to prevent and countermeasure the spread of COVID-19 in the work environment.

Employment Termination

Although Presidential Decree Number 12 of 2020 concerning Stipulation of The Non-Natural Disaster of The Spreading of Corona Virus Disease 2019 as National Disaster (“Decree Number 12/2020”) has declared COVID-19 as national disaster, it does not necessarily stipulate COVID-19 as a force majeure and a reason for companies to simply terminate the employment of the worker/laborer. The determination of COVID-19 as a force majeure still needs to be seen and determined case-by-case.

Employment termination based on Law No. 13/2003 is something that should be avoided as much as possible. However, in the event that employment termination cannot be avoided because the company or business activity closes, either due to force majeure or rationalization (efficiency) due to COVID-19, the Employer is obliged to pay severance pay, reward for service pay, and compensation pay for rights to worker/laborer as in accordance with Article 164 paragraph (1) and (3) of Law Number 13/2003, without prejudice to the Employer’s right to negotiate and reach agreement with such worker/laborer regarding the changes in the amount and payment method.

Whatever the measure and action ultimately taken by the Employer to overcome the impact of COVID-19 for their business activities, the Employer needs to discuss with the worker/laborer to find a solution and reach an agreement as fair as possible and agreed by the parties.

For more information and details, do not hesitate to contact our lawyers.